Facilitations in tax remittance without an extension fee
Entrepreneurs who encounter difficulty in settling their tax bills during the Covid-19 epidemic may seek recourse to art. 67a of the Tax Ordinance and apply for:
- A tax deferment;
- Permission to remit tax due in instalments;
- Tax forgiveness (with respect to the tax proper and/or any accrued interest).
In normal circumstances, a positive decision issued by the tax authority in reply to such a motion under art. 67a of the Tax Ordinance incurs an extension fee. The Covid-19 Act waives this fee in the case of applications lodged by taxpayers:
- While the country remains on an epidemic risk footing
- or in a state of epidemic officially announced in light of the Covid-19 crisis, as well as
- 30 days following repeal of the epidemic risk or epidemic state.
The Covid-19 Act also empowers the Minister of Finance to promulgate an ordinance waiving collection of interest on overdue tax remittances.
Tax benefits for frontline staff
Individuals paying personal income tax (including entrepreneurs other than farmers who have opted for the flat-rate income tax) as well as entities paying corporate income tax who, over the period of 1 January through 30 September 2020, offer bequests (cash donations as well as donations in kind) supporting the effort against the Covid-19 outbreak may deduct the value of such gifts from their taxable income. The Covid-19 Act is very specific as to what, exactly, donations qualify – in order to claim such a deduction the taxpayer must offer support to:
- Medical facilities (first and foremost hospitals specified in the National Health Fund lists published in the Public Information Bulletin);
- The Material Reserves Agency, which maintains stockpiles of various strategic supplies on behalf of the Polish state; and
- The Central Sanitary and Anti-Epidemic Reserves Base, charged with maintaining emergency stockpiles of medicines, vaccines and similar supplies.
Also, the Covid-19 Act variegates the tax benefit according to when, exactly, the bequest is made:
- For a donation made by 30 April 2020, the taxpayer may deduct 200% of the donation value;
- For a donation made in May 2020, the taxpayer may deduct 150% of the donation value;
- For a donation made between 1 June 2020 and 30 September 2020, the taxpayer may deduct 100% of the donation value.
No tax deductions may be claimed under the Covid-19 Act for donations already accounted for in the benefactor’s usual taxes.
In order to qualify for the tax deduction, the taxpayer must document:
- A cash donation – with proof of transfer to / payment to the bank account of the recipient institution;
- A donation in kind – with paperwork specifying the value of the bequest and confirming that the institution concerned has received and accepted the gift.
Entrepreneurs who donate medical supplies and medicinal products (e.g. disinfecting agents, face masks, or hazmat suits) which they themselves produced or purchased to one of the institutions indicated above will benefit from a 0% VAT rate (over the period of 1 February through 31 August 2020).
Please note that the tax deduction as well as the 0% VAT rate applies retroactively to bequests offered for counteracting the coronavirus outbreak even before the Covid-19 Act came into force.
Apart from the above, taxpayers may:
- Effectuate a one-time depreciation write-off to the initial value of fixed assets purchased (and entered on their books in 2020) for the purpose of producing, among other items, face masks, ventilators, disinfecting agents, medical-grade protective garments, shoe covers, gloves, glasses and goggles, and hand sanitiser);
- Deduct from the basis for calculation of advance payments towards tax certain qualified costs associated with development of products necessary for counteracting the Covid-19 epidemic;
- Apply a 5% for calculation of advance payments towards tax on income from intellectual property rights (IP Box), provided that such rights are being applied in the fight against Covid-19.
Other facilitations re income tax
Retroactive accounting for losses
Taxpayers subject to personal income tax and corporate income tax (whether or not their tax year coincides with the calendar year):
- who suffered a loss due to the Covid-19 outbreak in the current tax year
- whose revenues for the current tax year (i.e. for 2020) dropped by at least 50% vis a vis the previous year (2019)
may effectuate a one-time deduction from their 2019 income of their loss for 2020. The 2020 loss qualifying for this one-time deduction is capped at PLN 5 mln, with 2020 losses in excess of this value subject to deduction over consecutive years in accordance with the general rules.
Exclusion of the “bad debts” provision for debtors
The provisions for bad debts in the context of personal income tax and corporate income tax shall not apply advance payments towards taxes by debtors, who ought to increase their taxable income by any liabilities they have not settled. Debtors may, however, avail themselves of this solution (with respect to consecutive tax settlement periods in 2020) if:
- in the given month, they suffered adverse economic consequences because of the Covid-19 outbreak,
- their revenues from non-farming business operations have dropped by at least 50% vis a vis the analogous month in the preceding tax year (subject to certain exceptions).
Apart from the above:
- “Small” taxpayers may elect not to remit simplified tax advances in 2020; taxpayers who avail themselves of this solution for the period of March-December 2020 shall calculate advances towards tax on their monthly income in accordance with the general rules and declare their discontinuation of the simplified tax advance formula in their annual return for 2020;
- Standstill benefits collected by taxpayers in accordance with the Covid-19 Act shall be exempt from income tax.