Few companies take advantage of the innovation preference. Clear rules are needed to change this.
The Ministry of Finance announces a number of new preferences in the Polish Lada, which are to improve the innovativeness of the Polish economy. It also praises the incentives for investors that have been in force for several years: for research and development (R&D) and IP Box. The problem is that they are not very popular among taxpayers. According to the latest data from the Ministry of Finance, 2.5 thousand people benefit from the R&D relief. companies, with IP Box – approx. 2 thousand. companies.
– It’s a very small number. You can see that these tax reliefs do not meet their goals, says Izabela Andrzejewska-Czernek, PhD in law, partner at Vinci & Vinci.
Risk of dispute
Experts agree that it would be better than multiplying new incentives to refine the existing ones.
– If fiscal policy is to be an element of supporting business innovation, profound changes are necessary, both in the regulations themselves and in the approach of tax authorities – says Maciej Kubica, attorney-at-law, manager at TLA. – Unfortunately, the solutions implemented so far are not clear and specific enough. Although they look good in presentations, in practice their use is very burdensome and may generate disputes with the tax administration. Therefore, a significant part of taxpayers prefer to avoid the risk and refrain from applying reliefs – he explains.
According to Izabela Andrzejewska-Czernek, there are several reasons for the low interest in preferences. First, the number of obligations associated with the implementation of each of these allowances is disproportionately large. Secondly, taxpayers are afraid of questioning tax returns after taking advantage of the tax relief. Even obtaining an individual interpretation – as the example of the IP Box shows – does not reduce this risk. Thirdly, taxpayers simply do not have time to implement reliefs, because they have to pay a lot of attention to new regulations, current settlements and maintaining the so-called tax compliance.
– Taxpayers long for the peace and stability of the tax system. It is worthwhile for the ministry to first refine the already existing tax reliefs and allow them to work – says Attorney Andrzejewska-Czernek.
Experts point to IP Box practices that are unfavorable for taxpayers. The relief allows you to pay 5 percent. income tax instead of 19 percent. Interested programmers usually receive positive interpretations. Only that in many cases they do not give them any protection. The director of the National Revenue Information asks the taxpayer whether his activities are of research and development nature and constitute a work subject to protection pursuant to Art. 74 of the Act on Copyright and Related Rights. And it is the authority issuing the interpretation that should answer this question.
– More and more taxpayers are aware that the application of the IP Box tax relief in this situation entails the risk of a dispute. There is a conviction that the tax administration is trapping them in order to demand a tax surcharge in a few years’ time – says attorney Kubica.
It’s worth simplifying
Will the Polish Order change it? According to Paweł Lewandowski, an investment advisor, the package of new preferences may be a good solution if the number of bureaucratic requirements is reduced.
– So far, entrepreneurs have received contradictory messages. On the one hand, the announcement of new preferences, on the other, numerous requirements and difficulties in applying the already existing ones. It should be hoped that the ministry will take into account the views of practitioners during the consultations, emphasizes the expert.
Maciej Kubica notes that no entrepreneur will decide to implement innovations due to the reliefs. Business conditions are of key importance.
– Therefore, perhaps a better solution would be to abandon the introduction of new tax exemptions and simplify the tax system, he says.
Opinion for “Rzeczpospolita”
Rafał Ciołek, tax advisor, partner in Andersen
The most important barrier reducing the attractiveness of the tax reliefs is the psychological barrier resulting from negative experiences as to the attitude of tax authorities towards taxpayers who used the reliefs in the past. There are also many examples today. The question is, on what basis tax authorities artificially separate hedging transactions to hedge revenues or costs from the economic activity itself conducted in a special economic zone. It is also not known how to explain the request for separate records for activities conducted on the basis of the decision on support, if there is no such statutory obligation, and additional requirements are laid down in the tax explanations. It is understandable to introduce certain additional administrative requirements for the right to benefit from the tax relief. On the other hand, using even the slightest mistake of the taxpayer to increase tax revenues in the form of sanctions exceeding the original benefits certainly discourages them from reaching for preferences.
Source: https://www.rp.pl by www.rp.pl.
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