Reduction of the limit of cash transactions starting from 1 January 2017

I. Reduction of the limit of cash transactions starting from 1 January 2017

On 30 May 2016 the President signed an amendment to the Act on Personal Income Tax, Act on Corporate Income Tax and the Act on Freedom of Business Activity regarding reduction of the limit of payments related to the conducted business activity. The amendment comes into effect as of
1 January 2017.

Currently, pursuant to Article 22 clause 1 point 2 of the Act on Freedom of Business Activity entrepreneurs may make cash payments up to 15 000 euro. Entrepreneurs are obliged to make payments by bank transfers only when they exceed the above limit. So far, a breach of the above regulation has not caused any tax consequence.

Starting from 1 January 2017 the limit of cash transactions will be PLN 15 000. Making or accepting payments without using the payment account, in the case where the single value of a transaction – regardless of the number of payments resulting from it – exceeds PLN 15 000, will result in PIT taxpayers who conduct non-agricultural business activity and CIT taxpayers not being able to recognise as a tax deductible expense the cost in the part in which the payment was made without the use of the payment account. Transactions in foreign currencies will be converted to Polish zlotys according to the medium rate of exchange of foreign currencies announced by the National Bank of Poland as of the last business day preceding the date of the transaction.

Interim provisions provide that the regulations will apply to payments made in the fiscal year starting after 31 December 2016. At the same time, this solution will not apply to payments resulting from transactions executed before 1 January 2017, if the value of the transaction does not exceed the previous limit, i.e. 15 000 euro.

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