How to prepare for the minimum tax

"The tax is now calculated based on the initial value of a property minus PLN 10 mln for each building. The law that is to come into force is to change how this is calculated. PLN 10 mln is to be subtracted from a company's income," says Justyna Bauta-Szostak, a tax adviser and partner at MDDP.
"If a company has three buildings it will be able to subtract PLN 10 mln just once, not three times. The rest of the changes follow normal EC regulations. One of these regulations is about the relationship between property tax and corporate income tax. There were objections that this tax was another asset tax. So it will now be possible to apply for a return of the property tax when the corporate income tax is lower or a company makes losses. The tax office will check if the tax declaration is correct and will pay special attention to a company’s financing costs as well as its total costs. So there will always be a tax inspection before a return of the property tax. Because companies can apply for the return of the property tax, it should not be bigger than the corporate tax to be paid. If a tax payer has low rents, and does not make a sufficient income from leasing, the tax office should in theory return the minimal tax upon completion of the tax inspection I mentioned. The problem is that nobody knows what the tax office will inspect when returning the tax because this is a new procedure. We can expect the tax office to say that financing costs are too high but it could also question the cost of purchased services such as asset management and property management fees. It is hard to say what it is going to be like. Any company that doesn’t apply for the return – out of fear of such an inspection – when it makes a loss or has an income tax that is lower, will anyway find itself added to the list of those companies that could have but did not apply for the return and the tax office might then decide to have an inspection to find out why. Such a list will be easy to draw up as the system of tax declaration is moving online and tax authorities will have the software to search through the database for specific types of taxpayer. So anyway, everybody needs to prepare for the changes," explained Justyna Bauta-Szostak.