The adoption of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting, i.e. the multilateral convention amending the provisions of double taxation treaties signed by over 100 signatory countries, is scheduled for 1 July 2018. The primary purpose of the implementation of the convention’s provisions is to introduce uniform provisions for bilateral agreements (the amendments are to be made to over 1,200 treaties). This is designed to reflect the signatory countries’ harmonised approach to the practices aimed at aggressive tax evasion through the abuse of the provisions of individual treaties. The amendments to the bilateral international agreements will include, among other things, the definition of a permanent establishment, and a better recognition of hybrid instruments in international fiscal planning and mutual communication procedures.

The amendments to the treaties are to take effect in early 2019.

Changes to the recently amended income tax acts

The Ministry of Finance is planning to correct the recent extensive amendments to the PIT Act and the CIT Act. The government bill amending the Act on Personal Income Tax, the Act on Corporate Income Tax, and the Act on Lump Sum Income Tax on certain Revenues of Private Individuals of 5 February 2018, is primarily designed to address the concerns raised after the effective date of the previous amendments. The changes will specifically relate to:

  • the confirmation that the object of taxation, in the case of a contribution made to a company or a co-operative, is solely the value of the non-cash contribution, while maintaining the existing wording of Article 12(1)(7) of the CIT Act by not making the distinction between a cash contribution or a non-cash contribution,
  • the expansion of the types of creative activity eligible for the application of the 50% tax deductible expenses for personal income tax purposes. The recent amendment narrowed down this catalogue to a list of professions, unreasonably depriving a portion of authors of their preferential tax treatment; the new amendment also relies on a closed catalogue of creative activities; however, this list has been considerably expanded in comparison to the original,
  • the introduction of the principle of continued depreciation / amortisation in the case of tangible or intangible assets acquired by private individuals free of charge (through donation or inheritance); the recent amendment fully deprived beneficiaries or heirs of the possibility to make depreciation / amortisation writedowns on the acquired items and rights.

The amended act is to take effect after a lapse of 14 days from its publication in the Journal of Laws. The bill is currently subject to consultation in the Sejm (the lower chamber of the Polish parliament).