In order to successfully apply for a corporate income tax (‘CIT’) exemption within the Polish Investment Zone (‘PIZ’), it is necessary to declare a specific value of investment expenditures that will be incurred. The minimum value of these expenditures depends on the level of the average unemployment rate in a territory, in which it is planned to implement the investment (excluding the so-called 122 medium-sized cities losing their socio-economic functions and bordering communes that benefit from the lowest thresholds and the changes in average unemployment rate do not affect them).
In practice, the minimum value of investment expenditure for the large entrepreneurs, which is directly influenced by the level of the average unemployment rate, may range from PLN 10 million to even PLN 100 million.
On 28 September 2021, The Central Statistical Office (‘CSO’) published data on the unemployment rates, on the basis of which the minimum values of expenditures were updated. Due to the decreases in the average unemployment rates, the minimum values of investment expenditures (which entitle to apply for a CIT exemption) within the PIZ in many regions have increased constituting a barrier at the stage of applying for a CIT exemption. Nevertheless, there could also be identified some territories where the changes improve the conditions for applying for this form of state aid (i.e. the required investment expenditure values have decreased).
Declared CAPEX and the PIZ entry criterion
In detail, in 22 territories, the required investment values have decreased by PLN 20 million. In turn, in 63 regions, the minimum investment expenditures have increased in comparison to requirements prior to the publication of new data by the CSO. These changes may be a barrier to the possibility of applying for CIT exemption for those entrepreneurs who will not be able to incur larger investment expenditures than previously planned.
List of locations with changed conditions for applying for CIT exemption within PIZ
PwC comment
Lower minimum investment values in some territories may affect the increasing number of implemented projects benefiting from state aid in the form of the CIT exemption. In particular, according to our expectations, investors planning investment projects in large cities such as Gdańsk, Szczecin or Zielona Góra can take advantage of the reduced investment thresholds.
Nevertheless, the higher requirements for some areas affects an entrepreneur’ need of being better prepared for new investment. When planning a project in the area for which conditions have been tightened, it is important to check whether the project will still be able to successfully apply for a tax exemption (if not, it's worth to verify the investment assumptions - we might support you in this process).
If the investment is not eligible for this form of state aid, there is a chance that the quantitative criteria will be reduced by 50% in relation to the value of investment (the announced amendment to the PIZ regulations, introducing the so-called ‘reinvestment’) and as a result, some entrepreneurs will still be able to apply for a CIT exemption within the PIZ. Unfortunately, it is still unclear when the proposed amendment will come into force.
According to the planned investments, it is also worth considering the possibility of benefiting from direct financing within the so-called Government Grant, under which preferential conditions are available until the end of 2021.
Autorzy:
