Poland to Issue a Draft Bill to Implement Aspects of the OECD Administrative Guidance

General

On April 7, 2025, the Polish Ministry of Finance released details for a draft bill to amend the Minimum Tax Act. The amendments are primarily to implement the June 2024 and January 2025 OECD Administrative Guidance.

Whilst details of the specific amendments to the Minimum Tax Act are still at a high level, the amendments stated are:

June 2024 OECD Administrative Guidance

Amendments to reflect Article 1 of the June 2024 OECD Administrative Guidance relating to recaptured deferred tax liabilities.

This may include:

-Aggregate DTL Category basis

-Exclusion of certain types of GL accounts and separate tracking

-Exclusion of GL accounts that generate standalone DTAs

-Exclusion of swinging accounts and separate tracking

-FIFO/LIFO Basis

-Aggregation of Short-term DTLs

-Reversal of DTLs that accrued before the Transition Year

-5 year unclaimed accrual election

Amendments to reflect Article 2 of the June 2024 OECD Administrative Guidance relating to Divergences between GloBE and accounting carrying values.

This may include:

-Recalculated deferred tax where GloBE carrying value differs from accounting carrying value

-GloBE and accounting carrying values and the Transition Rules

-Additional provisions for Intragroup transactions accounted for at cost

-Exclusion of GloBE carrying value from the substance-based income exclusion 

Amendments to reflect Article 3 of the June 2024 OECD Administrative Guidance relating to the allocation of cross-border current taxes.

This may include:

-General rules for allocating cross-border, current taxes under a cross-crediting corporate tax system: 4 Steps

-Specific rules for foreign PEs/CFCs, Hybrids/rev hybrids with domestic source income

-Cross-crediting between Permanent Establishments and distributions from foreign subsidiaries

Amendments to reflect Article 4 of the June 2024 OECD Administrative Guidance relating to the allocation of cross-border deferred taxes.

This may include:

-Extension of the Substitute Loss Carry-forward DTA to PEs, hybrids and reverse hybrids

-Allocation of deferred tax expenses and benefits from a Parent Entity to a CFC, PE Hybrid or Rev Hybrid: 5 step process

-Five-Year Election to exclude the allocation of all deferred tax expenses and benefits to CFCs, PEs, Hybrids and Reverse Hybrids

-Exclusion of deferred tax assets or liabilities arising under a Blended CFC regime from transition rules

Amendments to reflect Article 5 of the June 2024 OECD Administrative Guidance relating to the allocation of profits and taxes in structures including flow-through entities.

This may include:

-Determining GloBE status when a Flow-through Entity is held directly by another Flow-through Entity

-Non-group owners: Partially owned Flow-through Entities

-Non-group owners: Indirect minority ownership

-Taxes allocated to a flow-through entity

-Hybrid entities – Taxes pushed down include indirect owners

-Hybrid entities – Entities located in jurisdictions without a Corporate Income Tax system

-Extension of taxes pushed down to include Reverse Hybrids.

January 2025 OECD Administrative Guidance

The draft law will include provisions to apply the January 2025 OECD Administrative Guidance on the application of Article 9.1 to deferred tax assets arising from tax benefits provided by General Government.

Other Changes

Other amendments in the draft law include:

-Amendments to Article 148 of the Minimum Tax Act which provides for the Transitional CbCR Safe Harbour. The amendments are to ensure that the Safe Harbour is aligned with the OECD Administrative Guidance

-Administrative provisions relating to Pillar Two returns and elections

-Further clarification on the use of a local accounting standard for Poland’s domestic minimum tax (QDMTT) under Article 29 of the Minimum Tax Act.