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September 7, 2022

Polish Government submits amended proposal of Corporate Income Tax changes to Parliament

  • The Polish Government submitted draft legislation to Parliament on 25 August 2022, proposing changes to the Corporate Income Tax (CIT) law.

  • The main focus is to modify areas which were covered by the tax reform implemented as of 1 January 2022.

  • This Alert outlines the proposed changes.

Executive summary

On 25 August 2022, the Polish Government submitted to Parliament draft legislation introducing changes to the Polish CIT law. Although the submitted proposal provides for several amendments compared to the initial version published by the Government on 28 June 2022,1 the main focus of the proposed changes is still to modify areas which were covered by the reform implemented as of 1 January 2022.

The potential impact of the proposed changes, including the areas where the 1 January 2022 tax reform has not yet taken effect, should be assessed by businesses in order to prepare for change and undertake the necessary actions.

Detailed discussion

The current version of the draft legislation provides, among others, the following changes:

  • Tax deductibility limitations regarding so called “hidden dividends” that were supposed to be in force as of 1 January 2023 will not be implemented.
  • The effective date of the new “minimum tax” is postponed to 1 January 2024 (or until the end of a taxpayer’s tax year that started before 1 January 2024 but ends after 31 December 2023) and there are changes in its specific provisions, including:
    • The minimum profitability ratio providing for an escape clause from the minimum tax is increased from 1% to 2%.
    • Several new types of payments are excluded for the purpose of the profitability ratio calculation (e.g., fixed assets lease payments, revenues and costs related to sale of receivables under factoring arrangements, revenues and costs corresponding to excise duty, year-to-year increase in costs of electric energy purchased for business purposes, 20% of certain payroll costs, as well as certain industry specific taxes and levies such as retail sales tax).
    • An option is now proposed to choose between two alternative formulas to calculate the minimum tax basis (in both cases the tax rate is 10%), i.e., 3% of revenues (other than capital gains) or 1.5% of revenues (other than capital gains) increased by certain types of payments (several changes compared to the catalogue of payments and to the methodology of their calculation implemented under the 1 January 2022 reform).
    • Exemptions are allowed for new types of entities, e.g., small taxpayers (less than €2m gross revenue in a preceding year), entities that generate the majority of their revenue from regulated medical services or taxpayers whose profitability in at least one of previous three tax years exceeded 2%.
  • Changes to the “shifted profits tax” which was introduced as of 1 January 2022 with the first due date on 31 March 2023 (for taxpayers with a calendar tax year). The changes predominantly aim at clarifying conditions which trigger application of the 19% shifted profits tax. However, some amendments are also proposed, like an additional condition that at least 10% of shifted profits paid by the Polish entity must be subsequently transferred by the foreign recipient to another entity, for the shifted profits tax to apply. It is important to note that modified rules regarding shifted profits tax are expected to apply only as of 1 January 2023 (rules in force as of 1 January 2022 are still applicable for the 2022 settlement, subject to further modifications to the proposal).
  • Changes to the withholding tax (WHT) pay-and-refund regime, by extending the validity of a management board statement until the end of a given tax year (currently up to three months) and mitigating deadlines related to the management board statement.
  • Amendments with respect to limitations of debt financing costs:
    • Explicit indication that the higher of PLN3m or 30% of tax EBITDA (earnings before interest, taxes, depreciation and amortization) should be applied as a maximum threshold.
    • Exception from non-deductibility of related party financing costs related to so called “capital transactions” for example for: acquisitions of shares of unrelated entities or debt financing granted by banks seated in the European Union or the European Economic Area.
  • Changes in the “Polish holding company regime” which include an increase of the dividend WHT exemption to 100% (from 95%) and easing of some of the conditions required to benefit from the regime.
  • Amendments in the regulations regarding Transfer Pricing (TP) documentation (to be applied retrospectively for financial years starting on 1 January 2021):
    • Withdrawal of transfer pricing reporting obligations related to indirect transactions with tax havens.
    • Increase of the materiality thresholds in the case of direct transactions with entities established in a tax haven.
  • Limitation of statistical reporting obligations regarding certain transactions with nonresidents, which are already subject to TP reporting.
  • Clarification of the rules regarding use of tax losses by Tax Capital Groups (tax grouping system in Poland).
  • Simplification of rules regarding refund of the minimum levy (tax on certain leased properties).
  • Amendments to the Controlled Foreign Company (CFC) regime.
  • Changes in the rules regarding the lump-sum taxation regime.

The majority of the changes proposed in the draft legislation are to come into force as of 1 January 2023. However, there are certain exceptions including cases where new provisions are planned to be effective retrospectively.

Next steps

The proposed legislation impacts a broad range of tax areas. This Alert provides a general overview of certain selected issues under the new proposed provisions.

Future Global Tax Alerts will report on the most significant changes for multinational groups and the progress in the legislative process.


For additional information with respect to this Alert, please contact the following:

EY Doradztwo Podatkowe Krupa sp.k., Warsaw

EY Doradztwo Podatkowe Krupa sp.k., Wroclaw

Ernst & Young LLP (United States), Polish Tax Desk, New York

  • Sylwia Migdal |



  1. See EY Global Tax Alert, Poland proposes significant changes to Corporate Income Tax law, dated 7 July 2022.

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