The securing opinion is issued by the Head of KAS and is intended to confirm that the activities planned by the entrepreneur do not constitute tax avoidance within the meaning of the so-called GAAR clause.
Our client has unsettled tax losses carried forward and additionally plans to repay interest from loans which will not be fully settled at the moment of its repayment due to restrictions resulting from thin capitalization. Thus, significantly increased tax costs from unsettled interest as well as tax losses could not be settled by the taxpayer in a “standard” circumstances (the planned income would be too low). As a result, the client would “loose” the tax asset in the form of non-deducted interest and tax losses.
The solution was to reduce the depreciation rates which would significantly increase the income and allow to settle the interest and losses, i.e. achieve a tax benefit.
The Head of KAS confirmed that such action is allowed by law and does not constitute tax avoidance.
It is worth underlining that according to the official data presented recently by the Ministry of Finance, as of 23 October 2020, a total of 60 requests for securing opinions were submitted and the Head of KAS issued 22 opinions in total.