Poland suspends retail tax for another six months

The Sejm (lower house) on Thursday passed an amendment to the law on the retail sales tax prolonging the suspension of the tax until July 1, 2020.

The law came into force on September 1, 2016, but in mid-September of the same year the European Commission launched a procedure in this case and called on Poland to suspend the tax.

Following the decision, the Finance Ministry stepped back from collecting the tax. In November 2016, the Sejm passed a government-drafted law which suspended the retail sales tax law.

The European Commission later found that the tax is in breach of EU state aid rules. The Commission concluded that the progressive tax rates based on turnover give companies with low turnover an advantage over their competitors.

In September 2017, Poland disagreeing with the EC's decision, sued the European Commission before the Court of Justice of the European Union over its decision. In May of this year the court ruled that the EC wrongly recognised the tax in question as unlawful state aid. In July, the EC appealed the ruling.

The tax would affect retailers with monthly revenue exceeding PLN 17 mln (EUR 3.96 mln). The lower rate of 0.8 percent tax would be applicable to monthly revenue in the PLN 17 mln - PLN 170 (EUR 3.96 mln - EUR 39.56 mln) range, and the higher 1.4 percent rate to revenue exceeding PLN 170 mln monthly. The levy would not affect online sales.