Poland: Tax law changes on the way in Poland

Paweł Mazurkiewicz

The Polish government and parliament are in the process of preparing amendments to the tax laws, which are aimed at the introduction of new taxes and new procedures. Apart from the already enacted (and effective as of January 1 2016) tax on financial institutions, the government and legislature are working on the new proposals, which include:

• a new retail sale tax (which is aimed at collecting additional taxes from large sales chains);

• a new anti-abusive clause to be introduced to the tax code;

• various para-taxes to be implemented (additional fees for delivery of running water, special contribution for state-owned television).

These proposals are either being discussed internally by the Ministry of Finance (for example, retail sales tax) or are subject to the legislative process within parliament (such as anti-abuse rule).

The potential impact of these changes is very serious. The retail sales tax is intended to become as an important source of income for the state budget. The government also wants this tax to help owners of small shops (which were supposed to be exempt from this tax) to compete against large multinational retail chains. However, the issue which slowed down the legislative process on this law was the treatment of franchise networks, which appear to be part of "multinational chains" but the specific retail units are actually run by Polish independent contractors (usually small entrepreneurs). To date, the Ministry of Finance has not decided how these structures should be treated by the new law and the issue has become politically sensitive.

As for the anti-abuse clause, the obvious intention of the government is to eliminate or reduce the scope for lawful tax planning (which, as decided by the Polish courts, was relatively wide). Business is concerned, however, that the new legislation may affect many processes (such as M&A) which are not tax driven. The draft law is still being discussed, but its original shape provided solid ground for such fears.

Paweł Mazurkiewicz (pawel.mazurkiewicz@mddp.pl)

MDDP

Tel. +48 22 322 68 88

Website: www.mddp.pl