Revenue and Expense Ledger (KPiR)

Entrepreneurs running sole proprietorships as well as civil-law partnerships, general partnerships and professional partnerships maintain a Revenue and Expense Ledger (KPiR) under the simplified bookkeeping system for the purpose of determining income tax.

Each document is recorded after prior verification of its substance and formal correctness. In the KPiR, only revenues and costs permitted by the tax act are recorded — unlike full financial books, where all revenues and costs earned and incurred by the enterprise are captured.

The accounting software consolidates the income-tax calculation systems with VAT records (on a quarterly or monthly basis). The key obligations of a VAT payer include:

• filing the Standard Audit File for Tax (JPK),
• timely payment of the tax.

With regard to income tax, the taxpayer is required to make advance payments and to file an annual declaration of income earned (or loss incurred).

An important instrument for calculating income tax is the fixed-asset register, which allows the tax base to be reduced by depreciation charges. A fixed asset is an item with an initial value exceeding PLN 10,000 and an expected useful economic life of more than one year. The purchase cost of such an asset does not reduce the tax base in a single instalment; instead, it is spread over "instalments" that regularly increase the company’s costs until the total depreciation charges equal the initial value of the fixed asset.