The Government presented yesterday a protective package for entrepreneurs affected by the SARS-Cov-2 virus epidemic. Although we still do not know the draft legal regulations that are to implement this package, the Ministry of Finance has presented the main assumptions of tax changes included in this package. Details of these solutions are to be published later this week.
As announced by the Ministry, the Anti-Crisis Shield will introduce, among others the following solutions:
- The option of settling the tax loss from 2020 with the tax income from 2019 in PIT and CIT (carry back) (with a limit of up to PLN 5 million);
- Extension of the deadline to pay the minimum tax on commercial real estate for the months March-May 2020 to 20 July 2020;
- Exclusion of the application of regulations in income taxes regarding the so-called bad debts for debtors who should take account of unpaid liabilities when calculating income tax advances;
- Introduction of the option to opt out of simplified tax advances in 2020 and calculation of monthly tax advances on current income – but only for small taxpayers
- extension of the deadline for filing CIT-8 for NGOs;
- Introducing a deduction in PIT and CIT for donations (in cash or in kind) made for purposes related to preventing and combating coronavirus infection;
- Extension of the deadline for payers to submit advance payments on remuneration tax collected in March and April;
- Temporary resignation from the extension fee due to payment in installments or postponing the date of payment of taxes and tax arrears – but only those being the income of the State Treasury
- Postponing the obligation to submit new JPK_V7M for large entrepreneurs until July 1, 2020
- Postponing of applications to the Central Register of Real Beneficiaries (CRBR) until July 1, 2020.
Extending the deadline for entrepreneurs to pay the advance payment on PIT
Certainly, the anticipated solution due to the positive impact on the cash flow of enterprises is the systemic extension to June 1, 2020 of the deadline for employers to submit advance payments for payroll taxes collected in March and April 2020. Extending this period may mitigate the negative effects of the current difficult situation of entrepreneurs and contribute to improving their cash flow. It should be emphasized that, it is to be of a universal nature and be available to all without the need to take additional actions in this regard.
Postponing the entry into force of new obligations: JPK_V7M and CRBR
Similarly, the postponement of the entry into force of new reporting obligations imposed on entrepreneurs should be assessed positively, i.e. the postponement of the obligation to submit a new JPK_V7M until 1 July 2020, or the postponement of applications to the Central Register of Real Beneficiaries also until 1 July 2020.
Carry back of tax loss for 2020
The anti-crisis shield will also introduce another instrument aimed at improving the financial situation of entrepreneurs in connection with the current economic situation. Taxpayers will be able to deduct the loss incurred in 2020 from the income obtained in 2019 and thus adjust the tax for 2019. The resulting tax overpayment will be refundable. To this end, it will be necessary to submit a correction of 2019 tax return. The condition for exercising this entitlement will be a drop in 2020 tax revenues by at least 50% compared to 2019. You will then be able to deduct the loss from 2019 income up to the amount of PLN 5 million. However, it should be remembered that the real tax refund after the correction will not take place until 2021. Then, taxpayers will know the amount of the loss incurred in 2020.
Opportunity to stop paying CIT advances
The solution that can improve the business cashflow much faster is the option of returning during the year from simplified advances (paid on the basis of tax for 2018) to advances paid on the basis of current income. According to the first proposals, this solution is to be addressed only to small entrepreneurs.
Postponement of deadlines for payment of taxes – only at the entrepreneur’s request
Tax deadlines, both for tax and social security payments or for tax reporting may be postponed but only as the result of a written justified request made by the taxpayer. Therefore, entrepreneurial activity will be required here. The proposed solutions provide that taxpayers will not be charged a prolongation fee (currently 4% per annum) for the deferral period. Similarly – when spreading payments into installments. However, it should be remembered that the lack of the extension fee provided for in the Act is to apply only to taxes that are State Treasury income (e.g. CIT, PIT, VAT and excise tax). But it does not apply to local taxes such as property tax or transport tax. Both in the case of postponement of the deadline and payment in installments, as well as cancellation of the tax, the key is to justify the application in which arguments that constitute the taxpayer’s important interest should be presented. In addition, it will be important to demonstrate that the granted relief will fall within the de minimis public aid limit.
In order to effectively use the benefits of the anti-crisis shield, entrepreneurs should subject its solutions to a detailed analysis. Some solutions may require taxpayers to prepare appropriate applications along with justifications, and collect documents to confirm them.
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