The new tax scale and higher tax-free amount are highlighted as positive changes over the last year by notable economists, tax advisors, and lawyers. Experts also point to the impact of maintaining the zero VAT rate on food products but criticize the obligation to issue so-called e-invoices. The introduction of “family foundations” into the market is also noted as a beneficial change. However, the new regulations for taxing income from renting properties are criticized.
Experts, evaluating the tax changes that took place in 2023, note that despite many fluctuations, a number of positive solutions also emerged. From feedback gathered among economists and business organization representatives, it becomes apparent that unfavorable changes were also predominant and unfortunately quite numerous. Even with the positive ones, there is some difficulty, as observed by Przemysław Pruszyński, an expert of the Lewiatan Confederation. In most cases, the “novelty” lies in correcting the solutions introduced by the Polish Deal in 2022.
– The fact that the legislator corrected flawed regulations and removed ill-considered solutions should be considered as changes in favor of taxpayers. Regulations on the minimum CIT tax have been postponed and modified, and regulations on so-called hidden dividends have been repealed or clarified – lists Pruszyński. – However, these were changes made to mitigate earlier missteps, as these solutions should not have been introduced at all. If the voice of entrepreneurs had not been ignored during the public consultation stage, many flawed regulations would not have been introduced in 2022 and would not require corrections in 2023 – adds the expert.
Among experts, the prevailing opinion is that the introduction of the new tax scale and higher tax-free amount in 2023 was undoubtedly a beneficial change. Of course, this change took place on July 1, 2022, but there were some doubts about it shortly after the law was implemented. – These changes were awaited by many people. It is also beneficial to assess more flexible rules for submitting declarations by taxpayers by individuals (editor’s note: PIT-2), resulting in a reduction in the monthly tax prepayments – says Dr. Anna Wojciechowska, partner at SOLVEO ADVISORY and former Chief of the Tax Inspection Department in Gdańsk.
– It would also be beneficial to assess the changes in the inheritance and donation tax in 2023, which affected the finances of many people planning to transfer or receive assets in the form of a donation. These changes include an increase in tax-free amounts and a modification of tax scales – says Dr. Jacek Matarewicz, partner at Ożóg Tomczykowski Law Firm and an expert at BCC. On the other hand, many negative comments on the changes introduced in 2023 are heard from taxpayers who rent residential premises or buildings as part of their business activity.
Criticism regarding tax changes is not lacking. According to Prof. Witold Modzelewski, tax advisor and former Deputy Minister of Finance, in the previous year a decision was made to discard the entire Polish settlement system, which involves documenting economic settlements. – This concerns the enactment on June 16, 2023, with effect from July 1, 2024, of the general obligation to issue e-invoices, or so-called structured invoices and the use of KSeF – says Prof. Modzelewski.
Some experts see as a plus that certain changes – despite being announced – were not implemented. Starting from 2024, a new, lower, limit for cash payments in transactions between entrepreneurs was to apply. It was supposed to be reduced from 15,000 PLN to 8,000 PLN.
In 2023, entrepreneurs also complained about the increased burden of audits conducted by tax authorities. – Entrepreneurs who decided to dispute with tax authorities were intimidated. As a result, criminal proceedings were simultaneously initiated and conducted in connection with alleged tax frauds, which were supposed to be identified irregularities. Often the owners of companies were punished with temporary arrests. The scale of applying such measures was worryingly on the rise, as highlighted, among others, by the Helsinki Human Rights Foundation. In addition, entrepreneurs were victims of unfavorable rulings by tax authorities in matters related to controversial legal interpretations. This subjected them to additional legal administration costs – recalls Dr. Jacek Matarewicz.
However, according to Jerzy Martini, managing partner at Martini Tax, the most important positive change in 2023, affecting taxes, was the introduction of family foundations. – This is a solution, thanks to which Polish entrepreneurs can optimally implement succession or carry out restructuring – says Martini. – It is also a solution that, as a rule, increases the security of conducting business activities – adds the expert. As for the negative changes, he points out examples like the ban on amortization of apartments. However, such regulations affected a relatively narrow group of taxpayers.
According to other experts, the most unfavorable and controversial tax change in 2023 was depriving taxpayers renting apartments on the basis of so-called private rentals (without business registration) of the possibility to tax their income on general terms, according to a tax scale, and obliging them to settle their rental income as a flat rate from recorded income. – In practice, a part of taxpayers was deprived of the possibility to take into account the costs incurred in the tax calculation, which made renting apartments without business activity less profitable – says Przemysław Pruszyński from the Lewiatan Confederation.
Another painful change for entrepreneurs was the prohibition of including health insurance contributions in the costs of obtaining income. Its removal would definitely be a significant achievement for taxpayers. From their perspective, a bigger problem than the regulations themselves is their lack of stability, as well as the often high level of aggression on the part of the tax authorities in case of audits. While the “current” service of taxpayers generally stands at a high level, unfortunately, audits and tax proceedings are often conducted in a biased manner, serving only to maximize budget revenues.
Prof. Witold Modzelewski, on the other hand, highlights the maintenance of the zero VAT rate on most food products. – Of course, this did not stop the rising prices, because no tax rate reduction will stop increases. Only a part of the rising production and import costs of these products was shifted to the budget. Costs rose, prices rose too, but these latter no longer included the budget’s share in the form of a 5% VAT rate – summarizes the former Deputy Minister of Finance.
