Overview of Tax Compliance in Poland
Poland is a member of the United Nations, NATO, and the European Union. The nation contributes to peacekeeping operations and engages in diplomatic contacts, vital in regional and international affairs. The President is the head of state and the Prime Minister as the head of government in Poland's parliamentary republican system. Penalties and legal repercussions may result from non-compliance. To properly navigate Poland's tax system, you must seek expert guidance and follow tax rules. It is impossible to exaggerate the significance of tax compliance. The economy is more stable and builds trust when taxes are paid on time. In Poland, both the national and municipal governments impose taxes. The Republic of Poland's government is built on the division and harmony of the legislative, executive, and judicial spheres.
Different Tax in Poland
- Corporate Income Tax:CIT, or corporate income tax, is a tax levied against the profits made by businesses. Tax people in Poland are required to pay tax on all of their international income. However, if Poland and another nation have a double taxation agreement, the overseas income may not be subject to Polish taxation. In Poland, the standard corporate income tax rate is 19%. The companies have to pay the Polish government a tax equal to 19% of their taxable income
- Value-Added Tax: The amount contributed at each stage of the production and the distribution of products and services is subject to the consumption tax known as VAT, or value-added tax. It is assessed on the difference between a good or service's sales price and the cost of the inputs needed to make or deliver it. VAT, an indirect tax paid by the final consumer, is often collected by companies on behalf of the government. It is frequently employed by many nations as a sizable source of income to finance public services and governmental outlays.
The Value Added Tax (VAT) system in Poland includes a range of rates and activities. With the exception of those protected by specific rules, the majority of products and services in Poland are subject to the regular VAT rate of 23%. Specific commodities, including pharmaceuticals, passenger transportation services, staple foods, books, and journals, are subject to lower prices of 8% and 5%.
Exports of products outside the European Union are one of the activities that are zero-rated, while some financial, insurance, and educational services are among the suppliers that are exempt from VAT. To combat inflation, a temporary VAT rate decrease to 0% was adopted in 2022 for essential food items. This cut is anticipated to last through June 30, 2023.
A "White list" of VAT payers, a digital database that details the VAT status of organizations, has been introduced by Poland. The majority of the time, VAT reporting is done on a monthly basis. However, small taxpayers may choose to undertake a quarterly reconciliation. Poland has made it possible for qualifying taxpayers to combine their VAT responsibilities into a single entity starting in 2023 by introducing the opportunity to create a VAT group.
- Custom Duty: Customs duty is a type of tax that a government imposes on items that are brought into or exported from a nation. It is based on the price, amount, or weight of the products and is assessed by customs officials at the point of entry or exit. In addition to defending local businesses and regulating trade, customs duties also help the government by bringing in money. The kind of the products, their country of origin or destination, and any relevant trade agreements can all affect the customs tax rate. Because Poland is a member of the European Union, it is part of a customs union; as a result, only commodities imported from or exported to non-EU nations are subject to customs fees and procedures.
- Excise Duty: Excise duty is an indirect tax that the government imposes on the manufacture, sale, or consumption of certain items inside a nation. It is often imposed on locally manufactured goods like alcohol, tobacco, petroleum products, and upscale goods. The excise duty is often paid by the manufacturer or producer before the items are made accessible to customers and is included in the price of the goods. The government frequently uses excise duty income to pay for numerous public services and development initiatives.
- Property Tax: Property tax is a periodic fee that local government entities charge to owners of real land. It is based on the property's assessed value. The market value, size, location, and any alterations or additions to the property are usually all taken into consideration when determining the assessed value. The assessed value is used to determine the amount of property taxes due. Municipalities set annual property tax rates for real estate within the parameters outlined in the Law on Local Taxes and Fees. Structures are subject to a set 2% original value property tax rate. Legal entities must submit their tax returns to the local authority in charge of the location of the taxing entities by January 31 for the tax year in question.
- Transfer Tax: A sort of tax known as a "transfer tax" is applied when ownership of specific categories of property is transferred from one individual or entity to another. Depending on the jurisdiction, it is typically imposed by the government at the municipal, state, or national level.
A transfer tax may serve a variety of purposes, but it is frequently used to raise money for the government or to regulate and manage property transfers. The tax may be computed using the sale price of the transferred asset or a preset rate that is applied to the transaction.Certain civil law transactions, including sales, loans, and donations, are subject to this tax. Using the transaction value as a base, the tax amount is calculated.
The tax rates for various sorts of transactions are listed below:
- Sales and exchanges involving property rights are subject to a 1% transfer tax. On the other hand, tangible property and real estate deals are taxed at a higher rate of 2%. In all situations, the market value of the item or property being transferred determines the tax basis.
- Loans: A 0.5% transfer tax is applied to loans. The loan amount or value is used to determine the tax.
- Retail Tax: Retail tax is a type of tax imposed on the sale of goods and services by merchants to the final consumer. It is sometimes referred to as sales tax or consumption tax. It entails taxing merchants according to the income from retail sales, which are defined as the selling of items to customers for a price, whether done on or off the retailer's property. The law controlling this tax establishes two tax rates: 1.4% of the portion of the tax base above PLN 170 million and 0.8% of the tax base for the relevant month, up to a maximum of PLN 170 million.
- Sugar Tax and Tax on Alcohol
- Capital Tax
- Taxes on financial Institutions
- Payroll tax
- Minimum income tax
- Exit tax
- Minimum tax on buildings
- Diverted profit taxes
Stamp Duty in Poland
A stamp duty, which is a kind of tax or fee that must be paid for particular transactions or official acts, is imposed on several activities in Poland. In conjunction with a number of administrative processes, such as the submission of a power of attorney, the conclusion of an official act, or the issue of a certificate or permission, stamp duty is sometimes necessary. Depending on the type of transaction or act involved, there might be differences in the exact amount of stamp duty and the processes for its payment. The appropriate rules and regulations established by the Polish government dictate the rates and guidelines for stamp duty in Poland.
Tax Period in Poland
Generally, the calendar year in Poland-that is, the period beginning on January 1 and ending on December 31-is the taxable period for corporate income tax. Companies might, however, choose a different fiscal year that does not correspond to the calendar year. A company can decide on a fiscal year that lasts from April 1 to March 31. This adaptability enables companies to match their unique company operations or industry standards with their financial reporting and tax responsibilities. It is crucial for businesses to choose their fiscal year in a clear and consistent manner and to make sure that their tax returns and financial statements are produced in accordance with the specified time frame.
Tax Return in Poland
Most of the time, businesses have to file their tax returns electronically. For corporate income tax (CIT) reasons, in particular, businesses must submit their yearly CIT return to the tax office no later than three months following the end of the tax year. This indicates that businesses have a three-month window to complete their CIT duties and submit the required data and paperwork to the tax authorities. To maintain compliance with tax laws and prevent any potential fines or legal repercussions, it is crucial for businesses to stick to these dates.
Services offered by Enterslice
Our ability to assist customers in efficiently managing their tax responsibilities and discovering tactics to decrease tax costs is made possible by our technical expertise and depth of understanding of industry practices. To handle tax risks and responsibilities both locally and internationally, we make use of the most recent methods and technology. To create tax strategies that are in line with our customer's goals and vision, we place a high priority on active listening and close client collaboration.
- Tax Compliance Advisory: We collaborate closely with customers to create tax plans that satisfy their legal requirements while lowering expenses, minimizing risks, enhancing quality, and generating strategic value for the entire company. We support communication between tax, finance, legal, and other departments by helping to address regulatory changes, using data for value, and simplifying compliance and planning.
- Tax Policy Advisory: We assist clients in managing and resolving local and multi-jurisdictional tax concerns in a climate where tax stances call for growing explanations. Our objective is to create effective plans for preventing future problems and assuring compliance.
- Advice on R&D Tax: As businesses vie for ownership of intellectual property (IP). Governments give considerable tax reductions and incentives. We help customers determine if they qualify for R&D super-deductions and make sure they meet the requirements in order to take advantage of these tax breaks.
- Acquisitions: As M&A operations proliferate, we assist customers in navigating challenging international business transactions. We can help customers through the full acquisition process while avoiding potential problems since we have a thorough awareness of tax changes in local jurisdictions.
- International tax advisory services are becoming important as the globe becomes more interconnected. Companies routinely engage in cross-border transactions that have intricate international tax repercussions. Clients that use Enterslice's worldwide tax advisory services receive in-depth guidance on international tax compliance, double taxation agreements, transfer pricing, and international tax planning. Their expertise helps businesses navigate the challenges of international taxes and improve their global tax status.
- International Tax Planning: Based on a deep understanding of international tax rules and regulations, Enterslice provides complete services for international tax planning. By identifying tax-efficient structures, analyzing cross-border transactions, and adhering to international tax regulations, they help businesses maximize their global tax situations. Their products enable businesses to expand globally while avoiding tax obligations.
We are committed to supporting the tax success of our customers, regardless of the stage of their business. Our cross-industry services are completely integrated.