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Corporate Taxes And COVID-19 Changes

Kitty Miv, Editor
23 October, 2020

From budgets in last week's column, this week we will be moving on to look at tax measures specifically affected businesses, starting with Poland, where corporate tax reforms are currently being discussed in Parliament.

Two bills currently before Poland's parliament would bring about sweeping changes to the country's corporate tax rules. Some of the proposed changes were consulted on over the summer.

The legislation under discussion would establish an "Estonian-style" corporate tax regime. Under Estonia's corporate tax system, tax is generally due only when profits are distributed. According to the Polish Ministry of Finance, the planned moves aim to encourage companies to retain profits and reinvest them into the economy, in order to help the country to recover from the COVID-19 crisis. In the tabled bill, the Polish Government has proposed to expand access to the concessionary tax regime, by enabling access for companies whose revenues do not exceed PLN100m (USD26.6m), up from PLN50m under the original plans.

If approved, the amendment to the corporate income tax act would enter into force from January 2021.

The second bill before Parliament would, among other things, raise the sales revenue threshold for access to the reduced, nine percent corporate income tax rate from PLN1.2m to PLN2m from January 1, 2021; and introduce tax under the corporate tax system for certain partnerships that do not disclose the identity of their partners, from 2021.

In Georgia, meanwhile, it emerged that sectoral assistance was on offer, via a planned introduction of a five percent corporate tax and individual tax rate to IT and maritime services companies and their employees.

The Government said the five percent rate would replace the standard corporate tax rate of 15 percent and the tax on personal income of 20 percent.

The reliefs are being offered to attract investment in Georgia from international businesses, also to support the economy to recover from the COVID-19 pandemic.

Then in Turkey, it was reported that there were plans to further reduce the corporate tax burden next year and introduce a special rate for small businesses.

Turkey's corporate tax rate currently stands at 22 percent and is due to be reduced to 20 percent in 2021 under existing plans. However, various media outlets have reported that the Government is working on proposals to reduce corporate tax further next year to mitigate the impact of the COVID-19 pandemic on the economy.

It is reported that the tax rate for small businesses (those whose turnover is less than TRY10m, or about USD1.27m) will be reduced to 15 percent, with other companies possibly subject to an 18 percent rate.

Until next week!


About the Author

Kitty Miv, Editor

Kitty was born in Argentina in 1960 to a Scottish cattle rancher and his Argentine wife. Educated in Edinburgh and at Princeton, Kitty worked for the World Bank as an economist, where she met and married an emigre Iranian banker. During her time with the Bank, Kitty worked in a number of emerging markets, including a spell in the ex-USSR as a Transition Economies Team Leader. Kitty is now a consultant in Brussels and has free-lance writing relationships with a number of prominent economic publications. kitty@lowtax.net


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