Tax Guide 2013
foreword A country s tax regime is always a key factor for any business considering moving into new markets. What is the corporate tax rate? Are there any incentives for overseas businesses? Are there double tax treaties in place? How will foreign source income be taxed? Foreword Since 1994, the PKF network of independent member firms, administered by PKF International Limited, has produced the PKF Worldwide Tax Guide (WWTG) to provide international businesses with the answers to these key tax questions. This handy reference guide provides clients and professional practitioners with comprehensive tax and business information for over 90 countries throughout the world. As you will appreciate, the production of the WWTG is a huge team effort and I would like to thank all tax experts within PFK member firms who gave up their time to contribute the vital information on their country s taxes that forms the heart of this publication. I hope that the combination of the WWTG and assistance from your local PKF member firm will provide you with the advice you need to make the right decisions for your international business. Richard Sackin Chairman, PKF International Tax Committee Eisner Amper LLP richard.sackin@eisneramper.com I
important disclaimer Disclaimer This publication should not be regarded as offering a complete explanation of the taxation matters that are contained within this publication. This publication has been sold or distributed on the express terms and understanding that the publishers and the authors are not responsible for the results of any actions which are undertaken on the basis of the information which is contained within this publication, nor for any error in, or omission from, this publication. The publishers and the authors expressly disclaim all and any liability and responsibility to any person, entity or corporation who acts or fails to act as a consequence of any reliance upon the whole or any part of the contents of this publication. Accordingly no person, entity or corporation should act or rely upon any matter or information as contained or implied within this publication without first obtaining advice from an appropriately qualified professional person or firm of advisors, and ensuring that such advice specifically relates to their particular circumstances. PKF International is a network of legally independent member firms administered by PKF International Limited (PKFI). Neither PKFI nor the member firms of the network generally accept any responsibility or liability for the actions or inactions on the part of any individual member firm or firms. II
Preface The (WWTG) is an annual publication that provides an overview of the taxation and business regulation regimes of the world s most significant trading countries. In compiling this publication, member firms of the PKF network have based their summaries on information current on 1 January 2013, while also noting imminent changes where necessary. On a country-by-country basis, each summary addresses the major taxes applicable to business; how taxable income is determined; sundry other related taxation and business issues; and the country s personal tax regime. The final section of each country summary sets out the Double Tax Treaty and Non-Treaty rates of tax withholding relating to the payment of dividends, interest, royalties and other related payments. While the WWTG should not to be regarded as offering a complete explanation of the taxation issues in each country, we hope readers will use the publication as their first point of reference and then use the services of their local PKF member firm to provide specific information and advice. Preface In addition to the printed version of the WWTG, individual country taxation guides are available in PDF format which can be downloaded from the PKF website at www.pkf.com PKF INTERNATIONAL LIMITED MAY 2013 PKF INTERNATIONAL LIMITED ALL RIGHTS RESERVED USE APPROVED WITH ATTRIBUTION III
About PKF International Limited PKF International Limited (PKFI) administers the PKF network of legally independent member firms. There are around 300 member firms and correspondents in 440 locations in around 125 countries providing accounting and business advisory services. PKFI member firms employ around 2,270 partners and more than 22,000 staff. PKFI is the 11th largest global accountancy network and its member firms have $2.68 billion aggregate fee income (year end June 2012). The network is a member of the Forum of Firms, an organisation dedicated to consistent and high quality standards of financial reporting and auditing practices worldwide. Services provided by member firms include: Introduction Assurance & Advisory Insolvency Corporate & Personal Financial Planning/Wealth management Taxation Corporate Finance Forensic Accounting Management Consultancy Hotel Consultancy IT Consultancy PKF member firms are organised into five geographical regions covering Africa; Latin America; Asia Pacific; Europe, the Middle East & India (EMEI); and North America & the Caribbean. Each region elects representatives to the board of PKF International Limited which administers the network. While the member firms remain separate and independent, international tax, corporate finance, professional standards, audit, hotel consultancy and business development committees work together to improve quality standards, develop initiatives and share knowledge and best practice cross the network. Please visit www.pkf.com for more information. IV
Structure of Country Descriptions A. TAXES PAYABLE FEDERAL TAXES AND LEVIES COMPANY TAX CAPITAL GAINS TAX BRANCH PROFITS TAX SALES TAX/VALUE ADDED TAX FRINGE BENEFITS TAX LOCAL TAXES OTHER TAXES B. DETERMINATION OF TAXABLE INCOME CAPITAL ALLOWANCES DEPRECIATION STOCK/INVENTORY CAPITAL GAINS AND LOSSES DIVIDENDS INTEREST DEDUCTIONS LOSSES FOREIGN SOURCED INCOME INCENTIVES Structure C. FOREIGN TAX RELIEF D. CORPORATE GROUPS E. RELATED PARTY TRANSACTIONS F. WITHHOLDING TAX G. EXCHANGE CONTROL H. PERSONAL TAX I. TREATY AND NON-TREATY WITHHOLDING TAX RATES V
INTERNATIONAL TIME ZONES Time Zones At 12 noon, Greenwich Mean Time, the standard time elsewhere is: A Algeria....................1 pm Angola....................1 pm Argentina..................9 am Australia - Melbourne.............10 pm Sydney...............10 pm Adelaide............ 9.30 pm Perth..................8 pm Austria....................1 pm B Bahamas...................7 am Bahrain....................3 pm Belgium....................1 pm Belize.....................6 am Bermuda...................8 am Brazil......................7 am British Virgin Islands...........8 am Guernsey................ 12 noon Guyana....................7 am H Hong Kong.................8 pm Hungary...................1 pm I India................... 5.30 pm Indonesia...................7 pm Ireland.................. 12 noon Isle of Man.............. 12 noon Israel......................2 pm Italy......................1 pm J Jamaica...................7 am Japan.....................9 pm Jordan....................2 pm C Canada - Toronto................7 am Winnipeg...............6 am Calgary................5 am Vancouver..............4 am Cayman Islands..............7 am Chile......................8 am China - Beijing..............10 pm Colombia...................7 am Cyprus....................2 pm Czech Republic..............1 pm D Denmark...................1 pm Dominican Republic...........7 am E Ecuador....................7 am Egypt.....................2 pm El Salvador.................6 am Estonia....................2 pm F Fiji.................12 midnight Finland....................2 pm France.....................1 pm G Gambia (The)............. 12 noon Germany...................1 pm Ghana.................. 12 noon Greece....................2 pm Grenada...................8 am Guatemala..................6 am VI K Kenya.....................3 pm L Latvia.....................2 pm Lebanon...................2 pm Luxembourg................1 pm M Malaysia...................8 pm Malta.....................1 pm Mexico....................6 am Morocco................ 12 noon N Namibia....................2 pm Netherlands (The).............1 pm New Zealand...........12 midnight Nigeria....................1 pm Norway....................1 pm O Oman.....................4 pm P Panama....................7 am Papua New Guinea...........10 pm Peru......................7 am Philippines..................8 pm Poland.....................1 pm Portugal...................1 pm Q Qatar......................8 am R Romania...................2 pm
Russia - Moscow...............3 pm St Petersburg............3 pm S Singapore..................7 pm Slovak Republic..............1 pm Slovenia...................1 pm South Africa.................2 pm Spain.....................1 pm Sweden....................1 pm Switzerland.................1 pm T Taiwan....................8 pm Thailand...................8 pm Tunisia................. 12 noon Turkey.....................2 pm Turks and Caicos Islands.......7 am U Uganda....................3 pm Ukraine....................2 pm United Arab Emirates..........4 pm United Kingdom.......(GMT) 12 noon United States of America - New York City............7 am Washington, D.C..........7 am Chicago................6 am Houston................6 am Denver................5 am Los Angeles.............4 am San Francisco...........4 am Uruguay...................9 am Time Zones V Venezuela..................8 am Z Zimbabwe..................2 pm VII
Poland Currency: Zloty Dial Code To: 48 Dial Code Out: 00 (PLN) Member Firm: City: Name: Contact Information: Warsaw Agnieszka Chamera 22 560 76 59 agnieszka.chamera@pkftax.pl A. Taxes payable Company tax Polish resident companies are subject to corporate income tax (CIT) on all sources of their worldwide income, while non-residents are subject to corporate income tax only on income derived from the territory of Poland. A company is deemed resident in Poland if it is incorporated or managed in Poland. The corporate tax rate for 2013 is levied at 19% of taxable base. In general, the tax year for corporate taxpayers is the calendar year. Taxpayers are obliged to submit their tax declaration, together with the balance sheet, to the fiscal office within three months from the end of their tax year. Taxpayers are obliged to pay tax monthly in advance, based on the current year s income. Taxpayers can also make monthly advance payments based on specific rules if they meet certain conditions. Capital gains tax Capital gains from the disposal of fixed business assets are aggregated with income from other sources and are subject to corporate income tax at the standard CIT rate (19% in 2013). Branch profits tax The tax rate of income derived by a foreign corporation from a branch located in Poland is the same as for Polish entities (19%). Sales tax/value added tax (VAT) As a result of Poland s accession to the European Union, the Polish VAT Act has changed in line with the regulations of the 112th Directive and other EU Directives related to VAT. Under the Polish VAT regulations, VAT applies to the following transactions: supply of goods and services made in Poland for consideration export of goods outside the EU importof goods from outside the EU intra-community acquisition of goods effected for consideration in Poland, including the movement of goods between different Member States within the same business intra-community supply of goods including the movement of goods between different Member States within the same business. The taxpayers shall be exempt from registering if the total value of taxable sales effected by them in the preceding tax year did not exceed PLN 150,000. VAT payers who have no registered seat in Poland nor fixed place of business or place of residence are obliged to appoint a fiscal representative. This obligation does not apply to EU residents. The fiscal representative is jointly liable with the business it represents for all Polish VAT liabilities. In general, tax obligation arises at the moment of giving, handing over, exchanging a commodity, making a gift or rendering a service. However, there are many exceptions to this rule. VAT is charged at the standard tax rate of 23% on the supply of most goods and services or at the reduced rates of 8%, 5% and 0%: 8% supplies include, amongst others, hotel services and passenger transport supply, construction and assembly services, restoration and conservation of building included in social housing programs 5% rate applies to certain foods, e.g. meat, fish, dairy products, vegetables, fruit, bread, etc 1
0% supplies include, amongst others, exports and intra-community supplies of goods and international transport services. In addition, there are a number of exemptions from VAT including education and health care services.changes were introduced in January 2011 which limit the scope of existing exemptions. In general, VAT taxpayers are obliged to settle VAT tax on a monthly basis up to the 25th of the month following the month in which the tax obligation arose. However, other than those taxpayers using the cash-basis settlement method, taxpayers may submit tax returns quarterly, having notified the head of a revenue office in writing by the 25th day of the second month of the quarter. A taxpayer who starts carrying out taxable acts during a tax yearmust make the notification by the 25th day of the month following the month in which it started performing these acts. Taxpayers who have chosen to make quarterly VAT settlements may resume filing monthly tax returns but not until they have submitted at least four quarterly tax returns. Fringe benefits tax (FBT) Benefits in kind are included in taxable income of employees.. Local taxes Real property tax and transport tax are charged as local taxes in Poland. Real property tax is paid by owners of real estate. The tax base depends on the type of asset concerned: buildings the usable area structures value of the structure land the area. The tax rates are established by the Commune Council. The tax on the means of transport is imposed on lorries, tractors and trailers. The tax rates are also established by the Commune Council. Other taxes Civil law activity tax (CLAT) Some of the civil acts may be subject to civil law activity tax. These are, in general: contracts of sale, lease, hire (if not subject to VAT) loan agreements foundation deeds of a partnership or company. CLAT rates are from 0.1 2%. The following shall not be liable to tax: 1. acts in civil law if, in respect of performing such an act, at least one party is: a) liable to goods and services tax b) exempt from goods and services tax, except for: contracts of sale and exchange whose object is immovable property or part thereof, or the right of perpetual usufruct, cooperative member s ownership right to a living accommodation, right to a single-family house in a housing cooperative or right to a parking lot in a multi-lot car park or a share in such rights contracts of sale for shares in commercial partnerships or companies. 2. partnership or company deeds or amendments relating to: a) company mergers b) transformation of a company into a different company c) contribution to a company, in exchange for its shares, in some circumstances. Loans granted by a shareholder to a company are also exempt from this tax. Stamp duty Transactions subject to stamp duty include the following: bills of exchange public administration actions (application forms, certificates, permissions). Social security contribution Resident individuals and employees within the territory of Poland are subject to obligatory old age and disability insurance. 2
Rates of social security contributions are as follows: Employer Employee Old age pension 9.76% 9,76% Disability insurance 6.50% 1.50% Sickness benefits 2,45% Accident insurance 0.67% 3.86% Health insurance 9.00% Contributions to the old age and disability pensions are paid by the employer and employee. The 9.76% employee contribution is transferred to the Open Pension Fund. Contributions by employees are based on their gross income for income tax purposes. The ceiling on income on which contributions for the oldage pension and disability insurance are due is PLN 111,390.00in 2013. There is no ceiling for health and maternity insurance. The employer withholds the employees contributions. Employees contributions are deductible for income tax purposes and employers contributions are deductible for corporate income tax purposes. The contribution for accident insurance is paid by the employer. The contribution for sickness benefit is paid by the employee. In addition: 9 % of gross pay (less contributions for old age and disability insurance) for obligatory health insurance contribution (covering medical expenses) is payable by employees 2.45% of gross pay is paid by the employer to the Labour fund 0.10% of gross pay is paid by the employer for the Guaranteed Welfare Benefits Fund. B. Determination of taxable income Corporate entities are subject to corporate income tax on the net profit shown on the yearly balance sheet, computed in accordance with the statutory accounting and bookkeeping rules, after adjustment for deductions and additions provided under the tax law. Generally, expenses incurred for the production of income are allowed as deductions. It is not possible to deduct expenses which are paid more than 30 days after the due date (or up to 90 days after the invoice date for expenses payable at least 60 days after the invoice date). Depreciation Current rates range from 1.5% to 30% depending on the type of asset. As a general rule, the straight-line method must be applied although the reducing method is possible under some conditions. Inventory Stock in trade, or inventory, is valued at its historic cost price or market value. The cost of inventory may be calculated at a standard cost, at a weighted average cost, or on the LIFO or FIFO basis, as long as the method selected is used consistently. Capital gains and losses Capital gains and losses are subject to CIT tax at a rate of 19% for 2013. Dividends Dividends received from resident companies are taxed separately at a rate of 19% unless the participation exemption applies (see Section F below). The tax is withheld by the distributing company. Dividends may be distributed only from net profits of the company. Sums allocated for distribution among shareholders cannot be deducted from the taxable base. 3
Interest deductions Interest is deductible on an accrual basis. For interest from credits and loans from related parties, thin capitalisation applies (3:1 equity ratio). Losses Losses from a given tax year can be offset against the income in the five subsequent tax years but the amount deducted in any one year cannot exceed 50% of the loss incurred in the previous five tax years (including those amounts already utilised against profits). Foreign sourced income Resident companies are subject to tax on their worldwide income, including foreignsourced income and gains. However, double tax agreements may apply to reduce or extinguish the tax liability imposed under domestic tax law. Incentives Polish law provides for corporate income tax incentives such as special economic zones (SEZs). In principle, companies operating within special economic zones may enjoy tax holidays which involve tax exemption from corporate income tax within certain time limits. Investments in SEZs may be conducted subject to a permit issued by the authorities. There are now 14 such zones in Poland: Mielecka, Katowicka, Suwalska, Legnicka, Walbrzyska, Lodzka, Kostrzynsko-Slubicka, Slupska, Tarnobrzeska, Warminsko-Mazurska, Starachowicka, Kamiennogorska, Pomorska and Krakowska (Krakow Technology Park). Undertaking business activity within a SEZ requires a special permit issued by the Minister of Economy or the authorities of the SEZ. Regulations applicable to a particular SEZ may specify the minimum investment value required and/or the number of employees that must be hired to benefit from the tax exemption. C. Foreign tax relief Foreign-sourced income received by a resident company is included in its taxable base unless otherwise provided by the double tax treaty. Taxes paid abroad may be credited against the tax due. However, the amount of tax credit may not exceed the amount of domestic tax that would have been due on the income derived abroad had it been derived in Poland. D. Corporate groups In accordance with the Corporate Income Tax Act, a tax capital group may be established. Corporate tax is due on the income of the group as a whole. Such a group can be established only by joint stock companies and limited liability companies. The parent company must own at least 95% of the equity of each of the dependent companies. There are also other conditions which must be met to establish the tax capital group, such as: an average capital of all companies not lower then PLN 1 million capital group agreement period minimum three years registration of the agreement with the tax office no outstanding tax liabilities to state budget profitability ratio of the group not lower then 3% for each year all of the companies included in the group must be registered in Poland. E. Related party transactions Transfer pricing provisions apply to transactions carried out between related parties (broadly where one partly controls the other or they are under common control). The provisions apply to both transactions between a Polish and a non-polish resident entity and to those between Polish entities. F. Withholding taxes Withholding tax is deducted from interest, royalties and dividends. On payments to non-residents, it is deducted at 19% on dividends and 20% on royalties and interest payments, unless reduced by a double tax treaty. However, under the provisions implementing the EC Parent-Subsidiary Directive, dividend distributions by resident subsidiaries to their non-resident EU parent or EEA (European Economic Area) parent companies or resident parent company are exempt. In order to benefit from this regulation, the following conditions must be met: the resident parent company or EU parent or EEA parent company in receipt of the dividends must be subject to corporate income tax in Poland or the EU 4
member country or EEA country on worldwide income and must not use an exemption to prevent it from being taxed on the dividends the parent company must have owned at least 10% of the capital in the Polish company continuously for a period of at least two years. The EC Interest and Royalties Directive was implemented into domestic law on1 July 2005. Interest and royalty payments under the Directive are subject to a reduced rate of withholding tax when certain conditions are met. The rate is 5% between 1 July 2009 and 30 June 2013 and 0% thereafter. In order to benefit from this regulation, the following conditions must be met: the payer must be a company which is resident in Poland or is resident in another EU member state and has a taxable permanent establishment in Poland the payee must be a company which is tax resident in an EU Member State other than Poland the company which is receiving the incomemust besubject to tax on its worldwide income the Polish company must have owned at least 25% of the capital of the EU company continuously for a period of at least two years; or the EU company must have owned at least 25% of the capital of the Polish company continuously for a period of at least two years. G. Exchange control With effect from 2003, most foreign exchange transactions are allowed by the Foreign Exchange Act and do not require a special permit from the National Bank of Poland. Domestic persons doing business in Poland, which normally operates wholly in Zlotys, generally may hold foreign currency accounts for foreign receivables. Invoices and services purchased abroad may be paid in foreign currencies at the official exchange rate on the day that the payment is made or from their foreign currency accounts. H. Personal tax Polish resident taxpayers are subject to tax on their worldwide income, subject to double tax treaties. Non-residents are taxed only on the income derived from work performed within the territory of Poland. Tax is levied on all taxable income at progressive tax rates. The tax scale for 2013is as follows: Tax base Rate Up to PLN 3,089 0% Over PLN 85,528 PLN 14,839.02 + 32% of surplus over PLN 85,528 When calculating the income, the so-called tax-free amount is taken into account (in 2013 PLN 3,091.00) Personal income tax is reduced if, in the financial year, the taxpayer incurred expenditure as specified in the law, within the proper limits. Payers of the income tax referred to in the PIT law are obliged to calculate and collect tax payments in advance, within the year, and transfer them to the bank account of the relevant tax office by the 20th of the month following the month when the tax advance payment was collected. Taxpayers are obliged to file an annual tax return by 30 April of the following year. This obligation does not apply to taxpayers for whom the annual tax return is made by the tax collector. The submission of the tax return has to be accompanied by payment of the difference between the income tax due, as calculated in the tax return, and the sum of any tax paid in advance. 5
The income tax arising from the tax return is the tax due for a given year, unless the tax office issues a decision establishing a different amount of due tax. Individuals who receive inheritances or gifts are liable to tax for the portion they receive. Polish citizens and persons who are domiciled in Poland are also liable to this tax if the property received by them is located abroad. Gifts and inheritances of property located in Poland are exempt if neither party is a Polish citizen or domiciled in Poland. The rates are progressive depending on the category of taxpayer and value of property received and will vary from 3% to 20%. I. Treaty and non-treaty withholding tax rates Dividends (1) Interest Royalties Non-Treaty Countries: 19 20 20 Treaty Countries: Albania 5/10 10 5 Armenia 10 5 10 Australia 15 10 10 Austria 5/15 5 5 Azerbaijan 10 10 10 Bangladesh 15/10 10 10 Belarus 10/15 10 0 Belgium 5/15 5 5 Bosnia and Herzegovina 15/5 10 10 Bulgaria 10 10 5 Canada 15 15 10 Chile 15/5 5/15 5/10 China 10 10 7/10 Croatia 5/15 10 10 Cyprus 10 10 5 Czech Republic 5 5 10 Denmark 0/5/15 5 5 Egypt 12 12 12 Estonia 5/15 10 10 Finland 5/15 5 5 France 5/15 0 10 Georgia 10 8 8 Germany 5/15 5 5 Greece 19 (2) 10 10 Hungary 10 10 10 Iceland 15/5 10 10 India 15 15 22.5 Indonesia 10/15 10 15 Iran 7 10 10 Ireland 0/15 10 10 Israel 5/10 5 5/10 Italy 10 10 10 Japan 10 10 0/10 6
Dividends (1) Interest Royalties Jordan 10 10 10 Kazakhstan 10/15 10 10 Korea 5/10 10 10 Kuwait 5/0 0/5 15 Kyrgyzstan 10 10 10 Latvia 5/15 10 10 Lebanon 5 5 5 Lithuania 5/15 10 10 Luxembourg 5/15 10 10 Macedonia 5/15 10 10 Malaysia 0 15 15/( ) (4) Malta 0/10 5 5 Mexico 5/15 5/15 10 Moldova 5/15 10 10 Mongolia 10 10 5 Montenegro 5/15 10 10 Morocco 7/15 10 10 Netherlands 5/15 5 5 New Zealand 15 10 10 Norway 0/15 5 5 Pakistan 15/19 (3) 20 (2) 15/20 Philippines 10/15 10 15 Portugal 10/15 10 10 Qatar 5 5 5 Romania 5/15 10 10 Russia 10 10 10 Saudi Arabia 5 5 10 Serbia 15/5 10 10 Singapore 10 10 10 Slovak Rep. 5/10 10 5 Slovenia 5/15 10 10 South Africa 5/15 10 10 Spain 5/15 0 10 Sri Lanka 15 0 0/10 Sweden 5/15 0 5 Switzerland 5/15 10 10 Syria 10 10 18 Tajikistan 5/15 10 10 Thailand 19 10 5/15 Tunisia 5/10 12 12 Turkey 10/15 10 10 Ukraine 5/15 10 10 United Arab Emirates 5 5 5 7
Dividends (1) Interest Royalties United Kingdom 0/10 5 5 United States 5/15 0 10 Uzbekistan 5/15 10 10 Vietnam 10/15 10 10/15 Zimbabwe 10/15 10 10 1 Different treaty rates may apply depending on whether the dividend is received by a company or individual, or the percentage interest in the Polish company held by the recipient of the dividend. It is important to consult the relevant treaty for further details. 2 The domestic rate applies. 3 The domestic rate applies, apart from where the dividend is received by a company holding at least one-third of the capital of the Polish company. 4 Domestic rate applies to royalties for the use of, or the right to use cinematograph films, or works recorded on tapes for television or broadcasting. 8
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