Withholding tax - another postponement and announcement of new regulations from 2022

The entry into force of the withholding tax regulations was originally planned for January 2019. However, the date has already been postponed a couple of times - most recently on 30 June 2021, when the Regulation of the Minister of Finance, Funds and Regional Policy came into force, changing the effective date of the regulations from 1 July 2021 to 31 December 2021. Information from the Ministry of Finance indicates that this is the latest postponement of the introduction of withholding tax regulations.

Withholding tax - what will change?

To remind, the assumption of the new withholding tax rules was the introduction of the "pay and refund" mechanism, according to which the tax is to be collected by the payer at the domestic rate, and then, if certain conditions are met, the foreign entity may apply for its return (procedure of tax collection and return). However, the Ministry of Finance is now working on amendments to the PIT and CIT Acts, which are aimed at moderating the withholding tax rules.

The response of the Minister of Finance to interpellation No. 24182 of 25 May 2021 on withholding tax, issued on 11 June 2021, indicates that draft amendments to the withholding tax regulations should be published soon and that the Ministry plans to issue the final version of the tax explanations.

The planned changes cover:

• the reduction in the subjective and objective scope of the withholding tax to be levied and refunded,
• extending an opinion on the application of withholding tax exemptions - reduced rates or exemption from withholding - under the double tax treaties