Tax remedies under the anti-crisis shield

In response to the state of epidemic emergency announced in Poland and its impact on the economy, new regulations have been introduced aimed at mitigating the resulting burden on businesses and improving the situation of employees. The government’s remedial package called “The Economic and Social Anti-Crisis Shield for the Security of Businesses and Employees in the Face of the Sars CoV-2 Virus Pandemic” (the “Anti-Crisis Shield”) includes certain facilitations and relief measures with regard to the settlement of tax liabilities.

The regulations pertaining to taxes that were eventually adopted in the form of the Act dated 31 March 2020 on amending the Act on special solutions related to preventing, counteracting and fighting COVID-19, other infectious diseases and the resulting crisis situations, and on amending certain other acts (the “Anti-Crisis Act”) contain certain alterations as compared to the initial assumptions and draft laws; for example, the intended suspension of tax inspections, audits and proceedings was ultimately not written into the Anti-Crisis Act.

The Anti-Crisis Act was published in the Journal of Laws and entered into force on 31 March 2020.

Below we present a summary of the most important changes written into the Anti-Crisis Act as well as the regulations of the Minister of Finance.

POSTPONEMENT OF DEADLINES FOR THE SUBMISSION OF DECLARATIONS AND INFORMATION FILINGS

The Anti-Crisis Act and the regulations issued by the Minister of Finance postponed the deadlines for the submission of certain declarations, returns, and information filings. Deadlines for the submission of the following, among others, were postponed:

(i) CIT-8: until 31 May 2020; and

(ii) ORD-U and IFT-2R: until 31 May 2020 (for entities the fiscal year of which is the calendar year).

The deadline for filing annual personal income tax returns was extended until 31 May 2020.

DEFERRAL OF THE DEADLINE FOR THE PREPARATION AND APPROVAL OF FINANCIAL STATEMENTS

The deadline for the preparation and approval of financial statements was postponed by three months. For certain entities, such as entities subject to the supervision of the Polish Financial Supervision Authority, a two-month postponement was adopted.

SUSPENSION OF PROCEDURAL AND COURT TIME LIMITS

During the state of epidemic emergency no new procedural and court time-limit periods will commence, and any already-running time limit periods are suspended for the duration of the state of epidemic emergency. The above applies to, among others, proceedings, audits and inspections conducted based on the Tax Ordinance, fiscal inspections of customs dues, court proceedings, including administrative proceedings, and criminal fiscal proceedings.

TAX-PLANNING SCHEME REPORTING

No new time-limit periods concerning the reporting of tax-planning schemes will commence, and any already-running time-limit periods are suspended from 31 March until the state of epidemic emergency is lifted; however, until no later than 30 June 2020.

LOSS CARRY-FORWARD AND CARRY-BACK

The Anti-Crisis Act provides that CIT and PIT taxpayers that incur a tax loss in 2020 and whose revenues generated in 2020 are at least 50% lower than those earned in 2019 will be entitled to deduct the loss incurred in 2020 from their 2019 income up to the amount of PLN 5 million. The taxpayers will be able to carry forward any undeducted losses to the following tax years.

DEDUCTIBLE DONATIONS FOR THE FIGHT AGAINST COVID-19

The Anti-Crisis Act states that taxpayers who make donations, whether monetary or in-kind, towards causes related to preventing and fighting coronavirus infections or for the benefit of healthcare facilities, including medical transport entities, as well as donations to the Material Reserves Agency and the Central Base of Sanitary and Anti-Epidemic Reserves will be able to deduct the value of such donations from their income. The deductible amount will differ depending on when the donation is provided, i.e. for donations provided until 30 April 2020, an amount corresponding to 200% of the value of the donation will be eligible for deduction; for donations provided in May 2020, an amount corresponding to 150% of the value of the donation will be eligible for deduction, and for donations provided between 1 June and 30 September 2020, taxpayers will be entitled to deduct an amount corresponding to the value of the donation.

DEFERRAL OF THE DEADLINE FOR THE PAYMENT OF THE MINIMUM TAX ON COMMERCIAL PROPERTIES

The deadline for the payment of the tax on revenue from buildings (what is referred to as the minimum tax on commercial properties) for the months of March, April and May 2020 has been postponed until 20 July 2020. The deferral will be available to those taxpayers whose businesses were adversely affected in a given month due to COVID-19 and who generated revenues at least 50% lower than in the corresponding month of 2019.

ABANDONMENT OF THE SIMPLIFIED ADVANCE TAX PAYMENTS SCHEME

Small taxpayers who in 2020 opted to make simplified advance tax payments towards their annual income tax obligations will be able to revert to making such payments for the months of March to December 2020 based on their current income provided that their businesses have been adversely affected by COVID-19.

EXEMPTION FROM MANDATORY BAD DEBT RELIEF IN INCOME TAXES

On 1 January 2020, provisions on what is referred to as bad debt relief in income taxes entered into force based on which any overdue liabilities increase a debtor’s taxable amounts. The Anti-Crisis Act provides that taxpayers whose businesses were adversely affected in a given reporting period due to the COVID‑19 epidemic and who generated revenues at least 50% lower than in the corresponding reporting period of 2019 will not be required to increase their advance tax payments in relation to unpaid liabilities for the relevant reporting periods in 2020.

POSTPONEMENT OF THE DEADLINE FOR THE REMITTANCE OF ADVANCE TAX PAYMENTS ON SALARIES

The Anti-Crisis Act postpones the deadline by which employers are required to remit advance income tax payments withheld in March and April 2020 with regard to, inter alia, the salaries of employees and remuneration paid to other retained workers until 1 June 2020 if the relevant tax remitters were adversely affected by the COVID‑19 epidemic.

DEADLINE FOR THE ISSUANCE OF INDIVIDUAL TAX RULINGS

The Anti-Crisis Act extends the deadline for the issuance of individual tax rulings. The three-month deadline will be extended by an additional three months for:

(i) applications submitted but not examined by the date on which the new provisions enter into force; and

(ii) applications submitted between the date the new provisions enter into force and the date until the state of epidemic emergency ends. In addition, the Minister of Finance may further extend such deadline by a maximum of up to three more months in recognition of the consequences of the COVID-19 epidemic.

OTHER CHANGES

The Anti-Crisis Act also contains other measures seeking to mitigate the tax burden of taxpayers affected by the epidemic by introducing reliefs such as:

(i) the waiver of the prolongation fee for deferring a tax payment deadline or breaking a tax payment up into instalments; and

(ii) the possibility to make a voluntary disclosure (czynny żal) filing electronically. In addition, local councils will be authorized to exempt businesses the financial liquidity of which deteriorated due to the adverse economic consequences of COVID-19 from the tax on the real estate, land, buildings and structures used for the purpose of their business activity or to postpone the real estate tax  deadlines falling in April, May and June 2020 until no later than 30 September 2020.

REMEDIES RELATED TO THE PAYMENT OF TAX LIABILITIES

In addition to the remedies available under the new provisions set forth in the Anti-Crisis Act, taxpayers who face problems with the timely payment of their tax liabilities may apply for relief. The existing provisions of the Tax Ordinance (Article 67a et seq.) allow taxpayers to request:

(i) that their tax payment deadline be deferred or that the due tax be broken up into instalments;

(ii) that their overdue tax liabilities be deferred or broken down into instalments; or

(iii) that their overdue tax liabilities be cancelled in whole or in part. Pursuant to the Anti-Crisis Act, no prolongation fee will be charged in connection with tax deferral decisions.

 THE RYMARZ ZDORT TAX TEAM

The Rymarz Zdort tax team is one of the largest teams of its type operating within a single law firm and it provides a broad range of comprehensive tax advisory services. The team comprises tax advisors, advocates and tax experts who have extensive experience gained in the largest Polish law firms and Big Four firms. We cooperate closely with lawyers from other practices to deliver complex solutions that comprise not only top-of-the-range tax advice but also general insights into a client’s legal position. Our advisory services cover a broad spectrum of tax matters, including CIT, PIT, VAT, real estate tax, tax on civil law transactions and international taxes.

If you are interested in more detailed information on the new regulations enacted due to the coronavirus epidemic emergency, please do not hesitate to contact us.