Estonian CIT in a new form

The flat-rate tax on the income of companies, referred to as “Estonian CIT,” was introduced into the Polish tax system from 1 January 2021. So far, this form of taxation has not been popular. In 2021, Estonian CIT was selected by only 334 taxpayers.
Author:
Katarzyna Adamowicz
Head of TAX Department
Ewa Janas
Junior TAX Consultant

According to the latest information, at the beginning of 2022 the legal form of Estonian CIT will be revised. The bill to amend Polish tax laws to implement the package known as the “Polish Deal” includes some changes that would make Estonian CIT slightly more accessible for taxpayers.

It is suspected that the overly complicated form and numerous formalities associated with Estonian CIT in its current form led the government to decide to revise the regulations.

Extending the list of taxpayers

The first major change would be to extend the list of taxpayers eligible for Estonian CIT. The government intends to remove the revenue limit, currently set at PLN 100 million. Therefore, any company would be able to choose this form of taxation, and limited partnerships and joint-stock limited partnerships could also benefit from the flat rate taxation of income.

Changing the conditions and making deadlines more flexible

The modifications would also involve:

  • eliminating the necessity to incur specific capital expenditures as a condition for applying the flat rate provisions, with the possibility of incurring them in order to benefit from the preferential flat rate,
  • eliminating the condition concerning the upper limit of taxpayer income taxed at the flat rate, and consequently also eliminating the additional tax liability for income above that limit,
  • making the deadlines for paying tax liabilities more flexible in the case of preliminary adjustments, and even lifting the obligation to pay liabilities in some cases.

The changes would ease the conditions for applying Estonian CIT and simplify the structure of this form of taxation for taxpayers.

If you have any questions about the Polish Deal and how it may affect your business, you are welcome to contact the experts at KR Group.

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