Polish government adopts draft tax changes

Poland's government approved a bill on Wednesday implementing new tax measures related to its new flagship reform, the Polish New Deal.

The changes represent a historic tax cut, Prime Minister Mateusz Morawiecki told a press conference after the government meeting.

He said that about 18 million Poles will benefit from the adopted proposals while for around 90 percent of Polish taxpayers the changes will be either advantageous or neutral.

The government-proposed tax changes include raising the tax-free allowance to PLN 30,000 (EUR 6,644) from PLN 3,091 (EUR 684) for middle-earners and from PLN 8,000 (EUR 1,771) for low-earners.

The income tax threshold is to be increased to PLN 120,000 (EUR 26,560) from the current PLN 85,000 (EUR 18,810).

According to Morawiecki, thanks to implementation of the tax portion of the Polish New Deal policy package, nine million citizens will no longer need to pay Personal Income Tax (PIT) and will collectively have PLN 16.5 billion (EUR 3.65 billion) lining their pockets.

Under the draft amendment to the current tax laws, the 9-percent healthcare insurance contribution will no longer be tax-deductible, which will raise the effective tax rate by the same percentage.

In Morawiecki's opinion, such a solution is necessary for a gradual increase of healthcare spending to 7 percent of GDP by 2027.

He said that the funds from the health insurance premium will be allocated exclusively to the needs of the health service.

The government also decided on Wednesday to impose a minimum tax on big, mainly international companies, that pay little or no Corporate Income Tax (CIT).

The tax is to be paid from 0.4 percent of revenues plus 10 percent of select spending, such as that on intangible assets and royalties.

Morawiecki said that the government expects PLN 2 billion (EUR 443 million) in annual receipts from the revenue tax on large corporations.

He added that the measure is also aimed at improving the competitiveness of small businesses.

"Following the example of American and Austrian solutions, we introduce equalizing solutions, solutions that are also to protect Polish companies, which are usually smaller or medium-sized in a given industry, in the market battle, in comparison with these international giants," Morawiecki told reporters.