Adverse tax solutions for companies have begun to emerge in Poland. As experts on the subject point out, the market is primarily expecting a change in the calculation of the health premium rate this year. There is also criticism of the idea of introducing the National e-Invoice System (KSeF) from July this year. However, the finance minister recently announced a postponement of this obligation. Experts also draw attention to the repressive elements of the state, the necessary reform of the system of prescription for tax liabilities, and issues related to withholding tax. They also point to the lack of stability in the regulations and the still high level of aggression from the tax authorities in case of inspections.
The problematic health premium
Public discussions suggest that 2023 has brought another set of adverse tax solutions for companies. Suggestions concerning modification of the rules abound. As highlighted by Dr Anna Wojciechowska, a partner at SOLVEO ADVISORY and an expert from the Business Centre Club (BCC), the most anticipated change by the market is the method of calculating the rate of the health premium. In the opinion of the former Head of the Tax Inspection Department of the Tax Control Office in Gdańsk, it is hard to find a logical justification for calculating such a premium in proportion to the income generated.
“The basis of calculating Personal Income Tax (PIT) and health premiums should be standardised in such a way that this tax is actually calculated on the same amount that serves as the basis for calculating the income tax payable. A system in which the bases and forms of settling PIT and health premiums are similar, but not identical, is the source of many unnecessary complications. Also, we need to simplify and standardise the rules for reducing the taxable base by the health premium paid. Currently, depending on the chosen form of taxation, the rights to deduct it from the base vary,” comments Łukasz Kozłowski, Chief Economist of the Federation of Polish Entrepreneurs.
The Association of Entrepreneurs and Employers has prepared a package of solutions which may turn out to be a life buoy for companies, but also may throw a spanner in their development. As Jacek Podgórski, Director of the Labor Forum at ZPP, points out, the proposals include the abolition of time limits for using the Small ZUS program, halving the disability premium paid by micro-entrepreneurs for themselves and their employees (to 3.25%), and abolishing the obligation to pay contributions to the Labor Fund and the Solidarity Fund for micro-entrepreneurs. Moreover, the Association suggests that the health premium for self-employed individuals and micro-entrepreneurs in the case of a tax scale should be lowered from 9% to 6%. Also proposed is an increase in the limit for reducing the tax base in a lump sum recorded to 75% and an increase in the amount that can be deducted from the tax base.
“Without a doubt, business owners are also expecting the so-called entrepreneurs’ vacations promised during the last election campaign. According to assumptions, entrepreneurs will be able to not pay contributions to mandatory social security once a year. This is important especially that social security contributions significantly increased from 1 January this year again,” adds Dr. Wojciechowska.
A long list of problems
According to Professor Witold Modzelewski, former deputy finance minister, the catastrophic mistake made in 2023 was the decision to introduce the universal obligation to issue so-called structured invoices from July 2024. This is an equally absurd and damaging deadline, as previously set – i.e. April 1 this year. The expert stresses that such complex and time-consuming operations are not introduced in the middle of the year when some employees are on vacation. This threatens to completely disrupt the settlements conducted by economic entities. However, in the second half of January this year, the finance minister announced that the KSeF launch would be postponed.
“This year we should primarily abandon the repressive model of the state in order to encourage entrepreneurs to invest in Poland, not to intimidate them with the unpredictability of officials’ actions. Temporary arrests in economic cases, where the body of evidence is primarily based on documents, should be significantly limited. The suspected person’s deprivation of liberty does not fundamentally affect the quality and scope of books and tax documentation. Since documents can be obtained by sending a summons, it is a disproportionate penal reaction to imprison someone,” warns Dr Jacek Matarewicz, a BCC expert.
The lack of evidence cannot justify the use of extraction detention against entrepreneurs, as Dr Matarewicz stresses. He also believes that systematic control should be established, for example by the Supreme Audit Office, and as a result – limit the use of criminal tax proceedings by tax authorities as a basic way to extend the prescription period for tax liabilities.
Przemysław Pruszyński, Director of the Tax Department of the Confederation Lewiatan, considers changes in various areas as crucial. First and foremost, it is necessary to increase the security of carrying out economic activities by ordering the legislative process, improving the quality, stability, and transparency of law enforcement, and extending the vacatio legis of tax laws. A reform of the system of prescription for tax liabilities is needed, preventing the tax administration from indefinitely suspending or interrupting the running of the tax obligation. In the expert’s opinion, the provisions on withholding tax (WHT) should also be corrected, and the regulations on reporting tax schemes should be liberalised. Moreover, efforts should be made to abolish the minimum Corporate Income Tax (CIT), which came into effect from 2024, and to restore the ability to depreciate residential properties.
“From my perspective, the biggest challenge last year was the issue of withholding tax. Although they did not result from new regulations introduced in 2023 in this respect, but from the practice of their application by tax authorities. The process of establishing withholding tax obligations is costly and high-risk. This happens because of the lack of clear and transparent rules considering the specifics of the operation of capital groups and the roles of individual entities. It is necessary to urgently prepare explanations and principles for settling the withholding tax by the Minister of Finance. They should be practical and in accordance with applicable national regulations and directives, and prepared after consultations with tax advisors,” stresses Dariusz Gałązka, head of the tax advisory team at Grant Thornton.
Meanwhile, Jerzy Martini, tax advisor at MartiniTAX, states that from the taxpayers’ perspective, the lack of stability of the regulations is a much bigger problem than the regulations themselves. Coupled with this is ahigh level of aggression on the part of tax authorities in the case of inspections. According to the expert, the current service of taxpayers generally stands at a high level. However, the situation with tax inspections and proceedings is different. Unfortunately, they are often conducted in a biased manner and only serve to maximise budget revenues.
“2024 should be a period of reflection, analysis of all the regulations that were introduced in the previous years. Unfortunately, many chaotic and unnecessary changes have been implemented that make it difficult to make business decisions and simply run a business – regardless of size. Any new changes should be adopted with respect for the rights and interests of entrepreneurs. More emphasis should also be put on the debate on the needs and expectations of business,” concludes Przemysław Pruszyński.
