With effect from 1 January 1997, there now exists the possibility of recognising debt written off as irrecoverable as a revenue earning cost.
This may occur where the cost of legal proceedings relating to the collection of the debt would exceed the amount of the debt itself. Article 16.125 of the Tax Code states that a provision against a bad debt will only be deductible if it is probably irrecoverable and certain criteria have been already satisfied, such as initiating legal proceedings. The changes now allows tax deductibility where theses criteria have not been met. Hitherto, a provision could be created, but it would not be tax deductible.
Tax laws and practise are constantly being revised and, whilst every effort is made to ensure that the information in this tax newsletter is accurate and timely, no decision should be taken on the basis of the information herein without first consulting with KPMG Polska.
Should you have any questions in relation to the above issues, please contact:
Oliver Sinton KPMG Polska LIM Center - Marriott Hotel - IX floor Al. Jerozolimskie 65/79 00-697 Warsaw, Poland Tel: +48 (22) 630 7236 Fax: +48 (22) 630 6355