The year 2024 is the first year for which the Polish (domestic) minimum tax will have to be settled. Therefore, since its settlement is approaching, it is worth explaining the methodology of calculating the tax (Article 24ca of the CIT Act).
First of all, it should be checked whether the taxpayer is not on the list of exclusions from this tax.
In practice, this applies to the following entities:
- taxpayers commencing their business activity (up to 3 years from its commencement);
- financial companies;
- taxpayers who in a given tax year generated 30% lower income compared to the previous year;
- taxpayers with a “simple” structure (ownership of natural persons, lack of rights in subsidiaries);
- taxpayers active in the mineral extraction sector or in international transport using sea, aircraft or carrying out medical activities (the requirement of the majority of the origin of income from these activities);
- municipal companies, taxpayers who are mining companies receiving state aid, taxpayers providing services related to health care;
- entities placed in bankruptcy, liquidation or subject to restructuring proceedings;
- taxpayers who are part of a “group” whose total profitability exceeds 2%. This “group” must include at least 2 companies, one of which holds (directly or indirectly) at least 75% of the shares of the other companies throughout the tax year. Important: the tax year of companies must cover the same period;
- taxpayers who are a party to the cooperation agreement;
- taxpayers who are so-called small taxpayers (taxpayers whose annual income do not exceed EUR 2 million);
- taxpayers who achieved profitability 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%.
If the taxpayer is not subject to any of these exemptions, then it must be assessed whether the taxpayer has met the conditions for being covered by this tax – this tax is paid by entities that:
- incurred a loss (from a source of income other than capital), or
- achieved profitability (i.e. the share of income from a source of income other than capital gains in income other than capital gains) of no more than 2%.
Importantly, for the purposes of calculating the loss/profitability, the result on specific transactions should be excluded:
- costs resulting from the acquisition, production or improvement of fixed assets, including through depreciation write-offs, included in the tax year as tax deductible costs;
- income and tax costs directly or indirectly related to these income in the scope of the transaction, if the price or method of determining the price of the subject of the transaction results from the provisions of laws or normative acts issued on their basis (here we are talking about specific situations such as the sale of electricity);
- payments specified in the lease agreement (including finance lease) included in the tax year as tax costs;
- tax income and costs directly related to these income from the sale of receivables to an entity which is a financial institution whose core business is the provision of financial services consisting in the purchase of receivables from a creditor arising as a result of concluding a contract for the sale of goods or services between the creditor and the debtor (e.g. factoring);
- increase in tax costs on the purchase of electricity, heat or pipeline gas (year on year);
- tax income and costs corresponding to the amount of excise duty, retail sales tax, gaming tax, fuel surcharge and emission fee;
- the amount of excise tax included in the price of excise goods bought and sold by the taxpayer trading in these goods, as appropriately included in tax income or costs;
- 20% of the value of costs of salaries and social security contributions as well as contributions to the ECP (employee capital plans, pol. PPK).
If, after such calculations, it turns out that the taxpayer is not subject to the minimum tax regulations, it means that there are no further obligations.
However, if the taxpayer falls within the scope of these obligations, then the tax base must be determined.
The tax base is the sum of the following:
- 1.5% of the taxpayer’s income (from a source of income other than capital gains) and
- the amount of debt financing costs incurred for the benefit of entities related to the taxpayer, exceeding the value of 30% of the so-called “tax EBITDA” (as in the case of thin capitalization), and
- the amount of costs of intangible services/rights (advisory services, licenses, etc.) incurred for the benefit of entities related to the taxpayer, exceeding PLN 3 million plus 5% of the so-called “tax EBITDA”.
In 2024, it will be possible to choose a different tax base – 3% of the value of income (from a source of income other than capital).
The value of the tax base may be reduced, among others, by selected deductions and tax reliefs, income exempt from SEZs/PIZs, income from the above-mentioned sale of receivables.
The minimum tax rate is 10%.
If, in addition to the minimum tax, the taxpayer is required to pay the “standard” CIT, then the minimum tax is reduced by the “standard” CIT. The amount of the minimum tax paid for a given tax year can be deducted from the “standard” CIT in the next 3 years.
