MF further explains calculation of PIT advances
In the last two days, the Ministry of Finance has issued two more documents to help understand the rules for calculating PIT advances on salaries.
The first is the Ministry’s position on the decree issued on 7 January 2022, which changed the way PIT advances are calculated. The second is the tax explanatory note.
– Following a wave of criticism of the ordinance, where tax experts suggested its unconstitutionality and some suggested that the provisions of the ordinance should be disregarded and based on statutory regulations, the ministry believes that: “the non-application of the Ordinance leads to harming the interests of employees, principals, pensioners and annuitants, while it was the proper important interest of taxpayers that was the basis for the decision to extend the deadlines for collecting the excess advance payment and its transfer to the tax office” – quotes Adam Allen, tax advisor, partner at Thedy & Partners.
What, then, is in the explanatory note?
– The MF explains that the regulation is applicable when the monthly income, inter alia from remuneration, obtained by the taxpayer via the remitter does not exceed PLN 12,800; however, this limit applies separately for each source of income. This means that payers during the year will have to apply the old rules – in force until the end of 2021 – and the new rules, resulting from the Polish New Deal. The payer, calculating advance tax payments in two ways, has to apply the facts existing in a particular taxpayer on the day of calculating the advance tax payment in 2022. If the advance payment from the Polish Order exceeds the advance payment calculated under the old rules, a surplus arises, which is subject to deferral. The payer collects from the taxpayer the lower advance payment, i.e. the one calculated under the old rules. When at some point in the year the advance payment according to the Polish order will be more favourable, the payer will apply the new rules – explains Adam Allen. Based on the explanatory note, payers are obliged to apply the regulation, which can only be commented on as a precedent case when the optional right to use the deferral would be obligatory. In the whole case, it easy to miss the fact that the lower advance payment is subject to later compensation, so if, after the application of the regulation, a given employee earns more at the beginning of the year, at the end of the year he or she will earn less as a result of the adjustment – adds Adam Allen.