This is not a minimum CIT. MF reveals how it pulls billions from businesses into the budget

Good corporate results, better collection and new rules of settlements with local governments are behind the high CIT revenues at the state treasury. But the so-called the minimum CIT has nothing to do with it. At least that’s what the Ministry of Finance says.

According to official data, the tax office collected almost PLN 45.7 billion from CIT in the seven months of this year. This is not only much more than a year earlier: the revenues were higher by PLN 14.6 billion, i.e. by almost a half.

The result so far is also almost 85 percent. plan for the whole year.

Because the companies’ results are very good

According to the Ministry of Finance, which we asked what could have caused such a high income, the main reason was the very good results of enterprises. The Ministry of Finance cites GUS data for the first quarter. The gross financial result of large companies then amounted to PLN 72.3 billion. And it was 25.7 percent more. compared to the first quarter of 2021

We wrote about the fact that large companies are doing great and are able to cope with rising costs without major problems, among others, in this text. However, it is worth noting that this only applies to certain industries. Mainly those related to the production of fuels and energy and the extraction of raw materials.

But banks also performed very well. Anyway, MF quotes them in his analysis.

– According to KNF data, banks’ gross profit in the first half of the year was 82.3% higher. Every year – the resort draws attention. And such a large increase in gross profit also means higher CIT revenues.

Read: Banks’ profit is almost twice as high as in the previous year. But there are also those who have losses

The ministry also reports that the highest corporate tax revenues compared to the previous year 2021 were in June. This is the effect of overlapping tax payments on current income on the settlement for 2021.

– According to preliminary data from the settlement for 2021, the balance for 2021 was higher by PLN 2.5 billion than the balance from the settlement for 2020 – says MF.

Because local governments get less

Another reason is the change in the method of settling accounts with local governments. It entered into force at the beginning of this year. Now local governments do not receive part of their current income from income taxes. Only every month, one-twelfth of the amount of forecasted inflows for this year is transferred to their accounts. The intention was to protect them against the effects of changes in taxes that entered into force in 2022. those related to the Polish Order.

The Polish Order did not harm local governments? According to the government, local government units have more money than a year ago

But it turned out that local government officials are now getting their pockets. The payment of the forecasted amount means that the amount of current inflows does not matter. And when they are larger than assumed – as now – local governments really lose.

– Under comparable conditions, i.e. in a situation where the shares for LGUs in 2022 would be transferred according to the rules applicable until the end of 2021, the state budget revenues in the period January – July would be over PLN 3 billion lower than today. This would mean that they increased by approx. 35 percent. Every year – admits MF.

Because downloadability is getting better

The ministry adds that more money from CIT is obtained by the tax office also thanks to the improved collection of this tax. No specific amounts are paid, but the ministry presents a whole list of changes that sealed the tax sieve.

For example, “a number of institutions counteracting aggressive optimization techniques”. For example, the imposition of CIT on limited partnerships or general partnerships with the participation of entities other than natural persons “in the event that these companies do not submit appropriate information identifying the identity of the composition of partners”.

– The presented change, in force from January 2021, allowed to eliminate the previously used optimization schemes and thus eliminate the resulting repercussions in the form of tax avoidance, but also disturbances in the rules of the market game and fair competition, which had negative consequences for the entire legal environment – says MF.

The Ministry also mentions the introduction of taxation of real estate companies and the development of regulations on hybrid structures.

– It seems that the basis for the increase in CIT revenues in the current year should also be seen in sealing legislative activities carried out consistently in previous years – the resort believes.

It is not a minimum tax

In response to our questions, the Ministry of Finance clearly states what was not the reason for the higher CIT revenues. Certainly, according to the ministry, this is not the introduction of the so-called minimum CIT. It is a solution whereby some taxpayers have to pay tax on revenues as long as they do not show profits.

Some economists have recently written about the fact that it is the minimum CIT that may be behind the budget results, and some media have repeated the thesis behind them.

The MF states that such a thesis is not true.

– These solutions have no impact on the amount of CIT in the first half of 2022, because according to their structure, tax settlement takes place after the end of the tax year. So in relation to the year 2022, the settlement would be made for the first time in a tax return submitted by the end of the third month of the following year (as a rule, the end of March 2023) – says MF.

Changes to CIT are coming. The bill is ready

– Moreover, it should be noted that the regulation on this tax does not provide for the payment of the tax in advance payments during the tax year. The minimum tax (provided that the taxpayer meets the conditions for its payment) is paid once in the amount indicated in the tax return – adds the resort.

In addition, the government plans to postpone the obligation to pay the minimum CIT for another year. At least that’s what the Council of Ministers work plan shows.

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