The negative consequences of the global financial crisis included the decrease of state proceeds and a larger budget deficit. In order to oppose them, the government had to make a decision on raising VAT besides taking up consolidation and reform measures in regard to the public finance. The decisions on lowering income taxes remained in effect. Furthermore, the government simplified the indirect tax settlements and liquidated certain public tributes. It was possible mainly because of the exceptional economic growth enjoyed by Poland in the period when most countries were in recession.
Lowering income taxes
The Government maintained its decision about lowering the personal income tax (PIT), which was made by the previous parliament. As of 1 January 2009, new tax rates are in power: 18 percent and 32 percent, which replace the thresholds: 19 percent, 30 per cent and 40 percent. The decision to further lower the pension premium was also maintained. In total in the years 2008-2009 the taxpayers will save over PLN 33 billion as a result of these decisions.
Indirect taxes
While combating the growing deficit and state debt, the Government has decided to temporarily raise the VAT for some items by 1 percentage point, which will bring approximately PLN 6 billion to the state treasury. In 2001 the VAT rates shall be 5 percent, 8 per cent and 23 percent. At the same time, the VAT rate for low-processed food will be lowered from 7 percent to 5 percent, which will keep the prices of basic foodstuffs at the same level. The new rates will remain in power for 3 years.
The government implemented an additional public finance protection mechanism. It consists in conditional VAT rate increases. If the public debt – GDP ratio exceeds 55% in 2011, the VAT will rise by 1 percentage point from July 2012 and from July 2013. Should the public debt – GDP ratio exceed the 55% level only in 2012, the increases will take place in 2013 and 2014 respectively. In any case, the increased VAT rates will remain in force only for 3 years. According to the
government forecasts, the public debt – GDP ratio will not go beyond 55%.
Simplified VAT settlement
According to the government plan of supporting entrepreneurs a VAT reform was introduced. The deadline for returning VAT was shortened from 180 to 60 days and more than 30 percent of the sanctions for wrong completion of the tax return were lifted. Taxpayers gained the possibility to correct their tax returns after a tax investigation. The duty to pay a deposit in the amount of PLN 250 thousand in the case of entrepreneurs starting commercial activities in the European Union was also lifted. These solutions will save the taxpayers up to PLN 2 billion.
From 1 January 2011 it is possible to issue, send, and store electronic invoices with no electronic signature. The new regulation is part of the deregulation packet aimed at simplifying business management in Poland.
E-PIT
To make settlements with the tax office easier, in 2009 the Government introduced regulations which enable filing personal income tax returns (PIT) via the Internet without the need to use electronic signature. The special web site (www.e-deklaracje.gov.pl) provides access to interactive forms and programs which can be used to easily complete and submit the tax return to the appropriate tax office. Until 2010 more than 320 thousands Poles took advantage of this opportunity.
Tax Amnesty
The Government supports also those Poles who work abroad. The Tax Amnesty Law has been in force since August 2008. The amnesty possibilities provided for in this Law apply to earnings generated abroad in at least one tax year in the period between 2002 and 2007 to which the pro-rata deduction method applied. According to the latter method, income tax has to be paid in Poland on foreign earnings. The Law grants amnesty to those who failed to pay income tax due on their foreign earnings. The only condition is to file a tax return. Moreover, according to the Law, income tax on foreign earnings will be refunded to those who paid it.
Abolishing some public levies
In 2008, the government decided to abolish the so-called Religa’s tax which had obliged insurers to transfer to ZUS 12% of premiums paid by drivers for their third party liability insurance policies (earmarked for treating traffic accident victims). The additional burden made the insurance policy prices rise. Thanks to the government decision policy prices remained at the same level.
In January 2010, the PLN 30 fee for providing a personal ID card was lifted. This will save Poles more than PLN 35 million.
Another step towards abolishing unfair charges for the state was lifting the radio and television subscription fee. As of 1 March 2010, pensioners and the unemployed are free from the obligation to pay this fee.
In August 2010, the ordinance of the Minister of Finance in which VAT on charitable text messages was lifted, entered into force, which allows all the money from the donors to be given to those in need.
Lowering income taxes
The Government maintained its decision about lowering the personal income tax (PIT), which was made by the previous parliament. As of 1 January 2009, new tax rates are in power: 18 percent and 32 percent, which replace the thresholds: 19 percent, 30 per cent and 40 percent. The decision to further lower the pension premium was also maintained. In total in the years 2008-2009 the taxpayers will save over PLN 33 billion as a result of these decisions.
Indirect taxes
While combating the growing deficit and state debt, the Government has decided to temporarily raise the VAT for some items by 1 percentage point, which will bring approximately PLN 6 billion to the state treasury. In 2001 the VAT rates shall be 5 percent, 8 per cent and 23 percent. At the same time, the VAT rate for low-processed food will be lowered from 7 percent to 5 percent, which will keep the prices of basic foodstuffs at the same level. The new rates will remain in power for 3 years.
The government implemented an additional public finance protection mechanism. It consists in conditional VAT rate increases. If the public debt – GDP ratio exceeds 55% in 2011, the VAT will rise by 1 percentage point from July 2012 and from July 2013. Should the public debt – GDP ratio exceed the 55% level only in 2012, the increases will take place in 2013 and 2014 respectively. In any case, the increased VAT rates will remain in force only for 3 years. According to the
government forecasts, the public debt – GDP ratio will not go beyond 55%.
Simplified VAT settlement
According to the government plan of supporting entrepreneurs a VAT reform was introduced. The deadline for returning VAT was shortened from 180 to 60 days and more than 30 percent of the sanctions for wrong completion of the tax return were lifted. Taxpayers gained the possibility to correct their tax returns after a tax investigation. The duty to pay a deposit in the amount of PLN 250 thousand in the case of entrepreneurs starting commercial activities in the European Union was also lifted. These solutions will save the taxpayers up to PLN 2 billion.
From 1 January 2011 it is possible to issue, send, and store electronic invoices with no electronic signature. The new regulation is part of the deregulation packet aimed at simplifying business management in Poland.
E-PIT
To make settlements with the tax office easier, in 2009 the Government introduced regulations which enable filing personal income tax returns (PIT) via the Internet without the need to use electronic signature. The special web site (www.e-deklaracje.gov.pl) provides access to interactive forms and programs which can be used to easily complete and submit the tax return to the appropriate tax office. Until 2010 more than 320 thousands Poles took advantage of this opportunity.
Tax Amnesty
The Government supports also those Poles who work abroad. The Tax Amnesty Law has been in force since August 2008. The amnesty possibilities provided for in this Law apply to earnings generated abroad in at least one tax year in the period between 2002 and 2007 to which the pro-rata deduction method applied. According to the latter method, income tax has to be paid in Poland on foreign earnings. The Law grants amnesty to those who failed to pay income tax due on their foreign earnings. The only condition is to file a tax return. Moreover, according to the Law, income tax on foreign earnings will be refunded to those who paid it.
Abolishing some public levies
In 2008, the government decided to abolish the so-called Religa’s tax which had obliged insurers to transfer to ZUS 12% of premiums paid by drivers for their third party liability insurance policies (earmarked for treating traffic accident victims). The additional burden made the insurance policy prices rise. Thanks to the government decision policy prices remained at the same level.
In January 2010, the PLN 30 fee for providing a personal ID card was lifted. This will save Poles more than PLN 35 million.
Another step towards abolishing unfair charges for the state was lifting the radio and television subscription fee. As of 1 March 2010, pensioners and the unemployed are free from the obligation to pay this fee.
In August 2010, the ordinance of the Minister of Finance in which VAT on charitable text messages was lifted, entered into force, which allows all the money from the donors to be given to those in need.