Minimum CIT – who will not have to pay it?
January 16, 2023
At the end of 2021 The Ministry of Finance announced the introduction of a new tax to the Polish tax system – the so-called minimum corporate income tax (minimum CIT). We are going to analyze who will have to pay the minimum CIT. The provisions on this tax were passed and were to apply from January 1, 2022. However, the Ministry of Finance decided to temporarily suspend them. In recent weeks, the government has passed amendments to the original wording of the so-called minimum tax. As intended, this tax is to enter into force on January 1, 2024, however, due to its structure and potential impact on the financial condition of enterprises, we encourage you to familiarize yourself with the main assumptions regarding this tax.
Who is the minimum CIT applicable to?
The so-called the minimum CIT is to apply to two main groups of CIT taxpayers, namely to those:
- who suffered a tax loss in a given tax year from sources of income other than capital gains
- who in a given tax year achieved a share of income in revenues not higher than 2% (concerns income other than from capital gains)
Calculating the loss and the share of income in revenues
Both the loss and the share of income in revenues are to be calculated in a strictly defined manner. These calculations will not include (among others):
- depreciation write-offs related to the purchase, production or improvement of fixed assets classified as tax deductible costs
- fees set in leasing contracts (financial leasing)
- revenues and tax deductible costs directly related to revenues from the sale of receivables to an entity that is a financial institution (factoring)
- increase in tax deductible costs for the purchase of electricity, heat or piped gas (compared year to year)
- the amount of excise tax, retail tax, gaming tax, fuel surcharge and issue fee
- 20% of the cost of salaries and social security contributions as well as contributions to PPK..
Who will not have to pay the minimum CIT?
Even if the individual calculation prepared by the taxpayer indicates that he or she is obliged to pay the so-called minimum tax, it is worth to analyze the catalog of subjective exclusions. Importantly, the amendment to the CIT Act passed on October 7, 2022. significantly expanded the catalog of entities that will not be obliged to pay this tax. Who will not have to pay the minimum CIT?
- taxpayers starting their activity (up to 3 tax years from its commencement)
- financial enterprises
- taxpayers who in a given tax year obtained 30% less revenue than in the previous year
- taxpayers whose shareholders, stockholders or associates are only natural persons and if that taxpayer does not hold more than 5%, directly or indirectly, of shares or stocks in other companies
- taxpayers conducting medical, mining or obtaining revenues from the operation of ships and aircraft as part of international transport
- municipal companies
- taxpayers forming a group of companies in which one of them holds (throughout the entire tax year) at least 75% of shares in the capital of other entities, and the total share of income in the revenue of all companies is greater than 2%
- taxpayers in bankruptcy or liquidation
- taxpayers who are “small taxpayers” (whose annual revenues do not exceed EUR 2 million),
- taxpayers who achieved a share of income from a source of income other than capital gains in one of the three tax years immediately preceding the tax year for which the minimum income tax is paid, in the amount of at least 2%.
Still not sure if the minimum CIT will also apply to you? Let’s talk. Our specialists will analyze your situation.
Now you can check how to calculate the minimum CIT:
Tags podatek CIT, the minimum tax