Tax amnesty as part of the Polish Order


As part of the Polish Deal, the Ministry of Finance prepared a draft tax amnesty. As a result, a taxpayer who has achieved income but has not paid tax on it will be able to obtain a tax clean account. Let's check what is tax abolition and what are the details of the program!

What is tax abolition?

The Ministry of Finance has created a program under which, from July to the end of December 2022, the taxpayer will be able to report income that he has obtained in the past, but has not taxed it. The ministry wants to pay an 8% income tax (the so-called transitional lump sum) or a 2% levy on the value of property abroad. It will be a preferential rate with no interest for late payment. Additionally, the taxpayer will pay a fee of 1 percent of the income for the application. According to the deputy finance minister, most EU countries apply such a program; in developed economies it is recommended by the World Bank and the International Monetary Fund. He says about abolition: "It is cleaning up tax arrears and opening the way for companies that acted risky to examine their conscience and present their actions to the tax administration. And after paying the tax, they continued their business with a clean slate”.

What income will be included in the tax amnesty?

Tax amnesty is to cover income from holding shares in foreign companies, real estate, financial instruments or situations of obtaining a tax advantage that has not been declared in Poland. The program is also intended to cover cases in which the taxpayer incorrectly assessed his tax residence and then did not tax his income or made a decision on the property that does not have an economically justified purpose.

Deputy Minister of Finance Jan Sarnowski assures that the tax abolition will not cover issues related to committing crimes, i.e. the program will not apply to VAT and money laundering, but only PIT and CIT taxes.

Is tax amnesty consistent with the constitutional principle of equality?

The possibility of taking advantage of tax abolition may arouse anxiety and a sense of injustice among entities that pay taxes honestly. Adam Mariański, professor at the Department of Tax Law at the University of Lodz, chairman of the National Council of Tax Advisors, with whom the Ministry of Finance consulted the proposed new regulations, spoke on this topic. As he claims, tax amnesty implements the principle of universality of taxation as an exceptional tax, introduced in a short transitional period. It does not violate the principle of equality, because everyone will be able to benefit from the regulation, and those hiding the income could not expect such a solution to be introduced. "This is a good solution as long as it is a one-time chance. If a similar law appeared in 10 years, it would be unethical to those who honestly fulfill their tax obligations, and perhaps also contrary to the constitutional principle of equality.”.

Tax amnesty - risk and consequences

The project is to be ready on vacation, and the regulations will enter into force in January 2022. As a result, companies will have 6 months to prepare for the application of the new regulations. "This is the Capital Repatriation Program, aimed at bringing back to Poland funds that have been withdrawn from it, so that they can be invested here". Thanks to obtaining the lost capital, the economy is supposed to strengthen and investments to accelerate.

Before submitting the declaration to the tax office, the taxpayer will be able to apply for an official opinion concerning his individual case, program and the amount of the lump sum. This is a solution for entities whose undisclosed income is very high, as the application for interpretation will be subject to a fee of PLN 50,000. zloty. The opinion will be issued by a specially appointed body composed of representatives of the Ministry of Finance, the world of science and the environment of tax advisers and judges. Sarnowski wants to enable anonymous requests for such an interpretation.

It is not yet known how many entities will want to use the program. Tax amnesty may in the future result in intensive inspections in terms of undisclosed income or unreal future tax residence.