On December 1st, 2023, the Ministry of Finance published a new model of the CIT/M form, i.e. information on the amount of minimum income tax, serving as an attachment to the CIT-8 and CIT-8a returns. The minimum tax was introduced as part of the so-called "Polish Deal" in 2022. However, the Polish Parliament suspended its provisions for the period from January 1, 2022 to December 31, 2023.
Due to the expiry of the suspension period, on January 1st, 2024, the provisions on the minimum tax will come into force. We would like to remind you that the minimum tax applies to companies - CIT taxpayers taxed in Poland on their entire income and to tax capital groups that have suffered a loss or achieved a low level of profitability. We wrote more about the minimum tax here: blog.
The amendment of October 7, 2022, provides numerous exemptions in addition to those already provided. The amendment introduced new exemptions, which apply to:
- small CIT taxpayers (essentially those whose annual gross revenues do not exceed EUR 2 million)
as well as taxpayers:
- conducting a municipal economy, as referred to in Chapter 3 of the Act of December 20, 1996, on municipal management (Journal of Laws 2021, item 679)
- whose majority of revenues were generated through the provision of healthcare services
- whose revenues are mostly related to transactions in which the price, or method of establishing the price, is determined by laws or other normative acts
- whose profitability in one of the last three tax years was above the 2% threshold
- placed in bankruptcy, liquidation, or subject to restructuring proceedings.
Changes in the methodology
The amendment also introduces changes in the methodology of calculating loss and the share of income in revenue, through additional exclusions from:
- tax costs of payments under a lease agreement, including depreciation charges on a fixed asset used under a so-called finance lease agreement (Article 17a(1) of the CIT Act, i.e., if depreciation charges are made by the lessee) - in addition to the previously excluded costs related to the acquisition, creation or improvement of fixed assets (such as tax depreciation)
- revenue and tax expenses of the value of trade receivables sold to factoring entities
- tax expenses 20 percent of the cost of salaries and social security contributions and contributions to employee equity plans
- tax expenses from the increase in the value of electricity, heat and line gas on an annual basis
- the value of excise tax (also taking into account the turnover of excise goods), retail sales tax, gaming tax, fuel surcharge and emission fee
Changes in the method of calculating the tax base
Based on the amendment of October 7, 2022, there has been a change in the method of calculating the tax base (the rate has been reduced from 4 %to 1.5%), along with the introduction of an alternative tax base, namely:
- the tax base is the sum of: 1.5% of operating income (i.e., income other than income of a capital nature) and excess passive costs, i.e., debt financing costs, and excess intangible service costs or
- The tax base is 3% of the value of income earned by the taxpayer in the tax year from a source of income other than capital gains, and the taxpayer shall inform about choosing such a method of determining the tax base in the return filed for the tax year for which such a choice was made
- the taxpayer will be able to decide whether they choose to calculate the tax base in accordance with paragraph a or b. It is also important that the reference to deferred tax, which was highly imprecise, has been deleted from the calculation of the tax base.
The new version of the CIT/M form is available on the website of the Ministry of Finance.
We will keep you informed about any future changes in minimum tax regulations.