On August 21, a draft bill (UD458) was published on the Government Legislation Centre's website, introducing comprehensive changes to income taxes (PIT and CIT) and the lump-sum tax on registered revenues. The new regulations, scheduled to enter into force on January 1, 2027, are intended to increase the progressivity of the PIT system while maintaining the stability of public finances, which is to be achieved, among other things, by raising the CIT rate to 22%.
Higher CIT for the largest companies
From a corporate perspective, a key element of the reform is the introduction of a new 22% CIT rate for the largest enterprises. This would apply to taxpayers (including tax capital groups) whose annual revenues exceed 50 million euros and entities belonging to domestic or international groups subject to the global minimum tax. The amendment will not cover banks that have already been taxed at an increased rate to date.
The introduction of this rate change is intended to finance the planned changes in PIT.
Key changes in Personal Income Tax (PIT)
The changes in the CIT Act are accompanied by modifications in the area of personal taxes, specifically the PIT tax scale. Instead of the current two-tier system, the draft bill introduces three tax rates:
- 12% for income up to PLN 130,000 (with a tax-free allowance of PLN 30,000),
- 24% for the income surplus in the range of PLN 130,000 to PLN 150,000,
- 32% for the income surplus above PLN 150,000.
This change aims to mitigate the sharp increase in the tax burden for the middle class when switching between levels of tax scale. Concurrently, to partially finance this relief, the bill proposes raising the solidarity levy rate from 4% to 5% for selected incomes exceeding PLN 1 million annually.
Restrictions on the Lump-Sum Tax
The draft bill also alters the rules for using the lump-sum tax on registered revenues. The revenue threshold entitling taxpayers to this form of taxation is to be significantly reduced from 2 million euros to 250,000 euros. Additionally, a new 17% lump-sum rate will be introduced for the revenue surplus exceeding 300,000 euros annually. These changes are intended to restore the lump-sum tax to its original purpose as a form of taxation for the smallest businesses.
Effective Date of the Changes
The draft legislation provides that the new regulations, including the amended CIT rate, is intended to enter into force on January 1, 2027. Taxpayers whose tax year differs from the calendar year are to apply the revised provisions starting from the tax year commencing after that date. The transitional provisions are structured so that the entry into force of the changes beneficial to taxpayers is correlated with the remaining amendments.
Status of the Draft Legislation
The bill is currently at the public consultation stage. In the next step, it will be submitted to parliament, and its entry into force will require the signature of the President of the Republic of Poland, who may sign the act into law, veto it, or refer it to the Constitutional Tribunal. At the current stage, given the political situation, it is difficult to determine whether the project will come into effect.
Summary
The bill is one of the most substantial tax reform proposals in Poland in years. By reducing the tax burden mainly for employees, it shifts the financing of the reform onto the largest enterprises and selected self-employed individuals using the lump-sum tax scheme. However, its final enactment remains uncertain.
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