The Federation of Polish Entrepreneurs (FPP) calls for the current amendment to the CIT Act to depart from the flawed concept of minimum income tax, which creates more problems than it solves. The impact of the repeal of these provisions on the tax revenues of the state budget would be negligible and easily compensated by more effective instruments. The quality and transparency of Polish tax law would definitely benefit from the elimination of the minimum CIT.
According to the data of the Ministry of Finance on the estimated implementation of the state budget for the first 7 months of this year, CIT revenues increased compared to the corresponding period of 2021 by as much as PLN 14.6 billion, i.e. 47.2%. A thesis appeared in the public discourse that such a significant increase in budget revenues related to the taxation of legal persons is due to the so-called minimum income tax. However, this is not true for a very simple reason – the minimum CIT is paid only after the end of the tax year, which means that so far no tax receipts have been generated on this levy.
“The reasons for the increase in CIT revenues should be sought primarily not in new legislative solutions, but in the economic environment of enterprises. Due to the sharp increase in the prices of energy and its carriers, companies from the mining and energy sector began to record significantly better financial results. According to GUS data, only in Q1 2022 the net profit of mining enterprises increased by 257% y / y, and of companies producing and supplying electricity, gas and heat – by 56% y / y. In terms of value, only these two branches accounted for half of the total increase in the financial result of the enterprise sector in Poland in the first three months of the year. This naturally translates into an equally sudden increase in the amount of income tax paid. A further increase in tax revenues to the state budget, including CIT, is possible mainly due to the stable and predictable tax law regulations and the dynamic development of the Polish economy, including the corporate sector. However, the minimum income tax does not meet the standards of good legislation. Despite the sectoral exemptions introduced, the levy will continue to burden companies that do not use aggressive tax optimization practices, but for purely economic reasons achieve a low level of profitability. The construction of the minimum tax calculated on the company’s turnover is also a fundamental contradiction of the very idea of income tax, according to which the tax should be imposed on companies that generate profit, and not incur losses, because this only aggravates their financial problems, exposing the companies to bankruptcy and the companies created by them. jobs for liquidation,” emphasizes Łukasz Kozłowski, chief economist of the Federation of Polish Entrepreneurs (FPP).
