Our GT Alert of 25 March 2020, COVID-19: Existing and Planned Tax Relief for Businesses in Poland, referenced the intensive legislative work being conducted to implement a set of emergency solutions called the “Crisis Shield”. The proposed “Crisis Shield” solutions are specified in a draft amendment to the act on extraordinary measures aimed at preventing, countering and combating Coronavirus Disease 2019 (COVID-19), other communicable diseases and crisis situations, and on amendments to certain other acts. The “Crisis Shield” act draft, now undergoing review, provides for a number of actions intended to mitigate the effects of the outbreak for businesses. These actions are intended to improve the liquidity of businesses, postpone certain statutory deadlines and implement measures facilitating tax settlements.
Some of the proposed amendments are mainly intended to support government functioning during the period of restrictions imposed due to COVID-19. If implemented, these measures may pose difficulties for businesses. Extending the time permitted for issuing individual advance tax rulings may have a significant adverse effect on the dynamics of business transactions, which depend on obtaining such tax rulings.
The draft of the “Crisis Shield” act assumptions concerning taxes
According to an unofficially published draft of the “Crisis Shield” act, the proposed tax solutions include the following:
- Postponing the deadline for payment of real estate tax on commercial properties for March to May 2020 until 20 July 2020.
This relief will be available to those taxpayers whose revenues in a given month fall by 50% or more as compared to the same month of the previous year (due to COVID-19), and those who did not generate revenues in the previous year but suffered adverse economic consequences of the COVID-19 outbreak in a given month.
- Option for communes to offer real estate tax relief for part of 2020.
According to the draft act, commune councils will be authorized to grant a real estate tax exemption to certain specified groups of entrepreneurs whose financial liquidity deteriorated as a result of the adverse economic consequences of COVID-19. Additionally, the draft act allows for the postponing of deadlines for the payment of real estate tax installments falling due in April, May and June 2020 for specified groups of entrepreneurs that find themselves in the same situation; however, the extension cannot extend beyond 30 September 2020.
- Retroactive deduction of Personal Income Tax (PIT) and Corporate Income Tax (CIT) losses.
According to the draft act, the taxpayers will be permitted to deduct their losses (losses on non-agricultural business activity, where PIT is concerned) incurred in 2020 (due to COVID-19) from their income reported for 2019 by filing a correction to the 2019 annual tax return. This relief will be available to those businesses whose turnover in 2020 falls by 50% or more as compared to 2019 (due to COVID-19). The maximum amount of the losses that can be deducted from the 2019 income by way of such a one-off correction is PLN 5 million (losses above this amount can be deducted in subsequent years).
- Suspended application of so-called bad debt income tax regulations with respect to those debtors who should account for unpaid liabilities in their calculation of income tax advances.
As proposed, this obligation would be waived for those businesses whose revenues in particular settlement periods fall by 50% or more compared to revenues in the corresponding periods of 2019 (due to COVID-19), as well as taxpayers who did not generate revenues in the previous year but suffered adverse economic consequences of the COVID-19 outbreak in the given settlement period.
- Option to cancel simplified tax advances in 2020 and to calculate monthly advances on actual income.
The option to cancel simplified tax advances will be available to “small taxpayers” if they suffer adverse economic consequences as a result of COVID-19. Taxpayers who cancel simplified tax advances for the period from March to December 2020 will calculate monthly advances based on their actual income.
- Waiver until 31 August 2020 of tax on civil law transactions with respect to loans concluded.
As proposed, this relief will apply if the borrower is an entrepreneur whose financial liquidity deteriorated as a result of the adverse economic consequences of COVID-19.
- Extended time permitted for issuing individual advance tax rulings.
According to the draft, the three-month period permitted under the Tax Code for issuing individual advance tax rulings will be extended by an additional three months for individual advance tax ruling applications that were filed but not considered by the effective date of the Crisis Shield Act, or filed after its effective date but before the epidemic emergency threat is lifted or, should an epidemic emergency be declared – before that is lifted. The draft act allows the Minister of Finance to extend (by issuing an ordinance) the time permitted for issuing individual advance tax rulings under the Tax Code for further periods in the circumstances described, however by no more than three months, taking into account the effects of COVID-19.
- Extended deadline for tax remitters to remit tax advances on remuneration collected for March and April 2020 until 1 June 2020, if the taxpayers suffered economic consequences of COVID-19.
- Temporary waiver of prolongation fee for spreading into installments or deferring payment deadlines of the taxes and tax arrears which constitute State budget income, for the duration of the epidemic emergency.
- Postponing the collection of the retail sales tax until 1 January 2021.
- PIT and CIT deductions for donations (in cash or in-kind) made in 2020 for countering COVID-19 to certain medical service providers, the Reserve Materials Agency (Agencja Rezerw Materiałowych) and the Sanitary and Epidemiological Reserves Center (Centralna Baza Rezerw Sanitarno-Przeciwepidemicznych).
- Release from PIT and CIT on revenues received in 2020 by taxpayers (with respect to PIT - by the taxpayers conducting non-agricultural business activity) under statutory aid in the form of guarantees, loan subsidies or loan interest subsidies.
- Postponing the obligation to submit the new JPK_VAT declarations (the declaration and the source documents) for large enterprises until 1 July 2020.
- Postponing the date of implementation of a new VAT rates matrix until 1 July 2020.
- Postponing the deadline for submission of information to the Central Register of Beneficial Owners (under the Anti-Money Laundering Act) until 13 July 2020.
- Option for the tax authorities to suspend, at their own initiative or on request, tax proceedings and inspections as well as customs and tax inspections should an epidemic emergency threat or epidemic emergency be declared.
The draft act also provides for a number of non-tax reliefs intended to mitigate the economic downturn caused by the COVID-19 outbreak, such as postponing the deadline for payment of the perpetual usufruct fee until 30 June 2020.
The draft of the “Crisis Shield” act is a work in progress, and it may significantly evolve. According to press information, the draft act will be submitted to the Sejm soon.
For more information and updates on the developing COVID-19 situation, visit GT’s Health Emergency Preparedness Task Force: Coronavirus Disease 2019.
This GT Alert is limited to non-U.S. matters and law.