Tax incentives for small enterprises

Tax exemptions for small businesses.

Small businesses operating in the Śląskie Voivodeship are eligible for a CIT exemption of 45% of their capital expenditures incurred for a new investment or the two-year costs of newly created jobs (as preferred). In the Śląskie Voivodeship this exemption is at 55%.

Example of how public-aid is calculated

Śląskie Voivodeship:

Your business will not pay CIT until the sum of unpaid tax reaches PLN 4.5 million (based on capital expenditures) or PLN 2.296 million (based on new jobs).

Opolskie Voivodeship:

Your business will not pay CIT until the sum of unpaid tax reaches PLN 5.5 million (based on capital expenditures) or PLN 1.584 million (based on new jobs).

CIT exemption period:

The KSEZ issues decisions regarding investor support. Such decisions are issued for a period of 15 years if the investment is made within the KSEZ or for 10-12 years for investments outside the KSEZ (depending on the unemployment rate).

What may be included in qualified investment costs?

The costs qualifying for the aid shall mean costs of an investment decreased by tax on goods and services and excise tax charged, if the possibility of their deduction results from separate regulations, incurred within a special economic zone during the duration of the permit, constituting:
1) purchase price of the ownership title or perpetual usufruct right to the site;
2) purchase price or costs of manufacturing, within one’s capacity, of fixed assets, provided that they are classified, under separate regulations, as elements of taxpayer’s property;
3) costs of extension or modernisation of the existing fixed assets;
4) purchase price of intangible assets connected with the transfer of technology through the acquisition of patent rights, licences, know-how or unpatented technical knowledge, subject to sub-clause 2 and 3;
5) costs connected with lease of sites, buildings and structures, provided that the lease period shall be at least 5 years, and in the case of small and medium-sized enterprises – at least 3 years counting from the expected date of new investment termination;
6) purchase price of the assets other than sites, buildings and structures covered by the lease, if the lease has the form of financial leasing and covers the obligation to purchase assets upon the expiry of lease period.

Rules of operating within the zone:

Entrepreneurs operates within KSEZ on the basis of valid permit received to run business activity within the zone consisting of 2 conditions:

1. Creation of specific number of work places within KSEZ within the specified period.
2. Bearing the specified amount of investment costs within the zone within the specified period.

The date for above conditions’ fulfilment is provided by investor (in accordance with KSEZ).

Newly employed employees shall mean the number of employees employed after obtaining a permit in connection with the performance of a new investment, however not later than within the period of 3 years following the completion of an investment.

The following conditions shall be met in order to obtain the right to income tax exemption:

• preservation of ownership title to the property elements connected with investment expenditure – for the period of 5 years following their entry into fixed and intangible assets register within the meaning of income tax regulations, and in the case of small and medium-sized enterprises – for the period of 3 years, however the replacement of outdated installations or equipment due to fast pace of technological development shall not be excluded;
• preservation of the investment in the region in which the aid has been granted for the period not shorter than 5 years following the termination of the whole investment, and in the case of small and medium-sized enterprises – for the period not shorter than 3 years

Investor is obliged to maintain declared employment level:

• for a period of at least 5 years after completion of investment in case of big enterprises
• for a period of at least 3 years in case of medium and small enterprises

Investor is also obliged to submit to KSEZ Co., simple in form and content, monthly  statements including information on current level of employment as well as amount of investment costs.
KSEZ Co. conducts periodic, annual inspections in investors’ companies to verify actual levels of investment costs and employment.