Polish Tax Laws — Fighting a Winning Battle Against Tax Evaders

Budgetary Revenue in Poland 2015

Fact box

Corporate tax — PLN 32.9 billion

Personal tax — PLN 83.1 billion

Value added tax — PLN 123.1 billion

Excise — PLN 62.8 billion

Gaming tax — PLN 1.3 billion

Unemployment rate 4.1%

Fiscal balance -3.5% of GDP

Duties — PLN 2.9 billion

In total — PLN 306.2 billion
source: Ministry of Finance

Witold Modzelewski

About Witold Modzelewski

Witold Modzelewski is President of the Institute of Tax Studies, Professor of Law and Administration at Warsaw University and a lecturer at the Warsaw School of Economics. He is a member of the National Development Council and an honorary Chairman of the National Chamber of Tax Advisers. Between 1992 and 1996 he was deputy Minister of Finance, and was responsible for the restructuring of the tax system as well as introducing VAT and excise taxes into the system. He has authored and co-authored over 1,000 articles and books about taxes.

Since the current Polish government came into power, last year, they have advocated the need to tighten up the existing tax system. They maintain that the current situation calls for a system that is more efficient and effective and they are looking to find ways to increase the budget’s income without hiking up the tax rates. They have inherited a tax system from the liberal government, which was in power for eight years (between 2007 and 2015), which is in deep crisis — the tax share of the GDP has fallen from 17 per cent to 14 per cent. 

The situation in Poland is not much different to many other countries in the European Union. In other countries too, the tax regulations, that were created, were largely influenced by lobbyists who are, by nature, interested in tax evasion. At that time, the governments in power were prone to such external pressures. Another detrimental factor was the influence of the international audit and consulting industry, which played a significant role in shaping the current tax regulations and tax practices: A fact which was recently discussed by the European Parliament, in a resolution dated the 6 July, 2016.

Where Poland is concerned, the government needs to cut all possible ties with the audit and consulting industry, if it wants to improve the existing tax system, because the industry’s position is very strong and relies on informal personal relations and dependencies to keep it well positioned. They have already been successful in a number of areas, for example, they scuttled the new law on value added tax, which was written by the Law and Justice (PiS) party, during the 2015 election campaign. There are also significant delays in drafting and introducing new regulations related to tax evasion. 

The solutions that are already in place are cover provisions against tax evasion and fuel trade licensing. The Ministry of Finance is also working on electronic invoices, which should be introduced in 2017. 

The Ministry of Justice has managed to be more successful in introducing necessary regulations but unfortunately, these haven’t solved all of the problems. However, the government stands a high chance of introducing new tax regulations before the end of this year, which will result in a significant increase in budgetary income for 2017. 

The plan sounds quite ambitious but it is feasible. It requires massive changes in the Ministry of Finance, whose measures are not always compliant with the government’s objectives. It is essential that the government and the ministry become entirely separated from all of the agents that are potentially interested in making the Polish tax system as inefficient and ineffective as possible — mainly those from international businesses that provide services related to, and resulting in, tax evasion. 

So far the overall situation looks optimistic — at the end of August 2016, the government confirmed that within the first six months of this year tax efficiency had increased by PLN 9 (€2.1) billion compared to the first half of 2015.

RELATED ARTICLES

Will a Two-speed European Union Side-line the Visegrad Four?

The GREAT London Food Scene

Bakery in London

Europe Needs To Be More Proactive In Embracing Armenia

Measuring Growth of Societies with GDP Alone Shows an Incomplete Picture

LGBT in CEE — A New Acceptance Is Being Born From Migration

The Netherlands’ Objection to the Ukraine-EU Association Agreement could be Costly to Europe

Will the New Five-day Visa-free Regime Encourage More Visitors to Belarus?

A Positive and Modern View of Entrepreneurship

Let’s Stop Wasting Time Redefining our Place in Europe

The Capital Markets Union: a New Beginning in the European Financial Sector?

The Morawiecki Plan Promises a Brighter Future for Poland

Fiscal Policy Predictability in CEE — It’s Time for Change

Where’s My Cheese? – The GREAT British Food Tour 2014

Cheese Shop

Business Moving Forward with Cautious Optimism — Can Investors Win the Confidence Game?

January Kicks Off an Exciting Year for Emerging Europe

The Global Outsourcing Industry — the Rise of the Phoenix

Outsourcing in Germany: Stop Talking at and Start Talking to

Changing Perspectives and Showing That True Romania is a Vibrant Innovative Country

Resignation in Ukraine: War, Revolution, Crisis — Some Things Never Change

A New Division Between Eastern And Western Europe?

The Sharing Economy Could Bring New Business Models to CEE

Czech Republic Renaming Has Real Economic Costs

CEE — Do We Need a Launch Pad For Our On-Site Tech Intelligence in the Silicon Valley

Old Fashioned Skulduggery Overshadows the Elections in Moldova

Romania Surviving the Waves of Recent Political Tsunamis in Europe

Poland’s Confusing GDP Growth

The Long Tail of Global Expansion

The EU’s Choice: Fundamental Reform Or Disintegration

People Power Reminds the Government of the Rule of Law

Central and Eastern European Consumers Are Joining the Global Trends for Change

Global Expansion in the Digital Age

After 25 Years of Restructuring, the Romanian Power Sector Is at a Crossroad

European Volatility Makes Economic Development Slower for Ukraine

Big Fish, Small Fish, Where to Fish? On the Eve of the Fourth Industrial Revolution

Falling into Old Ways in 2017? Ukraine’s Struggle for Functioning Economic Institutions

Europe at Odds over OPAL and Nord Stream 2

Finalising the DCFTA is Expected to Bring Multiple Benefits to Ukraine

A Bosnian Referendum Shows Russia’s Influence in the Balkans—As Well As Its Limits

The Competitive Edge in Central and Eastern Europe

SOFIA BULGARIA - MAY 5: View of the Ivan Vazov National Theatre in Sofia on May 5 2016. Sofia is the largest city and capital of Bulgaria.

China: A Giant That Is Hard to Crack

How Will Poland Approach the Brexit Negotiations?

We, the Post-Communist Generation, Have the Skills to Rid of the Past And Create Our Own Future

The EU’s Benign Neglect Of Eastern Europe

United or Divided? Europe in the Face of the Challenges of Tomorrow

Ukraine’s Reputation for Cheap Labour May Not Ring True in the Long-term

The CEE Region Is Making Advances in Prioritising Waste-to-Energy Projects

Examining How a Strong Swiss Franc Could Single-Handedly Topple Poland’s Economy

Are Labour Shortages Driving Economic Growth?

Prepare for a New Europe

The Right to Water: Who Can Change Today’s Situation?

Breaking With Imitations of the Past

Brexit: Let’s Learn the Lesson and Hope a Better Europe Will Arise

Not All Quiet on the Eastern Front

International Women’s Day — Let’s Take Action And Then Celebrate

Are There Differences Between How Tax Regulations in Poland and IAS Treat Intangible Assets?

Poland’s Unicorn, Slovakia’s Flying Car and the Future of Europe

The Voice of European Business Must Be Heard Loud and Clear by Brexit Negotiators

Poland: Is it Ready, and is it Time to Adopt the Euro?

Belarus 2020: Turning the Vicious Circle Into an Upward Spiral

Could the West At Least Help Ukraine To Insure FDI Against Political Risks?

History as Destiny? Institutional Erosion in Ukraine and Poland

Leave a Reply

Your email address will not be published. Required fields are marked *