The Polish Sejm, the lower chamber of the parliament, passed a bill on June 26 amending the 1992 Corporate Income Tax Law and the 1991 Personal Income Tax Law.
The introduction of CFC regulations is the latest move by the Polish government to limit cross-border tax optimization and close existing loopholes. Previous efforts included amending existing double taxation treaties (DTTs) or signing new DTTs to implement changes such as the following:
• introducing a switchover clause that allows Poland to unilaterally change the method for avoidance of double taxation from exemption with progression to ordinary credit;
• introducing a ‘‘real estate-rich company’’ clause (as provided for in article 13.4 of the OECD model convention);
• expanding the categories of income that are subject to the ordinary credit method rather than the exemption method, to include business profits, capital gains, and directors’ fees; and
• introducing specific antiavoidance clauses and widening the scope of the exchange of tax information clauses.