The proposed changes to income taxation may have significant implications not only for taxpayers, but also for the competitiveness of the Polish economy. Particular attention should be paid to the planned increase in the corporate income tax (CIT) rate from 19% to 22% for the largest entities and tax capital groups. Dr Grzegorz Keler, Managing Partner at Jabłoński Koźmiński & Partners, discusses the key elements of the proposed changes and their potential consequences below.

The Government has just announced far-reaching changes to income taxation. The greatest attention will undoubtedly be focused on the new personal income tax (PIT) scale, including an increase in the higher-rate threshold to PLN 130,000 and the introduction of a new 24% rate for income between PLN 130,000 and PLN 150,000. However, these are not the changes of greatest significance to the Polish economy.

Of particular concern is the proposed increase in the CIT rate from 19% to 22% for entities whose annual revenue exceeds EUR 50 million and for tax capital groups. The State budget is evidently facing a funding shortfall. It is regrettable that this gap is to be addressed at the expense of a substantial reduction in the competitiveness of the Polish economy.

Further changes to personal taxation have also been announced. Access to the lump-sum tax on recorded revenue will be restricted by reducing the applicable revenue threshold to EUR 250,000. This is consistent with both legislative measures and ‘soft’ measures — including the practice of the tax authorities — which appear to form part of a gradual process aimed at phasing out this form of taxation.

The solidarity levy rate will also be increased to 5%.

Further details are available here.