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Poland

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1) REFERENCES

Commission Opinion [COM(97) 2002 final - Not published in the Official Journal]
Commission Report [COM(98) 701 final - Not published in the Official Journal]
Commission Report [COM(1999) 509 final - Not published in the Official Journal]
Commission Report [COM(2000) 709 final - Not published in the Official Journal]
Commission Report [COM(2001) 700 final - SEC(2001) 1752 - Not published in the Official Journal]
Commission Report [COM(2002) 700 final - SEC(2002) 1408 - Not published in the Official Journal]
Commission Report [COM(2003) 675 final - SEC(2003) 1207 [Not published in the Official Journal]
Treaty of Accession to the European Union [Official Journal L 236 of 23.09.2003]

2) SUMMARY

In its Opinion of July 1997, the European Commission took the view that transposal of the Community acquis in the direct taxation field should not pose significant difficulties for Poland.

However, the November 1998 Report concluded that substantial efforts were required in the field of VAT and excise duties, particularly as regards the current discrimination against imports and the introduction of a VAT refund scheme for foreign taxable persons not established within Poland. Further efforts were also necessary to strengthen the administrative structures responsible for implementing the acquis.

The October 1999 Report emphasised that Poland had continued to align its tax legislation gradually. Poland had developed a well-structured pre-accession strategy in this area, but it still had to align VAT and excise duties. It should also strengthen the methods for the recovery of taxes at central level and in the regions and improve administrative cooperation and speed up computerisation.

The November 2000 Report found that Poland had made notable progress in the field of taxation but that substantial improvements were needed as regards its tax administration.

The November 2001 Report noted that since the last evaluation Poland had made constant progress on VAT and excise duties as well as corporate taxation, although the text on tax havens could pose a problem. Efforts had also been made to accelerate the modernisation of the tax administration and to simplify tax returns.

The October 2002 Report highlights the fact that Poland has made steady progress in developing its institutional capacity in the area of taxation and in aligning its legislation.

The 2003 Report found that Poland was essentially meeting the commitments and requirements arising from the accession negotiations in the areas of direct taxation and administrative co-operation and mutual assistance, and was expected to be in a position to implement this acquis by accession. In the areas of VAT and excise duties, Poland was only partially meeting its commitments.

It obtained transitional periods for the continued application of the reduced VAT rate on the supply of construction work for residential housing, excluding building materials, and on the supply before first occupation of residential buildings or parts of residential buildings, and on restaurant services (until 31 December 2007), as well as the application of the VAT zero rate to certain books and specialist periodicals (until 31 December 2007). It was also permitted to apply a super-reduced VAT rate to the supply of foodstuffs (including beverages but excluding alcoholic beverages) for human and animal consumption; live animals, seeds, plants and ingredients normally intended for use in preparation of foodstuffs; products normally intended to be used to supplement or substitute foodstuffs; and goods and services of a kind normally intended for use in agricultural production but excluding capital goods (until 30 April 2008). Derogations were obtained for a VAT exemption and registration threshold of EUR 10 000 for small and medium-size enterprises and VAT exemption on the supply of international passenger transport. In addition, Poland obtained a transitional period until one year after accession during which it could continue to apply a reduced rate of excise duty on specific oil products.
The Treaty of Accession was signed on 16 April 2003 and accession took place on 1 May 2004.

COMMUNITY ACQUIS

The body of EU law in the area of direct taxation mainly concerns some aspects of corporation taxes and capital duty. The four Treaty freedoms have a wider impact on national tax systems.
The November 2000 Report notes that changes in corporate taxation have been introduced making tax services more efficient and reducing the tax burden on businesses. The new rate of corporate income tax is 30 per cent and should be reduced to 20% by 2004. Tax deductions for companies with a high investment rate have been abolished. All existing tax deductions, including those for housing construction by individuals, have been maintained.

The legal framework for indirect taxation consists primarily of harmonised legislation in the field of value added tax and excise duties. This includes the application of a non-cumulative general tax on consumption (VAT), which is levied at all stages in the production and distribution of goods and services and requires equal tax treatment for all domestic and import transactions.
The November 2000 Report notes that the reduced rate on certain services has been increased and that certain other services, previously exempt, have become taxable at the reduced rate. Exemptions for certain establishments have been abolished, and they now have to pay VAT. A VAT refund scheme for foreign tourists and the right to deduct input tax for international services have been introduced. The definition of the taxable amount has also been amended. Finally, the July amendment to the law on the taxation of goods and services has extended the VAT system with regard to agricultural products (rate of 3%).

In the field of excise duties, established EU law and practice comprises harmonised tax structures and minimum rates of duty together with common rules on the holding and movement of excisable goods (including the use of tax warehouses).
Since the last report, the taxable scope has been broadened in the field of alcoholic beverages and the special scheme discriminating against certain imports has been abolished.

As regards the performance of the tax administration, cooperation and mutual assistance, Poland has continued its efforts to strengthen the administration and improve administrative cooperation. The tax administration has been made more taxpayer-friendly and information is now more accessible via the Internet. However, the various procedures in place still require significant simplification and compliance with the tax administration's requirements continues to be a heavy burden for corporate and individual taxpayers. Steps have been taken to establish the Central Office for VAT Information Exchange, which is part of the process of modernising the tax administration.

EVALUATION

Value added tax

The Polish VAT system has been progressively aligned on the acquis, and efforts have been made to ensure that national products and similar products imported into Poland are taxed at an equal rate.

Since the report in November 1998, Poland has adopted provisions introducing a VAT reimbursement system for tourists and a system for the exemption of VAT on imports of commercial goods not exceeding a threshold of ten euros in value. Other legislation relating to VAT has still to be transposed, in particular with regard to the scope of VAT and the levels of the VAT rate. Discrimination still exists in the taxation of certain products which are imported at a higher rate of VAT than that levied on similar national products.

Since the November 2000 report, Poland has made some efforts but progress is still needed concerning the exemption of certain transactions and taxation of the property market. In addition, certain products are taxed differently depending on their origin, which leads to a discrimination against imports.

Since the November 2001 report, a rate of 7% has been applied to newspapers and magazines and a zero rate has been introduced for the printing of books, magazines and newspapers. Certain SMEs that were previously exempt from VAT must now pay this tax. A rate of 7% has been established for Internet services and 3% for IT equipment.

The Commission's 2002 report notes that Poland has made good progress in further aligning its rates with the levels required by the acquis. Marine transport means and marine fisheries means have become zero rated and the definition of specialist journals benefiting from zero rating has been refined. The principles and conditions for refund of input VAT to importers were established and VAT exemption was introduced as regards certain imports.

At the end of 2003, Poland still needed to make considerable efforts. To complete alignment, it had to address the scope and definition of VAT rates (including the very frequent use of zero-rating), and exempted transactions, except where transitional measures had been granted. Poland also needed to broaden the definition of the scope of VAT, taxable persons, the taxable amount, the taxable event, the right of deduction, VAT refunds and tax liability. It was also required to eliminate national protection measures in order to achieve equal tax treatment regardless of origin. Lastly, it still had to introduce the required special VAT schemes for travel agents, second-hand goods and investment gold, and align its current special scheme for farmers to the conditions of the transitional measure granted in the accession negotiations.

Excise duties

Alignment has continued in this area. As a result the tax regimes for excise duties and VAT are relatively similar to the general principles of the Community acquis with regard to tax. In particular, the rates of excise duties on cigarettes and fuels have been raised in order to bring them closer into line with the minimum Community rates, but full alignment has not yet been achieved. Poland must resolve the problem of tax discrimination with regard to alcoholic beverages and tobacco products. Since the November 2000 report, Poland has continued to align its legislation more closely on the acquis but the Polish authorities must make additional efforts in order to meet the Community's minimum duty levels, in particular on cigarettes and mineral oils.

In 2001, excise duties were increased for spirits, beer, wine and fuels as well as for tobacco products.

In 2002, duties were increased on motor fuels and LPG used for motor vehicles, as well as on cigarettes. Energy from renewable sources and pumped storage plants are now exempt from excise duty.

At the end of 2003 Poland still needed to adjust certain duty rates and exemptions, align the taxable scope for mineral oils, the tax structure for smoking tobacco and introduce a duty suspension arrangement, including for intra-Community movements. It also still had to ensure equal taxation, irrespective of origin, for "non-EU harmonised" excise duties and align the tax base for imported smoking tobacco. The gradual increase of excise duties on cigarettes was proceeding according to schedule with the minimum rate to be achieved by 31 December 2008, as agreed in the accession negotiations.

Direct taxation

In the area of direct taxation, the rate of tax on company profits fell in 2001 from 30% to 28%, but it has yet to be determined if the legislation on tax havens is compatible with the code of conduct for business taxation. A new 20% tax on income from savings (interest from bank deposits, dividends from bonds, etc.) was introduced in March 2002. In January 2002, Poland introduced a 2% tax on all outward capital movements, which applies to residents only and will cease at the end of December 2003.

At the end of 2003 Poland needed to complete transposition of the Directive concerning indirect taxes on the raising of capital and the Parent/Subsidiary Directive, and to transpose the Directives on interest and royalties and on taxation of savings income.

Tax administration

Some efforts have been made to modernise the Polish tax administration, but more rigorous action is needed. In 2001, some progress was made on the computerisation of tax services as the POLTAX system is now operational. The 2001 budget law improved the implementation of tax obligations and arrears even though the collection of arrears is not yet overly effective. The current reform has introduced a system of objective indicators for the activity of the tax offices and has improved staff training.

Over the 2001-2002 period, the Polish tax authorities intensified their efforts to improve the effectiveness of the Polish tax administration. In August 2002, the Council of Ministers adopted the 'Tax Administration Modernisation Strategy by 2004' with the aim of ensuring a sufficient level of operating ability to apply and enforce the acquis. Significant steps have also been taken to achieve the key indicators for interoperability with the VAT Information Exchange System. However, in the field of information technology, significant efforts are required at regional and local levels.
Regarding administrative capacity, Poland made notable progress, although a significant number of actions still needed to be implemented. The main difficulty related to tax collection, which remained deficient.

At the end of 2003 the necessary administrative structures in this area were in place, although efforts were still needed to modernise them and enhance their efficiency. Priority needed to be given to improving the efficiency of tax collection and fiscal control strategy, in particular by introducing risk analysis and computerised auditing. Further action was called for to improve information to taxpayers and voluntary compliance.
The capacity of the tax administration was sufficient to ensure proper implementation of the acquis in the field of indirect taxation

In the field of administrative co-operation and mutual assistance, Poland was in the process of taking the necessary steps to transpose the acquis and implement it by accession, both at legislative level and in terms of organisational structures, including information technology systems.

This summary is for information only and is not designed to interpret or replace the reference document.

Last updated: 14.01.2004
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