New taxation Changes from 1 September 2024: How will millions of Poles benefit?

At the beginning of September 2024, crucial changes in taxation regulations will enter into force, which could benefit millions of Poles, especially entrepreneurs and self-employed people. The Ministry of Finance has prepared an amendment to the Income taxation Act, which has already been approved by the government. The main innovation is the introduction of the anticipation to choose the PIT cash settlement, which represents a major step forward in improving the taxation strategy in Poland.

PIT – What does it mean?

One of the most crucial elements of the amendment is the anticipation to choose the alleged cashier PIT. So far, entrepreneurs and self-employed people have been obliged to account for their finances according to accrual method. This meant that the gross was recognised at the time of the invoice or service, regardless of whether the payment was received.

Main accrual method problems:

• Taxation of unpaid invoices: Entrepreneurs had to pay income taxation that had not yet been paid to them, which was peculiarly burdensome in the case of long payment periods or non-payment by counterparties.
• Financial liquidity problems: Regardless of real income, entrepreneurs were forced to pay taxation liabilities, which frequently led to liquidity problems.

What Benefits Does the Cash PIT Carry?

The introduction of a PIT is simply a change aimed at adapting the taxation strategy to the actual financial situation of taxpayers.

Key benefits for entrepreneurs:

• Tax only on gross actually received: Entrepreneurs will only pay income taxation on actual receipts, thus avoiding taxation of unpaid invoices.
• Improvement of liquidity: Only after receiving payment will companies gain better control of their finances and it will be easier for them to manage their current expenses.
• Simpler and more transparent accounts: The fresh strategy will simplify the settlement process, which will translate into a lower administrative burden for entrepreneurs.

Who's gonna benefit from the fresh recipes?

These changes are aimed primarily at entrepreneurs and self-employed people, but they can besides benefit a wide scope of taxpayers who carry out business activities.

Groups that will benefit most from the changes:

• Small and medium-sized entrepreneurs: Companies that frequently face problems due to late payments will feel the top financial relief.
• Self-employed: Freelancers and single-person entrepreneurs will be able to manage their finances better without having to pay income taxation that they have not yet received.
• Industries with long payment deadlines: Companies operating in sectors where payment deadlines are longer than standard will gain liquidity and will have more resources for current expenditure.

What are the challenges and risks?

Although the introduction of the PIT cashier brings many benefits, there are besides any challenges that entrepreneurs will gotta face.

Main risks:

• Need for accurate checks on payments: Entrepreneurs will gotta monitor their receipts even more closely to avoid liquidity problems.
• Possibility of late payment: A change in the strategy can lead to a situation where any companies will hold payments to postpone payment of tax.

What's next? How to Prepare for Change?

Entrepreneurs should start preparing for the coming changes now. Here are any steps worth taking:

• Analyze Your Financial Situation: Check how changes can affect your company and whether it is worth going to the PIT box office.
• Update Accounting Systems: Make certain your accounting strategy is ready to handle a fresh settlement method.
• Consult with taxation advisor: An advisor will aid you measure whether the PIT cashier is beneficial to you and how best to prepare for changes.

The fresh taxation rules, which will come into force on 1 September 2024, will bring crucial benefits to millions of Poles, especially entrepreneurs and self-employed people. The PIT cashier will let better financial management, reduce the hazard of taxation of unpaid invoices and improve the liquidity of companies. However, entrepreneurs should already start preparing for these changes to maximise fresh opportunities and avoid possible risks.