The Sejm has passed a draft amendment to the CIT Act, which modifies the provisions introduced by the Polish Deal, but also made changes to VAT.

The new legislation suspends the minimum tax provisions for two years and extends the anti-inflation shield until the end of 2022. VAT rates will remain at 8 percent and 23 percent, and are to remain in effect as long as defense spending exceeds 3 percent of GDP.

CIT changes

Among the most important changes are the modification and deferral of the CIT minimum tax until 2024. At the same time, the break-even point at which the tax is applied will change from 1 to 2 percent and the repeal of provisions on so-called hidden dividends. The law provides for major changes to the provisions on documentation requirements for so-called indirect haven transactions, namely their abolition, and raises the thresholds for documenting transactions with entities from tax havens.

Extended anti-inflation shield until the end of 2022.

Among the provisions included in the law is an extension of the anti-inflation shield from October 31, 2022 to December 31, 2022. This means extending the lower VAT rates on food 5%, electricity and heat 5%, natural gas 0%, certain motor fuels 8% and fertilizers and other agricultural inputs 0%. Maintaining the reduced VAT rates will result in a revenue shortfall of 4.8 million zlotys for the state budget.

According to the government, such solutions are expected to curb price increases at fuel stations and the cost of buying light heating oil, and therefore also help fight inflation.

Author: Monika Bień