New Polish Government’s economic and foregin policy plans
The conservative Law and Justice party (Prawo i Sprawiedliwośd (PiS)) won the recent elections in Poland. Its planned changes to economic and foreign policy could have a significant impact on conducting business in the country.
The new PiS Government plans to make a number of changes to existing tax law, and introduce a number of new types of tax. These include a large-scale retail tax, tax on financial transactions, as well as a banking tax.
Large scale retail tax
Large-scale retail tax will be due on the turnover of stores which have more than 250 sq m of space. The main purpose is to limit the transfer of profits abroad by foreign-owned retail stores, and increase the market share of smaller domestic enterprises. In order to achieve this goal, and not fall foul of EU law – as was the case with the analogous tax introduced in Hungary – the tax needs to be carefully structured. Progressive tax rates ranging from 0.5% to 2% are being considered. Despite the protests of retailer associations, the retail tax is likely to be introduced by the end of the first quarter of 2016.
Tax on financial transactions
The tax on financial transactions will be imposed on financial institutions and other entities, which receive at least 50% of their turnover from financial activity. Tax will be due on underlying transactions involving trade, exchange and lending of financial instruments or derivatives, with rates ranging from 0.07% to 0.14%. The financial markets have already reacted negatively to announcements about this new tax, which is also expected to come in by the end of the first quarter of 2016.
New banking tax
The banking tax will be due on the assets of banks and insurance institutions, at a rate of 0.39%. According to the Minister of Finance, the tax is likely to come into effect early in 2016. The proposal has been strongly criticised by economic and financial experts.
The new Government is expected to take a stricter approach towards foreign investors as well as EU arrangements. The PiS party has underlined the importance of Polish sovereignty and may not be wiling to make compromises. Foreign companies are expected to be targeted by the tax authorities in their efforts to hinder profit shifting overseas.
Extended social benefits
Extended social benefits are planned for individuals, including a higher tax-free allowance of €2,000 instead of €700. There are also new incentives for having children – €120 for the second child and all subsequent children.
All of these new measures are expected to be enacted in the 2016 Budget.
For more information, contact:
Advicero Tax sp. z o.o., Poland
T: +48 22 378 17 10