Anti-crisis shield: protection package for businesses (draft bill)
Tax Alert – special issue | 23 March 2020
In the past few days, a draft bill providing further details of the governmental business protection package (the “Anti-crisis Shield”) related to the crisis caused by SARS-CoV-2 pandemic has been issued for consultations.
- Solutions regarding tax payment deadlines
- Subsidies for businesses
- Tax settlement
- Reporting obligations
As indicated before, the presented package involves 5 key pillars with a total value of approximately PLN 212bn. Entrepreneurs have expected presentation of detailed solutions for the first two pillars, which were to include direct job support and direct financial aid for enterprises, as well as solutions simplifying the performance of certain reporting obligations (tax return forms, tax withholding etc.).
At present, the proposed solutions have little reference to large enterprises, and the simplification of reporting obligations is left to the discretion of competent ministers (statutory delegation to issue appropriate regulations).
Please note that most of the proposed solutions and their financial effects qualify as de minimis aid, as regulated by Commission Regulation (EU) No 1407/2013 of 18 December 2013, which sets the ceiling of EUR 200 000 as the gross amount of de minimis aid that a single undertaking (a separate business or a related party operating in Poland) may receive over any period of three years (the gross amount of EUR 100 000 for undertakings performing road freight transport for hire or reward). To calculate the available aid limit, one has to consider the support granted in this form in the current financial year and during two preceding years.
The indicated solutions (in particular the aid amount) and the limited opportunity to use the aid instruments by large businesses employing tens of thousands of people do not meet the expectations of many domestic and foreign entrepreneurs. Therefore, let us remember that the European Commission has issued regulations that allow granting public aid to entrepreneurs who need to absorb losses caused by extraordinary circumstances or to maintain liquidity.
We will keep you updated on solutions related to the use of EU funds not consumed in 2019 that can be utilised to prevent the effects of the pandemic under the Operational Programmes and on how to spend savings originating from domestic funds (if any) as a result of the permitted increase of the share of EU funds in the total subsidy amount.
Below please find a brief presentation of selected key elements of the solutions proposed in the draft bill:
Solutions regarding tax payment deadlines
- Postponing the deadline to pay the PIT withholding from March and April payroll. According to the plan, the payment of the withholding can be postponed until 1 June 2020.
- The prolongation fee related to a tax installment payment plan or postponing of the payment of taxes and tax arrears that constitute State Budget income shall be renounced if an entity motions for such a solution during the state of epidemic and 30 days after its cancellation, as well as in relation to premium due for the period beginning from 1 January 2020 (Articles 15z and 15y).
- Municipalities can exempt entrepreneurs from real property tax in relation to the adverse effects of coronavirus; mayors can postpone tax installment payment deadlines for the period from April to June 2020 (not later, though, that until the end of September).
Subsidies for businesses
- Businesses can apply for subsidies from the Guaranteed Employee Benefits Fund to the remuneration and social insurance premiums of employees (people working on employment contracts, outwork contracts, contracts of mandate or other types of a service contract) affected by economic stoppage and worktime reduction. The subsidies shall be paid for three months of the contract date, and available until the funds are used up.
- During the economic stoppage employee remuneration may be reduced by up to 50 percent, but not below the minimum wage. The subsidy can reach up to 50 percent of the minimum wage.
- Should turnover drop (a decrease in the volume or value sales of goods and services on terms and in amounts determined in the bill), entrepreneurs can reduce worktime by 20 percent (but not lower than to 0.5 FTE maintaining the minimum wage) and have half of the remuneration subsidised during the worktime reduction. The subsidy amount shall not be higher, though, than 40 percent of the average monthly wage recorded in the quarter preceding that in which a subsidy motion is filed.
- The mayor of the county where a business is registered may subsidise a portion of payroll and social insurance expenses of micro-enterprises and SME that experienced a turnover drop caused by COVID-19. The subsidy can be granted for six months (to micro-enterprises and SME) or for three months (to medium enterprises) and its amount shall be calculated as the product of:
- the number of employees and 50 percent of the minimum wage should the turnover drop by at least 30 percent;
- the number of employees and 70 percent of the minimum wage should the turnover drop by at least 50 percent;
- the number of employees and 90 percent of the minimum wage should the turnover drop by at least 80 percent;
but it cannot be higher than the actually paid amounts.
As indicated before, the above instruments qualify as de minimis aid.
- Tax losses can be retrospectively included in CIT and PIT. Taxpayers will be able to deduct their tax loss for 2020 in the amount of up to PLN 5 million from income generated in 2019. To this end, an adjustment of 2018 tax returns form will be necessary. The option shall be available for individuals/companies whose revenue generated in 2020 drops by at least 50 percent year-on-year.
- The deadline to pay the minimum real property tax on commercial properties for the period from March to May 2020 shall be postponed until 20 July 2020. As above, the condition to qualify for the postponement is a 50 percent drop in revenue year-on-year.
- Income tax regulations regarding bad debts applicable to debtors who should include their unpaid liabilities in the calculation of income tax withholding shall be waived. The right to use the waiver applies only to debtors whose revenue generated in reporting (monthly or quarterly) periods drops by at least 50 percent year-on-year, and (possibly) to those who did not generate any revenue in 2019, but have been adversely affected by the pandemic in 2020.
- An option to withdraw from the simplified tax withholding calculation in 2020 and switch to the calculation of monthly withholding amounts based on the current income shall be introduced. Only “small taxpayers”, though, shall qualify to use the practical expedient in the period from March to December 2020.
- PIT and CIT deduction shall be introduced for donations (in cash or in kind) for COVID-19 prevention and fighting, available for certain classes of entities.
- Civil law tax exemption applicable to loans granted to support debtors suffering a deterioration in financial standing due to the pandemic shall be introduced.
- Introduction of the new VAT rate matrix shall be postponed from 1 April to 1 July 2020.
- The obligation to file the new JPK_VAT (JPK V7M, aka VDEK) with tax returns regarding large enterprises shall be postponed to 1 July 2020.
- The deadline to file information to the Central Register of Beneficial Owners (CRBR) shall be postponed to 13 July 2020.
- Transfer pricing: the deadline to file transfer pricing information (TP-R) referred to in Article 11t.1 of the CIT Act has been postponed to 30 September 2020 for entities whose fiscal year commenced after 31 December 2018 and ended before 31 December 2019. IMPORTANT: The deadline has not been postponed for entities whose fiscal year commenced prior to 31 December 2018 and ended prior to 31 December 2019 (either with regard to the CIT-TP filing, or to the preparation of tax documentation).
- Reporting deadlines regarding tax schemes other than cross-border ones shall be suspended in the period from 31 March to 30 June 2020.
- The deadline to issue individual tax rulings shall be extended by three or even by six months.
- The deadline to file information on payment to an account not included in the “white list” has been extended to 14 days.