Draft amendments to PIT and CIT legislation have just been published on the Government Centre for Legislation website. The changes are expected to come into force on 1 January 2013, although the legislative process is in its very early stages and may result in changes.
The scope of the proposals is very broad. The most important is a proposal to apply CIT to the income of partnerships limited by shares, and to the income of its partners (as is already the case for companies).
Other important changes concern:
- thin capitalisation – recognised entities that hold an indirect share of at least 25% in the borrower’s capital as qualified lenders for ‘thin capitalisation’ purposes. This would mean that interest on loans received from such entities would only be wholly tax-deductible costs for a Polish borrower if the value of its indebtedness to all qualified lenders (including indirect shareholders) was not higher than three times its share capital.
- taxation of contributions in kind – companies paying CIT would be taxed on the value of non-cash contributions comprising assets other than a business enterprise (or an organised part of one). The legislator’s intention appears to be to tax the entire value rather than the nominal value of shares (as currently), although it is not quite clear from the wording of proposed changes.
- obligations to remit tax – businesses conducting investment activities would be required to collect withholding tax on payments made to companies. Generally, obligation to collect the tax would be imposed on distributions received from securities.
- taxation of dividends – dividends received by Polish companies from foreign subsidiaries paying taxes in EU or EEA countries are to be taxed in Poland to the extent that they are attributable to the subsidiary’s tax-deductible costs or deductible from its income, taxable base or tax in that EU/EEA country.
- • in specie dividends – any non-cash distributions made as dividend payment by a taxpayer to its shareholders as well as non-cash distributions made as repayment of a loan or to redeem any shares would be treated as taxable income for that taxpayer.
Comments on the draft bill are required from various ministries by 7 September 2012, after which it will be submitted for parliamentary debate in whatever form is finally adopted by the Council of Ministers.