Ministry of Finance announced draft amendments to the Corporate Income Tax Act. The proposed changes cover i.a. tax capital group (TCG):

• Abolition of 2% TCG profitability criterion (which so far has been perceived as a main downside of TCG by the taxpayers);
• Adjustments of the rules of deduction of tax losses incurred at the level of companies before joining TCG, i.a.:
  – possibility to carry forward tax loss incurred by the company before TCG at the level of the group – once certain conditions are met, i.a. recognizes taxable income in the same source as the tax loss incurred in the past;
  – introducing the new rule that the five year period for carrying forward the tax losses includes also the tax years when the company had been a member in TCG;
  – the draft bill does not provide for transitional provisions, which may be crucial for the taxpayers who received advance tax rulings covering the tax loss settlements.
• The new rules on restructuring with participation of companies being members of TCG – detailed regulations regarding the mergers and demergers that are allowed taking into account the general prohibition of adding and removing members from TCG after the group is registered;
• Withdrawal of the requirement that TCG agreement has to be concluded in the form of notary deed;
• Decrease of the average share capital threshold of the members from PLN 500k to 250k;
• Change of the rules on reporting the extension of the TCG’s lifetime.

The draft legislation is available HERE.

Apart from the CTG amendments, the bill also provides for new tax incentives, i.e. regarding investments (IPO), consolidation and so called “Estonian CIT”.

The Ministry is open for remarks regarding the bill until June, 25th, 2021. Please let us know if you find any remarks are necessary or if you wish to discuss the bill in details.

*****

If you are interested in obtaining further information, or would like to discuss the impact of the above changes please contact:

Agnieszka Wnuk                               Agnieszka.Wnuk@mddp.pl                           tel. 667 661 767

 

or your advisor at MDDP.