Cash PIT. There will be a solution for companies that cannot obtain payment from their contractor

Work on cash PIT is starting. It will be available to entrepreneurs starting a business and those whose revenues from this activity in the previous tax year did not exceed PLN 500,000. PLN – said Maciej Berek, responsible for the legislative process in the government.

What is cash PIT?

The description of the solutions of the draft act states that the purpose of the regulation is to support entrepreneurs running small businesses. “In the current legal situation, the principle in personal income tax is the accrual method of determining business income. Revenue includes amounts due, even if not actually received, after excluding the value of returned goods, discounts and discounts granted,” we read.

For an entrepreneur, income from business activity arises on the date of issuance of an invoice, provision of a service or release of goods, regardless of whether the entrepreneur has received the payment due to him. As a consequence, the entrepreneur is obliged to pay income tax on income that he has not yet actually received. This is a dangerous situation, because it often happens that entrepreneurs have to collect receivables from their contractors for months, giving them credit, as it were – but they still had to pay tax on non-existent income.

Cash PIT for whom?

Cash PIT will be able to be chosen by entrepreneurs conducting business individually, provided that their revenues from this activity in the previous tax year did not exceed PLN 500,000. PLN and entrepreneurs who start running a business. Entrepreneurs who keep accounting books will not be able to choose cash PIT.

“This method of settlement will only apply to transactions between entrepreneurs (so-called B2B), i.e. the taxpayer will recognize revenue and costs of obtaining revenue on a cash basis when another entrepreneur is a party to the transaction,” the description explains.