On August 1, 2022, a draft ordinance was published on the website of the Government Legislation Center on the extension of certain deadlines for the fulfillment of obligations by tax remitters. The regulation is aimed at extending the validity period of the submitted WH-OSC and WH-OSP statements in order to apply the withholding tax (WHT) preferences after exceeding the amount of PLN 2 million in a year and not to apply the pay & refund mechanism (MPR).
The regulation addresses doubts as to the frequency of submitting the WH-OSC statement and, by analogy, the WH-OSP statement in the case of payments to natural persons, within one calendar year, in a situation where the remitter, after submitting the original statement, makes further payments subject to WHT in Poland to the same recipient. Based on the literal wording of the relevant provisions, the statement is only valid up to three months after its submission and once the validity period is over, the tax remitter is obliged to apply MPR (i.e. application of basic WHT rate without the possibility of applying exemption or preferential treatment).
In accordance with the draft ordinance and its justification, it is proposed to extend the deadlines provided in Art. 26 para. 7f and 7g of the CIT Act and Art. 41 para. 20 and 21 of the PIT Act, i.e. as regards the submission of initial statement and follow-up statement (closing statement submitted ex-post, i.e. after the expiry of the validity of the original statement).
Firstly, regarding the validity period of the initial statement, submitted in order to release the remitter from the obligation to apply MPR (based on Art. 26 para. 7f of the CIT Act and Art. 41 para. 20 of the PIT Act), the regulation proposes to extend the period of applying the preferences until the end of the tax year of the payer. This would mean that the remitters who submitted or will submit the initial statement in 2022 within the time limit provided in Art. 26 para. 7c of the CIT Act and Art. 41 para. 17 of the PIT Act, will be able to apply WHT preferences until the end of the tax year.
The ordinance itself does not specify which statement will be covered by extension, unfortunately, according to the justification, the extension of the deadline applies only to those declarations that were submitted on time and which validity as at the date of entry into force of the proposed regulation has not yet expired (i.e. it effectively applies to payments made from May this year and initial statement submitted after June).
The justification to the proposed regulation indicates that the problem of statements which validity period has already expired (i.e. statements submitted before June 2022), will be addressed separately as a part of the proposed statutory changes, which are to enter into force on January 1, 2023, but with retroactive effect from January 1, 2022 (abolition act). At the moment, however, the date of publication of such regulations is unknown.
At the same time the draft regulation also changes the deadline for submitting a follow-up (closing) statement (Art. 26 para. 7g of the CIT Act and Art.41 para. 21 of the PIT Act). In this case, it is proposed to extend the deadline until the end of the month following the end of the tax year of the remitter, instead of - as it currently is - the 7th day of the month following the expiry of the validity period of the initial statement.
The Ministry of Finance plans for the regulation to enter into force still in August.
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