- Budget revenues in 2021 are planned at PLN 404.4 billion (EUR 89.9 billion) and spending at PLN 486.7 billion (EUR 108.2 billion).
- The budget deficit, as calculated according to EU methodology, is planned to reach 6 percent of the country’s GDP.
- Economy is expected to expand by 4 percent while inflation is expected to stand at 1.8 percent.
- Wages are to grow by an average of 2.8 percent, and household consumption is seen increasing by 6.3 percent.
Changes to income tax from 2021
On November 30, 2020, the acts amending the Personal Income Tax Act, the Corporate Income Tax Act, Act on Flat-Rate Income Tax and certain other Acts were published in the Polish Journal of Laws.
The acts are effective from January 1, 2021, which introduced a number of changes to the Polish income tax regulations, including extension of corporate income tax obligations to limited partnerships/general partnerships, a requirement to prepare and publish a report on the tax strategy on large taxpayers, the possibility to apply an alternative corporate income tax scheme etc.
Following are the key highlights of the Act:
For Companies:
- Estonian – Corporate Income Tax (CIT)
The polish government has introduced news tax regime in concern with Corporate Income Tax called as “Estonian Tax Regime”. This regime is effective from January 1, 2021. The tax regime is optional and can be chosen by the taxpayer. The main applicability conditions are as follows:
- Revenues not exceeding PLN 100 million per year
- Shareholders to be Natural Persons
- No shares in other entities
- Demonstrate an appropriate level of capital expenditures
- Minimum 3 employees apart from Shareholders
- Passive income not exceeding the operating income
The tax is not due until the profit is retained in the business. The tax would be paid only when the profit is paid out.
- Publication of tax strategy
The obligation applies to taxpayers whose revenue exceeds EUR 50 million in a tax year and tax capital groups. The obligation to prepare and publish information on the execution of tax strategy entered into force from January 1, 2021.
The taxpayers are obliged to publish information on their tax strategy on their websites. Following information is to be included:
- The approach to the processes and procedures concerning the management of tax obligations and tax compliance.
- The number and type of information provided on tax schemes (MDR).
- Related party transactions exceeding 5% of total assets.
The taxpayers are required to prepare and publish information for the year 2020, by December 31, 2021.
- Increase in revenue threshold authorizing small taxpayers to apply the 9% corporate income tax rate
From January 01, 2021, the revenue threshold for small taxpayers increased to EUR 2 million (previously EUR 1.2 million) for the applicability of reduced 9% corporate tax rate.
VAT
On December 30, 2020 the bill amending the provisions of the VAT Act has been published in the Polish Journal of Laws. The SLIM VAT package introduces changes in VAT concerning, among others, simplification in invoicing, unification of exchange rates with income tax etc. The amendment of the Polish VAT Act came in force from January 01 2021.
Following are the key highlights:
- Correcting invoices
- The supplier will no longer be obliged to receive the confirmation of acceptance of the correction of invoice from the buyer in order to decrease the tax base and output VAT.
- The businesses can adjust the tax base and output VAT due in the period of issuing the correcting invoice. However, it is to be noted that documentation in possession should show that the supplier had agreed with the buyer
- In the same period, the buyer will be also obliged to make an appropriate correction of input tax, which results from the arrangements made between the taxpayers.
- Extension of the time limit for input VAT deduction increased to 4 months from 3 months.
- Increase in the threshold for gifts of small value from PLN 10 to PLN 20, which are not subject to VAT taxation and delivered free of charge
- Option to choose by a taxpayer the same rules of converting tax base expressed in a foreign currency into PLN for VAT and corporate income tax purposes.