Amendment to the Corporate Income Tax Act

This week, a draft amendment to the Income Tax Act appeared in order to extend the operation of the Anti-Inflation Shield from October 31, 2022 to December 31, 2022. As explained in the explanatory memorandum to the draft, this means, inter alia, maintaining a temporary reduction in VAT rates for food, motor fuels, natural gas, electricity and heat, fertilizers and other measures supporting agricultural production.

The draft law also aims to improve the rules on taxation of corporate income in a way that will make them more transparent and at the same time ensure their greater efficiency.

The draft also includes provisions under which VAT rates will be maintained at the level of 8% in the next and subsequent years. (reduced rate) and 23 percent. (tax rate).

Significant changes for companies

The main part of the project is changes in the corporate income tax. The most important modifications include, among others changes in regulations and postponement of entry into force of the provisions on the minimum income tax (suspension for the years 2022-2023), repealing the provisions on the so-called hidden dividend and the change in the provisions on the documentation obligation in the scope of the so-called indirect transactions of paradise, as well as those relating to the Polish holding company (PSH).

It is also proposed to amend the provisions on taxation with the tax on shifted income, to ease the provisions on the settlement of debt financing costs in tax costs, or to improve the regulations on lump-sum taxation on corporate income (Estonian CIT).