Supporting new investments within the so-called Polish Order

The scope of the project also includes issues related to the implementation of new investments within the Polish Investment Zone. The planned changes include both the Act of May 10, 2018. on supporting new investments (Journal of Laws of 2020, item 1752) (hereinafter also referred to as "WNI"), in which numerous changes were introduced, also with a tax dimension, as well as changes directly in tax acts in terms of conditions of use from tax exemption in PSI and SEZ.

The proposed amendment to Art. 17 sec. 2 of the Act on WNI consists in adding a new anti-abusive clause to the conditions for the revocation of the decision to support. The proposed anti-abusive provisions should be applied by the authority issuing the decision on support and by entrepreneurs in the event that this decision is revoked in connection with, inter alia, flagrant breach by the entrepreneur of the conditions specified therein or in the event of ceasing to conduct business activity specified in the decision. Such activities are aimed at an unauthorized increase in the limit of state aid, e.g. through non-market shaping of eligible costs. The provisions of the clause also apply to legal transactions that do not have a real nature or economic justification, except for obtaining a tax benefit resulting from a tax exemption in connection with the implementation of a new investment. The clause may also cover legal activities characterized by excessive complication and uselessness from the point of view of a rational entrepreneur, i.e. one who does not prioritize tax benefits over economic benefits.

The said change was related to the change in uPIT and uCIT (Article 21 sec. 1 point 63b of the PIT Act and Article 17 sec.), which has a sealing and clarifying nature, in particular by removing interpretational doubts in terms of clarifying the conditions of exemption for entrepreneurs running a business on the basis of a decision on support.

The draft act indicates that the tax exemption can be used by taxpayers who run a business on the basis of a decision on support and receive income only from the implementation of a new investment and in the area specified in the decision on support. The change is particularly important in the case of reinvestment in an existing plant. It should be noted that the interpretation practice to date has shown that in the issued DOW SEZ Managers who issued these decisions on behalf of the minister responsible for economy indicated the PKWiU classification, which were not related to the description of the nature of the new investment. Such activities, in the opinion of the drafters of the act, have negative budgetary effects, because with the tax exemption, taxpayers also include income not related to the implementation of a new investment, and thus in an unauthorized manner lead to a loss in the state budget and local government units.

The plan to amend the small clause contained in Art. 21 sec. 5cc of the PIT Act and Art. 17 sec. 6c of the CIT Act by adding to the catalog of legal activities the only purpose of which is to avoid taxation, activities other than the conclusion of an agreement, the effect of which is optimization activity undertaken by taxpayers, with the use of artificial means of actual activities that were undertaken by the taxpayer solely for the purpose of obtaining tax exemption. Such activities include, for example, the possibility of tax optimization schemes to maximize the use of tax-exempt income obtained from economic activity conducted in the special economic zone.

Also worth noting is the change made by the project initiator: in Art. 17 sec. 5 WNI: The project initiator indicates that the expiry of the decision on support due to the entrepreneur not using state aid at all or using this aid and meeting all the conditions specified, applies only to the decision on support, the conditions of which have been fully met by the entrepreneur, or abandoned, but without the use of public aid specified in this decision. Sealing the regulation in terms of the need to specify which decision specifically concerns the expiry is important due to the possibility for the entrepreneur to have several decisions on support, in which the aid is settled in the order in which they were issued.

Taking into account the nature of the planned changes, it should be assessed that they are of a typically professional nature. The planned date of entry into force of the amendment is January 1, 2022.