Poland: Ministry of Finance publishes a draft bill on corporate income tax

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The Polish Ministry of Finance issued a draft bill on 12th July 2017, regarding corporate income tax. The draft bill proposes significant changes and sets new foundations in taxation rules for companies in Poland.

  • The bill changes the specification for applying the CFC rule which may widen the scope of foreign subsidiaries that meet CFC criteria. After the introduction of the formulated amendments, a company that is expecting a rate that is 50% lower than the rate it would pay in Poland will be considered to be a CFC.
  • The bill introduces a new restriction in the thin capitalization rules, which limits the deduction of financing costs to 30% of an adjusted tax base. The restriction also applies to the financing of non-affiliated companies. A safe harbor is proposed for financing costs up to PLN120000 (US $ 32000) yearly. Non-deductible costs can be claimed.
  • The draft law basically limits the possibility of tax planning with tax capital groups. Accordance with the new rules, if a tax-capital group breaches a condition under which it was established, it may lose its income status as a common taxpayer from the date of its registration.

It is expected that the new rules will be in force as of 1 January 2018. However, the current rules may only be applied until the end of 2018.

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