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Revised: trade tax with 2 rates of taxation

Date02 Sep 2016

Initially, the national-conservative PiS Government wanted to introduce a special tax for trading already in March. Faced with massive criticism from retailers and the doubts expressed by the European Commission regarding to the first draft, the Permanent Committee of the Council of Ministers now accept the revised draft of law which is more moderate. This version should respond from the start to an objection by the European Commission. There is no doubt for the Polish Organization of Trade and Distribution (POHiD) which represents the interests of the large commercial chains, that the European Commission also this time will express their objections regard to the formulation of the trade tax.

Like in the first draft, the revised one includes two rates of taxation along with a monthly tax-free threshold of 17 million Złoty. In the event of a retail sale above 17 million Złoty, the tax rate is 0,8 percent. In the case of sales of 170 million Złoty (the original version includes 300 million Złoty), the second tax rate appears at the rate of 1,4 percent. The trade tax is applied to all businesses within the retail sector for retail sales to the final consumer. The trading of goods between businesses is excluded. This tax will be applied to all sectors of goods within the retail sector, therefore, not only food retailing, but also trading with consumer electronics, to furniture and to sales in construction markets, etc. The sale of energy carriers for heating purposes, such as natural gas, coal and fuel oil, as well as water supply, medicine and other subsidised medical commodities and goods, sold within gastronomical services, are exempt from taxation.

In the opinion of the general director of the Polish Organization of Trade and Distribution (POHiD), Andrzej Faliński, the high tax-free threshold – 206 million Złoty a year – represent improper public subsidies. Applying a taxation rate of 1,4 percent to higher retail turnover of yearly 2,04 billion is synonymous with a discrimination of the large commercial chains which are dominated by foreign capital. The introduction of a trade tax for large area retail trade (commercial chains) was one of the solutions offered by the national-conservative PiS party during their victorious election campaign. PiS promised that it should bring from 2 to 6 billion Złoty, planned for social measures. Now there is talk of incomes in the amount of 640 million Złoty.

Source: ‘Wirtschafts-Markt Polen’, Issue 232