Minimum CIT – how to calculate it?

January 23, 2023

From January 1, 2024 minimum corporate income tax (minimum CIT) will apply. It is a new tax which will influence the financial condition of your company. If you have determined that the minimum CIT does apply to you, it is time to perform calculations. How to calculate the minimum CIT? How to determine the tax base? What is the minimum tax rate? By when should it be paid?

Are you still not sure if you will have to pay the minimum CIT? Read our article and find out:

• “Minimum CIT – who will not have to pay it?”

Tax base

As part of the amendment to the regulations, the legislator introduced the second method of calculating the tax base. Importantly, the choice of method will depend only on the taxpayer.

Method 1

The tax base will be calculated as the sum of the following elements: 

• 1.5% of the value of revenues (other than from capital gains)
• the amount of debt financing costs paid to related entities in excess of 30% of the so-called EBITDA
• the amount of costs paid to related entities for the so-called intangible services – exceeding the value of PLN 3 million plus 5% of the so-called EBITDA.

Method 2

Under the second method, referred to in the CIT Act as “alternative”, the tax base will be calculated as the value of 3% of revenue from a source of revenue other than capital gains earned by the taxpayer in a given tax year.

After determining the tax base, it is necessary to verify whether it is possible to reduce the calculated amount by the deductions indicated in the Act. Those deductions are:

• donations, the amount of the R&D relief, as well as the value of new tax reliefs introduced as part of the Polish Deal
• revenues from operations in special economic zones
• the value of income from the sale of receivables under factoring

Tax rate

Once we determine the final value of the tax base, we multiply it by the tax rate – 10%. It applies to all taxpayers, regardless of which of the above methods they choose.

Tax payment

The minimum tax is to be paid once, on the date provided for the “classic” CIT, which is currently March 31 for the previous year. Warning! Taxpayers who will be required to pay the minimum tax are not exempt from the “classic” CIT settlement. However, they will be able to reduce the minimum tax by the amount of CIT due for a given tax year. In addition, taxpayers will be able to deduct the amount of the minimum tax paid for a given minimum tax in subsequent years from the CIT due. The deduction will be available as part of the annual tax return, for 3 consecutive tax years immediately following the year for which the minimum income tax was paid.

Still not sure if the minimum CIT will also apply to you? Let’s talk. Our specialists will analyze your situation.

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