Will limited and general partnerships have to pay CIT?

According to the published information, the aim of the planned changes is to tighten the corporate and personal income tax system, and one way to achieve this goal would be to tax limited partnerships, and in selected cases also general partnerships.

Under the current regulations, limited partnerships are tax transparent entities, which means that they are not subject to income tax. PIT or CIT taxpayers are its partners in proportion to their shares. Similar taxation rules apply to general partnerships.

In the past, the tax-transparent businesses were limited joint-stock partnerships. Their income was often used to optimize taxes and that is why they have been covered by the CIT Act since 2014.

On the basis of the presented information, it follows that, from next year onwards, the legislator intends to agree on a similar fate for limited partnerships and general partnerships, while CIT taxation of general partnerships will apply if the personal income taxpayers participating in the profits of such partnerships are not disclosed.

Due to the fact that such announcements are only directional ones, it is difficult to predict at this stage what rules would apply to limited partnerships taxation and whether the changes would cover all such entities.