In the literal sense, it is Corporate Income Tax (CIT). The CIT rate is regulated by Chapter 5 and 6b of the Corporate Income Tax Act. Taxpayers must bear in mind that CIT rates depend on the type of income earned, its source and available tax preferences such as Estonian CIT taxation. The subject of taxation is the income (the excess of revenues over tax deductible costs incured. Sometimes these costs are also referred to as tax deductible expenses.) that the company earned in a given tax year. CIT applies to legal persons, i.e. entities that are granted legal personality by law. These include:
Additionally, polish corporate income tax also covers capital gains and extends to foreign companies operating in Poland. Polish tax residents are subject to CIT on their worldwide income, which means that all global revenues and capital gains must be declared and taxed in Poland. Moreover, some entities may be subject to a minimum income tax if their profitability falls below a statutory threshold, and the minimum income tax rate is also specified in the Corporate Income Tax Act.
CIT rates are generally 19% of the tax base. However, on January 1, 2019, an amendment to the Corporate Income Tax Act came into force, according to which the preferential CIT is 9%. The lower CIT applies only to a certain group of taxpayers who meet the conditions specified in the Act. Who can benefit from a lower tax rate? The lower CIT rate can be applied by new and small entrepreneurs. A new taxpayer is defined as a limited liability company, joint-stock company and other legal entities subject to CIT, which are just starting their first tax year. Small taxpayers, on the other hand, are companies whose annual revenues do not exceed the equivalent of EUR 2 million, converted into złoty. Please note that the application of the reduced tax rate is also subject to restrictions, e.g. you cannot apply the 9% rate, you cannot apply this tax rate if the company was established through restructuring (for example, the division of a previous company), by transforming the company of a natural person or a company that is not a legal person into another type of activity, or an enterprise (part of it or its assets) of a given value was contributed to the company.
Similarly to personal income tax, CIT taxpayers are also required to calculate and pay monthly income tax advances by the 20th day of the following month. In the case of quarterly advances, the deadline is the 20th day of the month after the end of the quarter. If CIT taxpayers choose a simplified form of advance payment, their amount will be 1/12 of the tax amount due from the return submitted in the year preceding the given tax year. The selection of quarterly and simplified form of advance payment should be reported in the submitted annual return CIT-8.
CIT is a complex topic that can be a challenge for entrepreneurs. There are different CIT rates, depending on the size of the company, its status as a new taxpayer and the revenues generated. Additionally, the method of paying advances and tax obligations vary depending on the individual situation of the company.
Properly matching the appropriate CIT rate and settlement methods can bring measurable financial benefits. GLC will help you analyze the available options and choose the most beneficial solution, tailored to the specifics of your business.
She started her career at GLC five years ago as an intern in the legal department. Currently, as a legal advisor, she mainly deals with corporate topics. On a daily basis, she supports entrepreneurs in their day-to-day operations.
