On 1 January 2024, the period of suspension of the application of the minimum corporate income tax provisions regulated by Article 24ca of the CIT Act ends.
The 10 per cent minimum tax will apply to companies with Polish tax residency and domestic tax capital groups that in the tax year:
- suffered a loss from a source of income other than capital gains or
- have achieved less than 2% as a proportion of non-capital gains income from a source of income other than capital gains.
The tax regulations provide special rules for determining the loss for minimum tax purposes, which means that a loss on the balance sheet does not necessarily result in minimum taxation.
Tax simulations from a few years ago may no longer correspond to the rules that have changed from 1 January 2023.
The taxable base, broadly speaking, will be income from so-called operating activities, with numerous exclusions and deductions possible. In order to apply these, it is important, among other things, to correctly identify the ownership relationship – the group of relationships, particularly those of a capital nature.
MDDP will provide you with comprehensive minimum tax accounting support, combining the experience of our experts in corporate income tax, transfer pricing and accounting.
Which entities will pay the minimum tax?
The minimum tax may burden companies in those segments of the economy with low profitability or periodic losses, i.e. the industry:
- HORECA,
- transport,
- real estate,
- industrial,
- processing,
- wholesale and retail trade,
- construction.
Whether a loss or profit of less than 2% satisfied the arm’s length principle is irrelevant.
How can we help?
Preparation for the calculation of the minimum tax, among other things, through training for capital groups (including entities with extensive company structures) for financial managers and employees - we already have experience in organizing such training for our clients.
Determine the applicability of minimum tax exemptions, including related-party provisions.
Calculation and support in calculating loss and profitability for minimum tax purposes.
Analyze whether the group charges incurred affect the tax base and whether the loss incurred is related to the group operating model adopted.
Calculation of the tax base and the minimum tax itself, taking into account statutory deductions.
The detailed identification of related parties, together with the preparation of an appropriate procedure ready for implementation in the organization and a checklist that will easily indicate how to correctly identify relationships. We also offer our clients a linkage test and a case-by-case assessment of their existence.
All ongoing concerns about the minimum tax.
Feel free to contact us
Konrad Medoliński
Senior Manager | Tax adviser E: Konrad.Medolinski@mddp.pl T: (+48) 504 666 447
Marta Klepacz
Partner E: marta.klepacz@mddp.pl T.: (+48) (22) 322 68 88
Agnieszka Piętak
Manager | MDDP Outsourcing E: agnieszka.pietak@mddp-outsourcing.pl T: (+48) 797 666 927