On 19 August, during a press conference, the Prime Minister announced a package of tax changes planned for next year. According to the announcement, the reform is intended, on the one hand, to ease the burden on the middle class and, on the other, to shift a greater fiscal burden onto the wealthiest individuals and the largest companies. We take a look at the proposals included in the announced package and explain what they might mean for taxpayers.
New PIT Tax Scale
The government’s proposal primarily involves updating the PIT tax scale, which would be better aligned with steadily rising wages. In the near future, however, due to essential expenditure on defence and security, the tax-free allowance will remain unchanged.
A rate of 12 per cent will continue to apply to income not exceeding PLN 130,000 per year. For income in the range from PLN 130,000 to PLN 150,000, a new intermediate rate of 24 per cent is to be introduced. The top rate of 32 per cent will apply to income exceeding PLN 150,000.
The essence of the proposed change is therefore not only to raise the existing tax threshold, but also to create an additional bracket designed to mitigate the sharp increase in the tax burden previously felt by those who exceeded the first tax threshold.
Solidarity Levy
The reform is also set to include an increase in the solidarity levy, i.e. an additional tax imposed on individuals whose annual income exceeds PLN 1 million. The government has proposed raising this from the current 4 per cent to 5 per cent, affecting individual taxpayers with the highest incomes.
Higher CIT for Large Entities
The planned package of changes also provides for an increase in the CIT rate from 19 per cent to 22 per cent for entities with revenues exceeding EUR 50 million. The Minister of Finance justified the proposed increase by citing average tax rates across the European Union. This change is intended to compensate the state budget and offset the fiscal impact of tax relief granted to the middle class in the form of a modified PIT scale.
Changes to the Flat-Rate Scheme – A Return to the Previous Threshold
The government has also proposed changes to the flat-rate scheme for recorded revenue.
The current annual revenue threshold entitling taxpayers to use the flat-rate scheme is EUR 2 million. The government has proposed reducing this to EUR 250,000, which would mean a return to the pre-2021 level. An eight-fold reduction in the limit would also mean that many taxpayers would lose their entitlement to the flat-rate scheme and be forced to choose another, generally less favourable, form of taxation.
Legislative Outlook
The changes proposed by the government would come into force from 2027, although the draft bill has not yet been published. However, the legislative process for the announced package may prove challenging, so the final form of the legislation may differ from the announced proposals.
It is therefore advisable for taxpayers – in particular those on the flat-rate scheme with revenues approaching EUR 250,000, as well as entities subject to the solidarity levy and large enterprises – to start examining the announced changes now, analysing their potential implications and preparing action plans in case they come into force. We are here to help with all of this.
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