You run a company that pays CIT, or are you planning to set up a company?  From 2017 some entrepreneurs will be able to settle according to a new, reduced  rate of CIT of 15 per cent.

Who is 15% CIT for?

The reduced rate is for entrepreneurs whose value of revenues from sales (including the amount of output tax payable on goods and services) in the previous tax year did not exceed EUR 1,2 million.  The amounts expressed in euro shall be converted at the average euro exchange rate published by the Polish National Bank on the first working day of October of the previous tax year, rounded up to PLN 1,000.

In addition, start-up firms will make use of lower rate of CIT(during the first tax year).

Who will not be covered by the lower rate?

If you intend to transform e.g. a sole tradership into a CIT company, note that the new rules restrict the use of preferences for business start-ups.  This concerns, inter alia, the situation where the new company will be established by restructuring (e.g. the division of existing company) or transformation of a company of a natural person or company which is not a legal person into another type of activity. Then what?  Such companies will not be able to apply a lower CIT neither at the start of operations (i.e. when they were transformed) nor in the subsequent tax year (even if they have the status of "small taxable persons"). They will be able to apply the preferential rate of CIT from the third tax year (provided that they meet the criteria of "small taxable persons")

Capital groups will not be able to make use of the reduced rate .

Transitional provisions

The new provisions regulate the issue of companies to be created through restructuring or e.g. when a natural person becomes legal person in the period between the publication and the entry into force (1 January 2017). Such companies will not be able to benefit from lower CIT rate also in the tax year starting after 31 December (i.e. during the second tax year). The application of the lower rate will be possible (subject to a ‘small taxable person') only from the third tax year.

What to do if you meet the conditions for applying a reduced rate, but in your company the tax year does not coincide with the calendar year?  In accordance with the law, if the taxpayer's tax year is different than a calendar year and it starts before 1 January 2017 and ends after 31 December 2016, the taxpayers until the end of that tax year shall apply the existing rate.

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