CIT tax relief for 2023. How to prepare for the annual settlement based on the example of selected preferences?

What reliefs are CIT taxpayers entitled to?

The catalog of statutory reliefs regarding corporate income tax is quite long. Examples of deductions that can be used after meeting the appropriate conditions are:

• donations made for public benefit
• donations for religious purposes
• relief for research and development activities
• relief for the purchase of a payment terminal
• prototype relief
• consolidation relief

Donations made for public benefit and religious purposes

Even though these donations can be made separately, their total amount cannot exceed 10% of the taxpayer’s income for the tax year. It is worth remembering that donations to natural persons are not deductible.

Cash donations should be documented with proof of payment to the recipient’s bank account, and non-monetary donations should be documented with a document containing the value of the donation and the recipient’s declaration of acceptance. A donation in kind should be valued based on market prices.

Research and development tax credit

It consists in the possibility of deducting from the tax base expenses related to research and development work, the understanding of which is a constant debate between taxpayers and tax authorities. The amount of the deduction depends on the scale of the business and its status.

These costs should be documented, e.g. with invoices, and appropriately assigned to individual expenses. In the case of a dual expense (some of it relates to research and development activities, some of it does not), we should recognize the costs proportionally.

Discount for the purchase of a payment terminal

Thanks to it, we will deduct expenses for the purchase of a payment terminal and for handling payment transactions using this terminal. The relief can be applied in the year of purchase of the equipment and in the following year. The discount limit is:

– PLN 2,500 per year – for taxpayers exempt from the obligation to keep records of sales to natural persons not running a business and flat-rate farmers

– PLN 1,000 per year – for other taxpayers

Relief for a prototype

It allows you to deduct the costs of trial production of a new product and introducing the new product to the market from the tax base. Production costs include the costs of purchasing or producing brand new fixed assets, expenses for improvement and the cost of purchasing materials and raw materials necessary to start production. The costs of introducing to the market include, among others: costs of research, expert opinions, product life cycle testing or environmental technology verification system.

The deduction limit is set at 30% of costs incurred and 10% of income obtained from activities other than capital gains.

Consolidation relief

It allows for deduction from the tax base of expenses incurred for the acquisition of shares in a company with legal personality. It requires the fulfillment of a number of conditions listed in the Act as well as limitations on the types of costs – these include expenses incurred for legal services, notarial, court and fiscal fees, taxes and other public law liabilities. The purchase price of the shares itself is excluded from the relief.

The maximum value of the deduction is PLN 250,000 in a tax year, and expenses deducted from the tax base in accordance with the rules provided for in the consolidation relief are included in tax-deductible costs.

Summary

The reliefs presented above are only part of the range available to taxpayers in their annual CIT settlement. In each case, however, you should remember to meet the conditions for applying individual deductions, appropriately document the incurred expenses and store them in case of a potential audit.