Is the sugar tax a tax cost?


The new year brought many new changes in taxes and introduced new fees. Such a novelty is the levy on food products, commonly known as the sugar tax. A large group of taxpayers is obliged to pay this public tribute. Therefore, it is worth considering whether the sugar tax incurred by the taxpayer may constitute a tax deductible cost in terms of personal income tax.

Sugar tax - regulations

The sugar levy was regulated in the Public Health Act. Let's follow the most important regulations in order to introduce the rules of operation of this new fee.

The sugar duty in question will apply to the placing on the domestic market of beverages with the addition of:

  • monosaccharide or disaccharide sugars and foodstuffs containing these substances, and sweeteners;

  • caffeine or taurine.

The drink referred to above is a product in the form of a drink and a syrup which is a foodstuff, included in the Polish Classification of Products and Services in classes 10.32 and 10.89 and in section 11, which includes at least one of the above-mentioned substances, with the exception of naturally occurring substances.

The obligation to pay lies with the natural person, legal person and organizational unit without legal personality which is:

  1. an entity selling beverages to retail outlets or conducting retail sale of beverages in the case of: a producer, an entity purchasing beverages as part of an intra-Community supply of goods or a beverage importer;

  2. the ordering party, if the composition of the drink subject to the fee is part of the contract concluded by the producer regarding the production of this drink for the ordering party.

The method of determining the fee is based on the following mechanism:

  1. 50 grams for the content of sugars in an amount equal to or less than 5 g in 100 ml of drink, or for the content of at least one sweetener in any amount;

  2. 5 grams for each gram of sugar over 5g in 100 ml of drink

- per liter of drink.

Beverages containing the addition of caffeine or taurine will be subject to an additional fee of PLN 0.10 per liter of drink.

The entities obliged to pay the said fee will be obliged to:

  1. submit to the head of the tax office (with jurisdiction over the place of residence or seat of the entity obliged to pay the fee) information about the fee in electronic form, with a qualified signature (CUK-1),

  2. calculate and pay the above-mentioned the fee

- by the 25th day of the month following the month to which the information relates, to the account of the authority competent for the fee.

The obligation to pay the fee arises on the day the drink is introduced to the domestic market. Placing on the domestic market is understood as the sale of beverages by entities obliged to pay the fee to the first point where retail sale and retail sale of beverages are conducted by: the producer, the entity referred to in art. 12d paragraph. 1 point 2, an entity purchasing beverages as part of an intra-Community supply of goods or the importer of a drink or sale in the case referred to in art. 12e paragraph. 3.

In the event of failure to pay the fee on time, the authority competent for the fee shall set, by way of a decision, an additional fee in the amount of 50% of the amount of the fee due. The additional fee shall be paid to the account of the authority competent for the fee.

The fee and the additional fee are:

  1. 96.5% of the revenue of the National Health Fund;

  2. 3.5% of the state budget income, in part managed by the minister responsible for public finances.

The sugar tax is a public-law financial burden on entities selling beverages containing sweeteners, caffeine and taurine.

Sugar tax as a tax deductible cost

According to the general definition of costs in Art. 22 sec. 1 of the PIT Act, tax deductible costs are the costs incurred in order to achieve income or to maintain or secure the source of income, with the exception of the costs listed in art. 23 of this act.

Based on the above regulation, the following conditions have been developed that must be met in order to be considered a tax cost:

  • be in a cause-and-effect relationship with the income or source of income;

  • be incurred in order to achieve income or to maintain or secure a source of income;

  • not be on the list of costs not recognized as tax deductible costs referred to in article 1. 23 sec. 1 of the Personal Income Tax Act,

  • be definitive, i.e. the expenditure has not been reimbursed to the taxpayer in any way;

  • be properly documented.

The basic matter of tax costs is the relationship between the expenditure incurred and the income from business activity. Incurring an expense has or may have an impact on the amount of income obtained or the preservation or protection of the source of this income.

The concept of "costs incurred in order to generate income" contained in the Act means that the taxpayer has the possibility to deduct all expenses for tax purposes, provided, however, that he proves that he has incurred a specific expense related to the conducted business activity, and its incurrence was or could have a direct impact on the amount of the revenue generated, or it is intended to preserve or secure the source of revenue. Start a free 30-day trial period with no strings attached!

On the basis of an objective assessment, it should be concluded that the incurred expenditure may (but does not have to) contribute to the achievement of income or serve to preserve or secure the source of income - now or in the future.

When transferring the above arguments to the ground of the problem analyzed by us, it should be pointed out that a taxpayer conducting retail sales of beverages containing certain substances must pay a sugar fee if he wants to obtain income from retail trade. Therefore, the elementary cause-and-effect relationship between the incurred expenditure and the conducted business activity is maintained, which justifies the possibility of recognizing the sugar charge as a tax cost.

The sugar tax was not mentioned in the negative catalog specified in Art. 23 of the PIT Act, and therefore may constitute a tax deductible cost in business.

Additional sugar charge as not constituting a tax cost

On the other hand, the issue of including in the costs an additional fee determined by a decision in the amount of 50% of the amount of the unpaid fee due is completely different.

In this regard, it is necessary to indicate the content of Art. 23 sec. 1 point 16f of the PIT Act, which directly states that the additional fee referred to in Art. 12i paragraph. 1 of the Public Health Act.

Such content of the provision clearly indicates that the additional sanctioning fee may not constitute a tax deductible cost.

The additional sugar charge imposed by means of a decision for late payment is not a tax expense.

Moving on to the summary and at the same time to the answer to the question posed in the title, we can therefore indicate that the sugar tax is a tax cost under the PIT tax. Only the additional sugar levy was excluded from the cost category.