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Planned tax reforms for 2007
The Polish government has presented a package of planned tax reforms to be introduced as of 2007. The Ministry of Finance has already announced draft of a bill containing amendments to laws affecting all of Poland's major taxes - including the corporate income tax (CIT), personal income tax (PIT), VAT, tax on inheritance and donations (TID), and social security contributions. The draft is to be submitted to the parliament, soon.
A number of the planned changes is intended to facilitate the settlements of Polish taxes i.a. standardization of the moment of recognition of tax point for the CIT and VAT purposes; introduction of uniform deadlines for direct VAT refunds; elimination of monthly tax returns in settlements of CIT and PIT; introduction of quarterly (instead of monthly) VAT settlements.
Some of the VAT amendments are also intended to eliminate existing discrepancies between the Polish VAT Law and the VIth Directive. In this area the Ministry is planning abolition of 30% penalty applied in the case of VAT understatement; introduction of accessibility of direct refund of VAT even in the absence of taxable activities; full deductibility of input VAT related to acquisition of company cars - accompanied by taxation of letting for using such cars for non-business purposes.
The most important changes to CIT Law assume elimination of step-up in fiscal value of assets when contributed in-kind within the enterprise or its organized and limitation of possibilities of the accelerated depreciation on used buildings.
In the area of the personal income taxation the government is proposing reductions of some mandatory social security contributions; increases in the income thresholds for the two highest PIT rates; tightening of the optional 19 percent flat tax regime for business income; elimination of exemption from taxation of sale of residential property available to natural persons if the sale is performed after 5 years after the acquisition together with replacement of 10% flat rate on revenues from such sale by 19% standard tax rate calculated on the income from sale.
Last, but not least, government plans also introduction of general anti-avoidance clause aimed at challenging transactions with the main reason being tax reason.
The new law, after it is accepted by the parliament, is intended to come into force as of 1 January 2007.