Sejm in favour of 15% CIT for small companies

Sejm [the lower chamber of Polish parliament] supported the government project bringing the CIT for small companies down from 19 to 15 percent. 439 MPs were in favour of the bill introducing the amendment, no one was against, three MPs abstained. The project predicts 5 percent CIT for small companies with annual turnover of up to 1.2 million EUR.

The goal of the amendment is to lower the CIT rate for small taxpayers from 19 percent to 15 percent. The reduced rate is to affect the companies – CIT payers, whose revenue on sales (including the output goods and services tax) falls below the threshold of 1.2 million euro per year.

According to the data cited during the legislative process in the Sejm, in Poland there are 393 thousand small taxpayers whose revenue does not exceed 1.2 million euro a year.

The fiscal impact of the act, i.e. a decrease in the budget income, is estimated to be around 270 million PLN. Meanwhile, in the bill there are changes “sealing” tax collection that are to recover the budget loss, according to the Ministry of Finance.

According to the government, in the long term the amendment should contribute to boosting Poland’s GDP growth and creating favourable conditions to increase Poles’ entrepreneurship, especially those that are young and well-educated.

The bill encompasses provisions that prevent entrepreneurs from demerging a company solely to take advantage of the lowered CIT rate. The introduced solution will also apply to taxpayers launching operations. The reduced rate will not apply to capital tax groups.

Moreover, there have been amendments introduced that further specify current regulations in order to eliminate any interpretative doubts that may result in tax avoidance with respect to some incomes.

A provision was introduced limiting the use of preferential taxation on exchange of shares transactions, the rules of which are specified in the act. Pursuant to the act, the rules do not apply when the main or sole aim of share exchange is tax avoidance or tax evasion.

The instances when taxpayer income subject to reduced tax obligation is regarded as accrued in the territory of Poland have been described in more detail.

After the government approved the proposal of the bill, Government Information Centre explained that when introducing a reduction of CIT with the omission of PIT it takes under consideration current taxation rules that apply to income (revenue) from operations accrued by physical persons. It indicated that they may take advantage of the general principles of taxation, i.e. be taxed according to a tax scale: at 18 percent or 32 percent, or linear at 19 percent, or according to the simplified, flat rate taxation schemes, i.e. flat rate on recorded revenue or tax card. “CIT payers do not have this choice” – it noted.

The bill will now go to the Senate. The act is to enter into force on 01 January 2017.

What This Means for Businesses in Poland

Tax policy changes in Poland have direct implications for both domestic and foreign-owned businesses. Companies operating in Poland must stay informed about regulatory developments to optimize their tax position and maintain compliance. The Polish tax system includes CIT (19% standard, 9% for small taxpayers), VAT (23% standard rate with reduced rates of 8% and 5%), and various sector-specific levies.

For international entrepreneurs and investors, understanding the Polish tax landscape is essential for business planning. Poland offers several attractive incentives including the Polish Investment Zone (up to 15 years of CIT exemption), R&D tax relief (up to 200% deduction), and the IP Box regime (5% effective CIT rate on qualified intellectual property income). Professional tax advisory can help identify the most beneficial structure for your specific situation.

The interplay between Polish domestic tax law and international tax treaties is particularly important for foreign-owned entities. Transfer pricing regulations, withholding tax provisions, and anti-avoidance rules (GAAR) require careful navigation to ensure both compliance and optimization.

If you are doing business in Poland or considering entering the Polish market, Zalewski Consulting can help. Learn more about our tax advisory services in Poland, or contact us for a free consultation.