This week the Sejm will be working on a draft bill containing solutions proposed by the government as part of an economic assistance package aimed at alleviating the economic effects of the COVID-19 pandemic.
The new bill pertains to many areas of the law, including tax regulations. As the draft has been made public, we are able to get to know the details of some of the solutions, such as for example deduction of the loss incurred in 2020 from the income generated in 2019. The draft indicates that taxpayers will be able to reduce their income from non-agricultural operations in the year 2019 by the loss incurred in 2020, by no more however than 5 million zlotys. This will be done by filing a correction of the return for that year. The loss deduction will be available to those taxpayers whose 2020 revenue from business operations is at least 50% lower than the revenue generated on those operations in 2019. Any un-deducted loss will be accounted for in accordance with existing regulations.
There is also confirmation of the announcement that the deadline for the payment of advances for employees for the months of March and April 2020 will be extended. Instead of the respective due dates of 20 April and 20 May, the advances may be paid by 1 June 2020.
The deadline for the payment of building tax for the months of March to May 2020 is to be deferred until 20 July 2020. It will not, however, be a solution for every taxpayer. It will be available to those who in a given month recorded a drop in revenue of at least 50% compared to the same period of last year. Those who commenced operations in 2019 will be able to have their building tax deferred if in a given month they record a drop in revenue of at least 50% compared to the average monthly revenue they had recorded in 2019.
The draft also provides for an exemption from the requirement to apply the regulations relating to so-called bad debts of income tax payers required to increase the income constituting the base for the calculation of monthly (quarterly) advances in 2020 by outstanding tax liabilities. This exemption will apply to those taxpayers whose monthly or quarterly revenue declined by at least 50% compared to the same periods of the previous year. Liabilities unpaid in the course of the year and before filing the return for 2020 will have to be included in the annual tax return. To determine the decline of revenue in 2020, those taxpayers who commenced operations in 2019 will need to calculate their average monthly or quarterly revenue in 2019.
The new regulations also provide for extending the time the tax authorities have to issue an individual tax interpretation by three months. This means that taxpayers will be forced to wait longer for the issue of such interpretations – as many as four months, instead of just one.
After the new regulations go into force, the tax authorities and ZUS will cease to collect the extension fee for relief in the payment of amounts due, such as cancellation, deferral of payment or spreading the amount due into installments.
These are of course only some of the new solutions. The draft has more than 100 pages and amends the provisions of numerous acts. The details will be discussed further in our upcoming alerts.
Tax solutions adopted in the draft bill on counteracting COVID-19 outbreak
- Ability to deduct 2020 loss from 2019 income (revenue)
- Ability to deduct donations made in 2020 for counteracting COVID-19.
- Deferral of due date for payment of advances for tax on revenue from broadly defined work collected in March and April until 1 June 2020.
- Deferral of due date for payment of tax on revenue from buildings for March-May 2020 until 20 July 2020
- Exemption from requirement to apply so-called bad debt regulations
- Allowing taxpayers who in 2020 pay advances in simplified form to forfeit this form with regard to advances for March – May 2020.
- Exemption from taxation of support, guarantees and financing granted in connection with COVID-19 outbreak
- Waiving extension fees on spreading into installments or deferring the due date for taxes and tax arrears (and similarly with ZUS proceedings)
- Ability to suspend tax and audit proceedings by decree issued by minister of finance
- Deferral of due date for the filing of new SAF_VAT until 1 July 2020 (but voluntarily it may still be filed as of April 2020)
- Introduction of a one-off stand down benefit for sole traders and those working on the basis of civil law contracts
- Allowing communes to grant property tax exemptions: land, buildings and constructions associated with business operations, to specific groups of businesses whose financial liquidity has worsened in consequence of COVID-19
- Allowing communes to extend property tax installment payments
- Exemption of loans taken out for business purposes from tax on civil law transactions
- Suspension of the Retail Sale Act until December 2020
- Extension of the deadline for taking the oral portion of the advisor exam
- Extension by 3 months of the deadline for the issue of tax interpretations