Remote work and right to special economic zone CIT exemptions
Special economic zones (hereinafter: ‘SEZ’) are designated areas on the territory of the Republic of Poland in which business can be carried out on tax-preferential terms. Benefitting from the preferences under the act on corporate income tax of 15 February 1992 (hereinafter: ‘CIT Act’) in connection with the act on special economic zones of 20 October 1994 (hereinafter: ‘SEZ Act’) is subject to obtaining a relevant permit and satisfying certain conditions.
Since SEZs were established in order to stimulate, among other things, the economic growth through the creation of new jobs, one eligibility condition for preferential tax terms is maintaining a proper level of employment. Moreover, under Art. 17 (1) (34) CIT Act, an exemption only applies to revenues obtained from the business activities carried out on the territory of an SEZ given that any activities carried out by a business outside the SEZ must be separated from its SEZ activities.
Considering the above-mentioned conditions, as well as the new situation resulting from the SARS-COV-2 epidemic, numerous doubts have been raised by businesses in relation to whether or not the fact of some members of staff working remotely may adversely affect the requirement of maintaining a proper employment level and hence preclude the business from being eligible for the exemption on SEZ revenues under the CIT Act.
These doubts have been clarified in a tax ruling of the Head of the National Revenue Information Service (hereinafter: ‘NRI Head’) no. 0111-KDIB1-3.4010.46.2022.2.PC of 12 May 2022 concerning the eligibility for the CIT exemption of revenues from activities carried out on the territory of an SEZ with some employees working remotely.
The case involved a Company holding a permit referred to in Art. 16 (1) of the SEZ Act allowing it to do business in an SEZ and setting out a specific level of employment as one of the prerequisites for the CIT exemption. However, for reasons not attributable to the Company, as a result of the SARS-COV-2 epidemic, it was necessary for the Company to instruct some of its staff to work remotely, which gave rise to doubts whether or not the above requirement will still be met given this new working method.
The Company was of the opinion that the mere fact of staff performing remote work which is directly related to the Company’s activities in the SEZ does not result in its business being transferred outside the Zone. Therefore, the revenues from the activities carried out by the Company under relevant permits will be exempt from CIT, even if part of the staff work remotely.
The position presented by the Company was fully upheld by the NRI Head, who acknowledged that transferring certain activities related to an SEZ business outside the SEZ does not preclude the revenues from SEZ activities from being eligible for the CIT exemption. For doing business on the territory of an SEZ is a condition for the exemption, whereas having one’s staff present in it is not.
Natalia Szymocha, Tax Consultant, ATA Tax Sp. z o.o.
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