Hidden CIT trap: small companies could pay the 22% rate too during routine restructurings

Small firms at risk from the CIT change

• Draft Polish CIT rules would set a 22% rate for the largest companies from next year.
• Tax advisers warn the same higher rate could hit small firms taking part in ordinary reorganisations.
• Piotr Stryjewski of Paczuski Taudul says the rules target routine internal restructurings, regardless of revenue.

The Ministry of Finance says the rules on company restructurings are meant to stop firms from avoiding the 22% rate (Pułapka w noweli o CIT. Wyższy podatek zapłacą też małe firmy – pro.rp.pl). Tax advisers argue the wording reaches further. According to them, a higher tax could apply to companies that take part in a normal reorganisation of their business, including those with low revenues.

Why ordinary restructurings are affected

Piotr Stryjewski, an attorney and tax adviser at the Paczuski Taudul law firm, says the provisions strike at routine internal restructurings, a common part of running a business. A small company does not need to be a target of the rules for them to apply. A reorganisation that looks purely administrative could be enough to trigger the higher rate.

What the change is meant to do

The largest companies are set to pay 22% from next year. The government presents the rate as a way to close loopholes. The question for smaller businesses is whether the rules distinguish between tax-driven restructurings and those made for ordinary commercial reasons. Advisers say the current drafting does not clearly make that distinction.

Companies planning reorganisations in the coming months may need to check how the final wording treats their structures before committing to changes.