During the conference "The Future of PIZ and SEZ under the Conditions of the Global Minimum Tax ("GMT"), Maciej Żukowski, Director of the Department of Development and Investments at the Ministry of Economic Development and Technology, outlined the legislative directions regarding the Polish Investment Zone ("PIZ") in connection with the implementation of Pillar 2.
Proposed Changes
The introduction of global minimum taxation provisions may limit the benefits for investors from the Polish tax incentive system, particularly the CIT exemption within the PIZ. To maintain Poland's competitiveness and attractiveness internationally, the Ministry has announced changes to the PIZ operating mechanism aimed at mitigating the negative impact of top-up taxation.
In the announcement, the Ministry proposed replacing the CIT exemption with a budget-neutral cash grant correlated with the profitability of the investment-related activities. The amount of support obtainable will depend on several factors:
- value of the investment,
- location of the investment (according to the regional aid map), and
- number of declared quality criteria.
Investors will be able to start using the support from the completion of the investment and will have up to 15 years to utilize the available pool of state aid (previously, the utilization period ranged from 12 to 15 years depending on the investment location).
Support Based on Quality Assessment
Support will be granted based on a quality assessment, where a maximum of 20 points can be obtained (although the final number may change). Minimum thresholds will still be specified based on the investment location.
The number of points obtained in the quality assessment will influence the level of support received in relation to the intensity derived from the regional aid map:
- 8-12 points – 60% support,
- 13-16 points – 80% support,
- 17-20 points – 100% support.
According to the announcements made at the conference, investors will be able to receive grants based on payment requests in annual installments. These installments will be determined as a percentage of revenues, dependent on the gross (accounting) profitability of the operations (investment). Therefore, the higher the profitability of the investment, the higher the percentage of support. Conversely, a lack of profitability in a given year will mean the inability to receive a grant.
Dual Support Model
The Ministry also indicated the possibility of introducing a dual support model for businesses. Under this model, the described changes would only apply to entities subject to Pillar 2 provisions (i.e., companies belonging to groups whose annual revenue in at least two of the last four tax years, reported in the group's consolidated financial statements, is at least EUR 750,000,000). Other entrepreneurs could benefit from a tax relief for new investments under the existing rules.
Conversion for Current PSI Beneficiaries
There were also concerns raised during the discussion about including investors currently benefiting from the tax exemption within the PIZ under the new grant mechanism. For now, the Ministry has announced the possibility (upon application by the investor) of converting the tax relief granted under the Decision on Support to a cash grant. However, the detailed conditions of such conversion have not yet been specified.
PwC Commentary
The proposed changes to the PIZ operating mechanism are similar to the solution implemented in Hungary in response to the introduction of Pillar 2 provisions. Introducing grant support, in our opinion, will positively affect the calculation of the effective tax rate, as the received funds should be treated as business income rather than a reduction of qualifying taxes. It is important to note that currently, only announcements are known, and the final model may change. Additionally, we still await the presentation of the bill in this regard. We encourage you to follow information regarding the implementation of Pillar 2 regulations, which we cover on our website. We will keep you updated on all changes as they occur.
Autorzy:
