Commencing on 1st January 2016, the bad debt tax relief will cease to apply.
The bad debt tax relief was introduced to help entrepreneurs deal with the plague of overdue payments for the supplied goods and services. The mechanism of the bad debt tax relief involved the right of the taxpayer being the creditor to adjust the income in case the debtor failed to make a payment within the deadline specified in the tax regulations. The debtor was obliged to accordingly adjust its tax costs.
In practice, the bad debt tax relief proved to be very inefficient. In particular, it created an additional administrative burden on the taxpayers and the additional area of dispute with the tax authorities. And what is most important, it was not a helpful tool for fighting overdue payments. Consequently, the Polish parliament decided to cancel such a tax relief.
The bill provides for an interim provisions regarding taxpayers who adjusted the income before 1stJanuary 2016 basing on bad debt tax relief provisions. Such taxpayer would be entitled to report tax deductible expenses provided that overdue payments are settled.