The information about the government's preparation of a draft act regarding the introduction of the principles of the global minimum tax (GloBE) into the Polish tax system has been included in the legislative agenda. The Act must be adopted by the Council of Ministers in Q3 2024. As previously announced, the project will be subject to extensive public consultations.
The global minimum tax is a solution intended to prevent tax avoidance by the largest multinational enterprises by shifting profits to jurisdictions where they are subject to very low taxation. The draft act is based on the assumptions of the European Union directive, which in turn refers to the OECD model rules.
The aim is to limit aggressive tax optimization involving the investment of income by multinational groups in countries with a low level of taxation. In the opinion of the OECD, multinational groups take advantage of the phenomenon of the so-called ‘race to the bottom’, leading to a situation in which:
- taxation takes place in a jurisdiction with a low effective tax rate, not in the jurisdiction of the value creation,
- some jurisdictions can afford to lower tax rates and forgo tax revenues, which in turn deepens the economic gap between developed and developing countries,
- a country that wants to remain attractive for investments, must (as a result of the pressure in the ‘race to the bottom’) also lower taxation within its territory, which contributes to a decline in the overall level of taxation of multinational groups around the world.
According to the project, the largest groups of companies, both multinational and domestic, will have to check every year whether their effective tax rate in individual jurisdictions is not lower than 15%. If so, they will have to pay a top-up tax, which will top-up their tax burden to the minimum level. The global minimum tax system to be introduced by the project intends to be based on three types of top-up tax:
- global top-up tax levied under the income inclusion rule (IIR) – imposes the obligation to pay the appropriate top-up tax, as a rule, on the ultimate parent entity in the group. This regulation will apply to the ultimate parent entities in Poland, which are Polish taxpayers.
- qualified domestic minimum top-up tax (QDMTT) – the top-up tax will be levied in Poland if, under other regulations, the effective tax paid by a given group in Poland is less than 15%. The collection of this tax should ensure that the IIR mechanism does not apply in the parent entity's jurisdiction. As a result, QDMTT is intended to guarantee that the minimum tax will go to the Polish budget and not to another jurisdiction.
- top-up tax on undertaxed profits rule (UTPR) – imposes an obligation to pay a top-up tax from the parent entity to the entities within the group located in a given jurisdiction, in a situation when this parent entity operates in another jurisdiction where there IIR does not apply.
The planned date for its adoption by the Council of Ministers is Q3 2024.
According to the government's announcements, the project is to be subject to extensive public consultations before adoption.
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