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Tax Focus 2019 | Postponement of the ruling on certain Withholding Tax (WHT) provisions until 1st January, 2020

Dear ladies and gentlemen,

We recently advised you regarding the implementation date for Withholding Tax (WHT).

By virtue of the Regulation of 27th June, 2019, the Minister of Finance postponed the application of some of the amended provisions regulating WHT collection by CIT taxpayers. The ruling of the new regulations concerning legal persons was postponed until 1st January, 2020.

This means that until 31st December, 2019 taxpayers and payers of corporate income tax (CIT) will apply the existing rules.

What does the regulation refer to?

In principle, this regulation refers to new obligations imposed on CIT payer/s by the amendment of 23rd October, 2018. (Journal of Laws No. 2193). This advises that CIT payer/s who pay interest, dividends, licence fees or remuneration for certain tangible services is/are obliged to first collect WHT (20% or 19%) and only the taxpayer themselves can apply for a refund.

Current legislation in force

We would like to point out that this postponement concerns only the application of the new WHT mechanism. This means that the regulations, which came into force on 1st January, 2019, obliging payers to exercise due diligence (and in the case of related entities – particularly due diligence) when verifying the correctness of applying the exemption or preferential rate, and to qualify the recipient of receivables as a real beneficiary on the basis of the amended (extended) definition of a beneficial owner (including the requirement that such entity conducts real business activity), are in force unchanged from 1st January, 2019.

What are the effects of this Ministry of Finance regulation?

Due to this entry coming into force 27th June, 2019, corporate income tax payers gained more time to prepare for the amendment of the provisions on WHT collection (including, for example – applying for a decision to apply for an exemption or audit of transactions subject to WHT).

We will be keeping track of the legislative work and keep you informed of any changes in this respect.

If you have any further questions, please do not hesitate to contact us.

The information contained above is of a general nature and does not concern the situation of a specific company. Due to the speed of changes occurring in the Polish legislation, we kindly ask you to determine, on the date of this information, whether it is still up to date.

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