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The pro-growth tax relief, also known as the expansion relief, is addressed to taxpayers engaged in non-agricultural business activities.

Pursuant to Art. 26gb of the PIT Act, the entrepreneur may deduct from the tax basis the tax deductible costs incurred in order to increase revenues from the sale of products up to the amount of income obtained by the taxpayer in the tax year from non-agricultural business activity, but not more than PLN 1,000,000 in the tax year.

Taxpayer reduces the amount of tax paid for the fiscal year in which the expanses were made. What about a scenario in which business shows operating loss or the tax relief is larger than the income? In such a case the taxpayer can deduct the relief in the next 6 fiscal years in a row.

There are three conditions to using the pro-growth tax relief. A business wanting to use that tax relief must meet one of them in two fiscal years in a row. The first of them is that such a business increases profits compared to the previous year. Another one is that a business gains profits from selling products which were not previously on offer. Yet another one is that a business sells products otherwise not available in the country.

Additionally, it is worth pointing out that in Art. 26b of the PIT Act, several definitions related to pro-growth relief have been defined.

It is defined that products are understood as things produced by the taxpayer. As a result, the said tax preference does not apply to commercial goods purchased for resale.

On the other hand, the costs incurred in order to increase revenues from the sale of products are as follows:

1) participation in the trade fair, incurred for:

  1. a) organization of the exhibition space,
  2. b) purchase of airline tickets for employees and the taxpayer,
  3. c) accommodation and meals for employees and the taxpayer;

2) promotional and informational activities, including the purchase of advertising space, website creation, press publications, brochures, information catalogues and product leaflets;

3) adapting product packaging to the contractors requirements;

4) documentation preparation enabling the sale of products, in particular regarding the certification of goods and registration of trademarks;

5) documentation preparation necessary to join the tender, as well as to submit offers to other entities.

As you can see, there is a specific, closed catalogue of expenses entitling to the pro-growth relief. It should also be emphasized that these expenses constitute a tax cost on an ongoing basis and at the same time may be deducted again in the annual tax return under the analysed tax preferences.

Marcin Sądej, Redaktion

There are some generalizations in the text so if you interested please contact me on the phone or via e-mail. I’ll be happy to share more details.