Dorota Białas

Steuerberaterin (Polen)
Associate Partner
Phone: +48 71 60 60 402

In the April and December 2015 issues of our SEZ News, we told you about the change in the tax authorities' and administrative courts' approach to accounting for state aid where the business entity holds several SEZ permits.

It is very often the case that entities carry on business in Special Economic Zones based on more than one permit. A situation where enterprises kept the same records for several permits for business in SEZs had not raised any doubts among tax authorities for years. It had never been a problem, either, when an entity first used up a limit of state aid granted to it under a chronologically older permit, and then moved on to use limits under the next ones. In late 2014, the Minister of Finance changed his stance – now, advance tax rulings require entities to keep separate records for every permit and prohibit using state aid in chronological order. Importantly, the Minister of Finance goes on to change the interpretation of earlier positive advance tax rulings. One of the examples is the advance tax ruling of 8 December 2015, file no. DD10.8221.199.2015.MZB. The tax authority held that if an entity carried on business in the Special Economic Zone it should have calculated the allowable state aid limit separately for every permit. Thus, adding up state aid under all permits for business in SEZ and using limits under the individual permits chronologically is not allowed. In effect, if an entity carries on business in a SEZ, it will be obligated to keep records in compliance with Article 9(1) of the CIT Act. Such records should enable identifying expenses incurred in relation to every permit. This is to enable accounting for all projects separately.

The latest administrative court rulings give hope though. In its judgement of 14 June 2016 (file no. I SA/Rz 345/16), the Provincial Administrative Court (PAC) in Rzeszów held that revenues and expenses of an enterprise doing business in a SEZ were determined based on general principles of tax law. This applies to income generated from business in a SEZ, rather than income generated as a result of implementation of an investment project or new jobs. Article 17(1)(34) of the Corporate Income Tax Act refers to the permit but the permit does not define the expenses and tax-exempt income; these arise in the course of business in a SEZ. There is also no legal basis that would allow inferring that an enterprise is required to keep separate records for every permit. Only if an enterprise conducts a business activity also outside a special economic zone must the in-zone and outside-zone activity be organisationally separated, and the exemption amount should be determined on the basis of data from the organisational unit which conducts the business activity exclusively within the zone. The fact that individual permits set a maximum state aid limit does not defeat the business-friendly approach because the individual permits make up the total aid limit available to an enterprise.

The judgement is not final, but it reflects the stance already expressed in an earlier judgement passed by PAC in Rzeszów on 8 December 2015 (file no. I SA/Rz 1035/15). Possibly, this could be the beginning of taxpayer-friendly judicature. 

If you hold more than one permit for business in SEZ, we recommend reviewing how you calculate the state aid and document its utilisation. Our tax advisers in Rödl & Partner offices in Cracow, Gdansk, Gliwice, Poznan, Warsaw and Wroclaw will be glad to help you on your operations in Special Economic Zones. They will also answer your other questions about taxes, and will provide legal advice in Poland on conducting a business within a SEZ as well as any other aspects of your operations.