The end of the tax haven in ports? The ministry is introducing tough conditions

The income tax exemption for seaport managers is to be linked to specific expenses and require reporting obligations – according to the draft law prepared by the Ministry of Infrastructure. The aim is to ensure that national regulations are consistent with EU law.

On Wednesday, a draft act amending the Act on ports and harbors and the Corporate Income Tax Act was published on the website of the Government Legislation Center. The regulatory impact assessment (IAS) indicated that the amendment is necessary due to the European Commission's reservations regarding the exemption of ports from income tax (CIT) in the Polish legal system. According to the EC this constitutes illegal state aidtherefore the Commission called on Poland to adapt the tax exemption for entities managing ports and marinas to the requirements of European Union law on state aid. If appropriate legislative action is not taken, the EC may apply for taxpayers to refund the tax benefits they have obtained since 2007.

For this reason the Ministry of Infrastructure is planning changes to the exemption to ensure its compliance with EU regulations. The Ministry emphasized that investments carried out by sea ports generate significant income for the State Treasury due to the increased impact of various types of public law liabilities.

The proposed amendment assumes that the exemption would cover expenses incurred for: conducting activities to which the competition rules set out in EU treaties do not apply; construction, replacement or modernization of port infrastructure or infrastructure providing access to ports or marinas from the sea or land; dredging and planning costs for the above-mentioned activities. “Despite the modification of the support conditions, the amount of the expected tax benefit will be similar to that currently obtained by taxpayers,” the ministry assured.

Moreover, a condition for separate accounting of aid funds is proposed. Additionally, entities are to be obliged to keep separate records for non-economic activities and to assign revenues and costs to the appropriate nature of the activity. Entities that want to benefit from the exemption will have to submit to the territorially competent director of the maritime office (DUM), among others: annual expenditure reports together with an auditor's report confirming the accuracy of the report.

DUM will verify whether the managing entity received support correctly and decide on the fulfillment of the aid conditions and its correct amount. If it finds that the regulations have been violated, it will be able to oblige the managing entity to return public aid along with interest.

The project assumes that the Minister of Infrastructure will issue a regulation specifying the types of non-economic activities of the managing entity and detailed conditions for using public aid in the form of income exemption from corporate income tax. (PAP)

jls/mmu/