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IPF Counts Cost Of Polish Interest Deduction Changes

by Ulrika Lomas, Tax-News.com, Brussels

05 October 2017


Consumer credit company International Personal Finance (IPF) has said that changes to Poland's corporate tax law approved by the Government recently will have a significant impact on its business.

In a statement issued on October 4, IPF noted that proposed changes to corporate tax were approved by the Council of Ministers on October 3. It said that based on an earlier draft of the proposals, the main impact for IPF would be an increase in tax payable arising from disallowance of tax deductions for expenses linked to certain intra-group transactions.

Under the proposals, the amount of interest that a company can offset against income would be limited to 30 percent of earnings before interest, tax, depreciation, and amortization.

"For illustrative purposes, in the absence of the Group taking mitigating action, such as replacing the current intra-group credit hedging arrangement with a third-party equivalent, the proposals would have resulted in an increase in the Group's tax charge of around GBP12m (USD15.9m) to GBP14m," the company stated.

"In addition, it would result in a one-time accounting charge in 2017 of up to GBP30m arising from the write-down of a deferred tax asset," it added.

IPF said that the proposals are expected to be submitted to the Polish Parliament for consideration before coming into force on January 1, 2018.

The statement said that the company is continuing to review the proposals, which may change before being put into law.

TAGS: Finance | tax | business | interest | law | accounting | transfer pricing | Poland | Personal Finance | BEPS

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