First settlement of the minimum income tax

The minimum income tax provisions apply to income earned for the 2024 tax year. Therefore, if your company's tax year coincides with the calendar year, it is worth analyzing now whether the company is obliged to calculate and pay the minimum tax.

Entrepreneurs who do not comply with the new regulations may face problems related to tax audits and possible sanctions for failure to comply with their tax obligations.

Who is affected

Only CIT taxpayers can be subject to the minimum income tax. The tax will not apply to PIT taxpayers.

The tax may be imposed on taxpayers who incurred a loss from a source of income other than capital gains (operating source) or their profitability measured as a share of income in revenues does not exceed 2%.

The provisions on minimum income tax have introduced numerous categories of both revenues and tax costs which are not included in the calculation of loss or profitability for the purpose of minimum tax.

Tax base

The taxpayers will be able to choose the method of calculating the tax base in a mixed way, i.e. in terms of revenues and costs or only in a revenue way. The choice of the tax base is associated with different tax rates.

The basic tax base is of a revenue and cost nature and is the sum of:

• 1.5% of revenues from a source other than capital gains (operating source), and
• debt financing costs incurred for the benefit of related parties and the
• costs of certain intangible services, as well as
• transfer of the risk of the debtor's insolvency due to loans other than those granted by banks and credit unions.

The taxpayers may also choose a simplified method of determining the tax base only on the basis of revenues from the operating source.

The choice of the tax base (and the appropriate tax rate) may be associated with a different amount of tax liability.

Tax rate

The tax rate is:

• 10% of the tax base calculated on the basis of the revenue and cost criteria, or
• 3% of the tax base calculated on the basis of purely revenue-based criteria.

The choice of the method of calculating the tax base is made in the annual CIT-8 return.

Minimum income tax and "ordinary" CIT

The amount of the minimum income tax to be paid to the tax office is reduced by the CIT due for the same tax year, calculated in accordance with general rules.

The minimum income tax may also be deducted from CIT calculated on general principles in the following 3 tax years immediately following the year for which the taxpayer paid the minimum tax.

Exemptions

The CIT Act introduced numerous categories of entities excluded from the minimum tax. The tax does not apply to, e.g., taxpayers in the year of commencement of their business activity and 2 subsequent tax years, as well as taxpayers who have generated revenues lower by at least 30% compared to the previous year.

If you have any questions about minimum income tax, please contact Forvis Mazars' Tax Advisory Department.