This article describes historical rules. The cost correction statement and the correction obligation under Article 24d of the PIT Act (personal income tax) have not applied since 1 January 2016 – in 2026 such statements are not prepared. Today the consequences of unpaid or incorrectly paid invoices follow from other provisions: a payment above PLN 15,000 in a transaction with another business made without a payment account or to an account not on the VAT taxpayer white list is not a tax-deductible cost (Article 22p of the PIT Act, in CIT (corporate income tax) Article 15d), and for invoices unpaid within 90 days of the due date the bad debt relief applies – the creditor may reduce the tax base and the debtor must increase it (Article 26i and Article 44(17) of the PIT Act, in CIT Article 18f).
Changes in tax law introduced from 1 January 2013 significantly affected how the KPiR (tax revenue and expense ledger) was kept. One of the most important changes was the obligation to correct costs for expenses not paid within 30 days of the due date (and, for payment terms longer than 60 days, within 90 days of recognising the cost). These rules applied until the end of 2015 and required business owners to pay particular attention to their accounting records. We apply the current rules on recognising costs in the KPiR every day when providing our accounting services.
The cost correction was a mechanism meant to ensure that tax-deductible costs were actually incurred by the taxpayer. If expenses were not paid within the specified period, the business owner had to reduce costs or increase revenue in their accounts. This procedure required detailed documentation and the preparation of appropriate statements.
The obligation to correct costs for unpaid expenses applied from 1 January 2013 to the end of 2015. It was introduced by the Act of 16 November 2012 on reducing certain administrative burdens in the economy (Dz.U. (Journal of Laws) 2012 item 1342), which added Article 24d to the PIT Act (in CIT – Article 15b)
The Minister of Finance introduced a significant simplification for businesses, allowing aggregate entries in the tax revenue and expense ledger. This solution made it possible to manage cost corrections more efficiently and reduce the administrative burden of bookkeeping. Similar questions about how to record entries arise with returnable and non-returnable pallets in KPiR.
Legal basis of the cost correction
The correction obligation followed from Article 24d of the PIT Act, and the way of recording it in the ledger was set out in detail in the Regulation of the Minister of Finance of 26 August 2003 on keeping the tax revenue and expense ledger (consolidated text Dz.U. 2014 item 1037). Paragraph 26a of this regulation (repealed from 2016 by the regulation in Dz.U. 2016 item 467) precisely defined the rules for making corrections and the documentation requirements businesses had to meet.
Under the rules, business owners could (but did not have to) make aggregate entries reducing tax-deductible costs or increasing revenue at the end of each month. This monthly cycle allowed systematic monitoring and correction of entries while ensuring compliance with tax requirements.
Correcting entries could be made at the end of each month within the deadline set in § 30(1) of the regulation. They were based on data from monthly statements of documents under § 12(3) point 1a
The key element of the procedure was the preparation of monthly statements of documents, which formed the basis for aggregate entries. These statements had to contain all the information needed to settle cost corrections correctly and determine their impact on the business's tax result.
The rules also set detailed requirements for the form and content of correcting documents. The Minister of Finance specified exactly what evidence should document a cost reduction, which was meant to ensure the transparency and verifiability of the accounting operations. Such evidence then has to be kept for the required period — our guide explains how to store accounting records.
Structure of the cost correction statement
The cost correction statement had to contain specific elements required by the regulation. The first required element was the sequential entry number, which ensured systematic numbering and made it easier to identify individual items in the records.
The second key element was the numbers and dates of the documents referred to in § 12(3) point 1a of the regulation. This information was needed to link the statement to specific source documents and make the basis of the corrections fully traceable.
The third required element was the total value of the reduction of tax-deductible costs or the increase in revenue resulting from the documents. This value was the basis for the actual entries in the tax revenue and expense ledger.
The cost correction statement had to contain the sequential entry number, the numbers and dates of the documents and the total value of the cost reduction or revenue increase. These three elements were mandatory under § 26a(3) of the regulation
The statement was structured so that the whole cost correction process could be easily traced. Each item in the statement had to be clearly linked to a specific source document, which allowed the inspection authorities to verify the corrections.
Using the statement in practice required business owners to collect documents subject to correction systematically and compile them periodically in line with the rules. This process, although time-consuming, was necessary to comply with the tax regulations in force.
How the statement was prepared
Preparing the cost correction statement required a systematic approach and following specific procedures. Business owners had to keep a running record of documents subject to correction and update their statements regularly in line with the monthly cycle.
The first step was to identify all expenses that had not been paid within the statutory period and were subject to correction. This required careful analysis of the accounting records and checking the payment terms of individual liabilities.
- Review all accounting documents for the month
- Identify expenses not paid within the statutory period
- Prepare the source documents for the statement
- Prepare the monthly cost correction statement
- Make an aggregate entry in the tax revenue and expense ledger
- File the statement together with the source documents
The next stage was calculating the correction correctly. In the statement, cost correction amounts were shown with a minus sign, reflecting their effect of reducing tax-deductible costs. This approach made it possible to calculate the final impact of the corrections on the tax result correctly.
Cost correction amounts were shown in the statement with a minus sign. Only after adding them up could the business owner determine which part of the correction would reduce costs and which would increase revenue because costs in the month were insufficient
Particular attention had to be paid to situations where costs in a given month were insufficient to absorb the full value of the correction. In such cases the excess had to be recorded as an increase in revenue, which directly affected the amount of income tax payable.
Impact of corrections on the business's accounts
Cost corrections directly affected bookkeeping and the calculation of the business's tax result. The mechanism required particular attention when planning cash flow and the company's tax strategy, because it could significantly affect tax liabilities.
Where the business owner had sufficient costs in a given month, the correction reduced costs, and where costs were insufficient, the remaining part was added to revenue (Article 24d(5)). In both cases income rose by the full amount of the correction, which translated directly into higher income tax, and after the liability was paid, costs were increased in the month of payment (Article 24d(4)).
| Accounting situation | Effect on costs | Effect on revenue | Tax effect |
|---|---|---|---|
| Sufficient costs | Costs reduced | No change | Income higher by the correction amount |
| Insufficient costs | Costs reduced to zero | Revenue increased | Income higher by the correction amount |
| Partly sufficient | Costs partly reduced | Revenue partly increased | Income higher by the correction amount |
| No costs | No change | Revenue increased in full | Income higher by the correction amount |
Applying corrections in practice required business owners to plan and monitor their cost structure carefully month by month. Companies often had to adjust their accounting approach to minimise the negative impact of corrections on their tax burden.
The cost correction mechanism could lead to a business owner paying higher tax even though the expense had actually been incurred and was merely unpaid on time. Where costs in the month were insufficient, the correction took the form of increasing revenue by the missing amount
The long-term impact of corrections was felt especially in businesses with an irregular cost structure or seasonal activity. Business owners had to take these mechanisms into account in their financial forecasts and tax plans.
Documentation and storage of statements
Proper documentation of the cost correction process was key to complying with tax law and being prepared for possible inspections by the tax authorities. Cost correction statements had to be kept together with the ledger and the source documents until the tax liability became time-barred (Article 86 § 1 of the Tax Ordinance Act (Ordynacja podatkowa)).
Storing documents required a systematic approach and good organisation. Each statement had to be clearly linked to specific source documents and entries in the tax revenue and expense ledger, so that the correction process could easily be reconstructed during an inspection.
- Cost correction statements had to be kept, as a rule, for 5 years from the end of the year in which the tax payment deadline passed (Article 70 § 1 of the Tax Ordinance Act) – for 2013–2015 this period has, as a rule, already expired
- The source documents underlying the corrections are subject to the same storage rules
- Copies of accounting entries related to corrections should be protected against loss
- The numbering system for statements should make documents easy to identify
- Electronic copies of documents must be protected against unauthorised access
The documents should be organised so that specific statements can be found quickly and the corrections verified. Many companies introduced additional coding or classification systems to manage large numbers of correcting documents.
The cost correction documentation had to be complete and allow the whole correction process to be reconstructed. Each document in the statement had to be identifiable by its number and date, and the correction values had to be verifiable against the source documents
Practice showed that the companies coping best with the documentation requirements introduced standardised procedures for preparing statements and internal control systems ensuring complete and correct records. These organisational solutions made tax settlements much easier and reduced the risk of errors.
Practical aspects of applying the rules
Applying the cost correction rules in practice required businesses to adapt their accounting systems and internal procedures. Many companies had to introduce additional checks and monitoring mechanisms to ensure the new rules were applied correctly.
Businesses with a complex cost structure or operating in different sectors faced particular challenges. In such cases, identifying expenses subject to correction and calculating their impact on the tax result correctly required detailed analysis and often support from specialists.
A trading company operating across the country had to introduce a system for monthly monitoring of all unpaid liabilities. Every month, accountants prepared detailed correction statements, which were then checked by the chief accountant before the aggregate entries were made in the tax revenue and expense ledger.
Automating the preparation of statements became a priority for many businesses. Accounting systems were adapted to generate correction statements automatically based on an analysis of payment terms and the payment status of liabilities.
Training accounting staff was an essential part of implementing the new rules. Staff had to be trained to identify situations requiring correction, calculate correction values and follow the procedures for preparing the required statements.
Applying the rules in practice required companies to introduce additional control procedures. Many businesses had to modify their accounting systems and train staff in the new documentation and settlement requirements
Some companies used external support to interpret complex cases and streamline their accounting processes in the light of the new legal requirements.
End of the rules in 2016
The rules on mandatory cost correction were repealed at the end of 2015 – Article 24d of the PIT Act (and Article 15b of the CIT Act) was repealed by the Act of 5 August 2015 (Dz.U. 2015 item 1197) with effect from 1 January 2016, which was a significant simplification for businesses. From 1 January 2016 business owners no longer had to remember to reduce costs systematically for liabilities not paid on time.
From 2016 no new corrections were made – both for expenses incurred from that year and for earlier ones whose mandatory correction date would have fallen in 2016. This solution ensured a smooth transition between the old and the new system.
Particular attention had to be paid to transitional situations where a business owner had corrected costs before 2016 and then paid the liability in 2016 or later. In such cases – under Article 5(1) of the Act of 5 August 2015 – these items could be included in costs again in the month of payment, under the former Article 24d.
Business owners who corrected costs before 2016 and paid the liabilities in 2016 or later could include these items in costs again in the month of payment. This mechanism ensured a fair settlement of costs actually incurred by the taxpayer
The repeal of the cost correction rules was part of a wider process of simplifying the tax system and reducing administrative burdens for businesses – the same Act added Article 2a to the Tax Ordinance Act (doubts that cannot be removed are resolved in the taxpayer's favour).
Companies that previously had to maintain extensive systems for monitoring and correcting costs could simplify their accounting procedures. This does not mean, however, that the payment date is irrelevant today: in 2026 a payment above PLN 15,000 in a transaction with a business made without a payment account or to an account not on the white list is not a tax-deductible cost (Article 22p of the PIT Act), and a debtor who has not paid an invoice within 90 days of the due date increases their income under the bad debt relief (Article 44(17) and Article 26i of the PIT Act; in CIT Articles 15d and 18f).
