16. Net regulatory charges

Annual Report
2019

Accounting policies

CONTRIBUTIONS
AND PAYMENTS
TO THE BGF:
According to IFRIC 21 “Levies”, fees paid by the Group to the Bank Guarantee Fund are recognized in profit or loss upon the occurrence of the obligating event.

The Group makes contributions to the banks’ guarantee fund (quarterly) and the banks’ mandatory restructuring fund (annually). Contributions to the guarantee fund and the mandatory restructuring fund are not tax-deductible.

FEES TO PFSA In accordance with IFRIC 21 “Levies”, fees paid to the Polish Financial Supervision Authority are recognized in profit or loss upon the occurrence of the obligating event.

Both fees (to cover the cost of banking supervision and to cover the costs of supervision over the capital market) are paid once a year. Fees paid to the Polish Financial Supervision Authority are tax deductible

FLATRATE
INCOME TAX
The Act of 23 October 2018 on amendments to, among other things, acts on income taxes, introduced a possibility of an alternative to taxation with WHT, namely a 3% tax on certain interest paid to non-residents. Therefore, on 29 March 2019, the Bank filed a notification on the election of the 3% taxation option with the tax office in respect of:
  • interest on loans which are paid by the Bank to PKO Finance AB with its registered office in Sweden (the election of the taxation, compliant with the act, relates to the years 2014– 2022)
  • and interest on Eurobonds issued by the Bank before 1 January 2019.
OTHER TAXES
AND FEES  
Property tax, payments made to the State Fund for Rehabilitation of Disabled Persons, municipal and administration fees.

Financial information

NET REGULATORY CHARGES 2019 2018
Contribution and payments to the Bank Guarantee Fund (BGF), including: (509) (427)
to the Resolution Fund (348) (167)
to the Banks’ Guarantee Fund (161) (260)
Fees to PFSA (41) (28)
Flat-rate income tax, of which: 81 (49)
withheld tax (20%) 138 (49)
flat-rate income tax (3%) (57)
Other taxes and fees (68) (71)
Total (537) (575)

Due to the fact that the Bank collected 20% withholding tax on interest paid to PKO Finance AB for 2017–2018, on 12 February 2019, it filed a request to determine overpayment of tax together with corrected tax returns. The request was accepted without issuing a decision on this matter. The Bank was informed by the Tax Office that its application had been approved and requested for the instruction on the overpayment settlement approach.

The correction of the 20% withholding tax by PLN 138 million in plus and recognizing the 3% tax on interest assessed for 2014–2018 (PLN 50 million) are one-off events, however the amount of tax (3%) on interest accrued in 2019 amounts to PLN 7 million. The 3% tax option in respect of tax interest on loan paid to PKO Finance AB results from Article 21 of the Act of 23 October 2018 on amendments to the Act on personal income tax, the Act on corporate income tax, the Act on tax code and other acts (Journal of Laws of 2018, item 2193 with further amendments). The Group paid the tax in the mandatory statutory period, i.e. to 31 July 2019.

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