- January 07, 2019
- Posted by admin
- Tags: Business, Consukltant, Design
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Non-profit foundations and associations typically filed CIT (Corporate Income Tax) returns in paper form. A year ago, their lives were made difficult by introducing the obligation of electronic filing. Now, the filing of CIT returns via the CIT-8 paper form will be reinstated.
Why was the requirement to file returns electronically burdensome?
The mandatory requirement to file CIT-8 tax returns electronically by non-profit organizations such as foundations or associations was introduced at the beginning of this year. They had to settle their accounts using an electronic form with a qualified electronic signature. This was very burdensome, especially for those organizations that do not engage in registered business activities, such as foundations, associations, or rural housewives’ circles. It was associated with additional costs resulting from the need to purchase a qualified electronic signature, regardless of whether organizations acquired the signature independently or through a proxy holding a UPL-1 authorization to sign declarations, such as an accounting office.
Why is the paper-based filing method being reverted to only now?
The Ministry of Finance was aware of the difficulties that the obligation of electronic filing posed to public benefit organizations. However, initially, an extension of the deadline for submitting the CIT-8 declaration was introduced, giving organizations an additional 7 months to do so. The extension mainly applied to organizations exempt from tax on all income and not required to submit any PIT for the year 2018, and whose tax year began after December 31, 2017, and ended before July 1, 2019. The regulation was issued on March 4. This was necessary as most organizations are required to settle their taxes by March 31 because their tax year aligns with the calendar year. The extension of the CIT declaration deadline for foundations or associations was introduced to allow more time to prepare tools facilitating the submission of electronic statements without the need to obtain a qualified electronic signature. However, ultimately, the decision was made to return to paper-based filing.
Changes are also being introduced in annual financial statements
Starting from January 1st, public benefit organizations that do not engage in registered economic activity will be required to submit their financial statements electronically in XML format to the head of the National Tax Administration (not to the tax office). Currently, financial statements are already prepared electronically but can be created, for example, in a PDF file and submitted to the tax office through the e-PUAP system or on a data carrier like a USB flash drive. However, from the beginning of next year, all organizations will be required to create their statements in XML format. They will do this using a special application from the Ministry of Finance called e-Financial Statements. This option was available this year, but it was not mandatory yet. Now, organizations will have to use the online-only application without the option to download it to their computer. There is no return to paper financial statements (except for CIT-8 declarations), so non-profit organizations will not need to purchase a qualified signature. They can instead use a free trusted profile, which can be set up through online banking. This option is provided by nine banking services.
It seems that all public benefit organizations (non-profits), such as foundations, associations, rural housewives’ circles, etc., which do not engage in economic activity and are exempt from income tax, can breathe a sigh of relief. They will be able to submit CIT-8 declarations in a more convenient way. This change will not affect the requirement to submit financial statements electronically, but it will not be as burdensome as the electronic CIT-8 reporting introduced earlier this year.