Poland: Proposed economic stimulus plan includes tax measures (COVID-19)

Proposed amendments to the Polish tax system

Details about stimulus plan designed to bolster economy following coronavirus pandemic

Poland's government on 15 May 2021 unveiled details about a new stimulus plan designed to bolster the economy following the coronavirus (COVID-19) pandemic.

The proposed program introduced amendments to the Polish tax system, including changes affecting individual taxpayers such as:

  • An increase to income for the “tax-free allowance” for low-wage earners
  • An increase to the threshold that triggers for individual taxpayers, application of the higher income tax bracket of 32% to PLN 120,000 (currently PLN 85,528)
  • An increase to the total tax and contribution burden for non-deductible health insurance contributions

In principle, the proposed amendments would aim to reduce the tax burden for individuals with monthly earnings that do not exceed certain amounts for employees and individuals operating a business activity. At the same time, the tax and health contribution burden would increase for those that exceed the designated amounts.

Other amendments

  • The so-called “return relief” is to encourage employees and entrepreneurs who have settled abroad, to return to Poland. Individuals coming back to Poland would pay half of their individual income tax due within two years of their return.
  • Concerning corporate income tax, the plan would introduce a new relief related to automation and would extend the existing research and development (R&D) and intellectual property (IP) relief schemes. 
  • There would be extended tax relief regarding Estonian corporate income taxpayers and tax relief to reduce the costs of entering the stock exchange (IPO).
  • There would be value added tax (VAT) relief such as eliminating VAT on settlements within capital groups and introducing the possibility of selecting VAT settlement method for financial transactions.

KPMG observation

The government has not published any documents containing legislative details of the announced changes, and the schedule of the amendments along with the effective date remains unknown. Given that the majority of the amendments announced relate to income taxes, it could be that the earliest the measures would be effective beginning 1 January 2022.

Read a May 2021 report prepared by the KPMG member firm in Poland

 

 

The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.