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Poland Plans Advertising Tax on Digital Companies

Posted on Feb. 4, 2021

Poland is planning a tax on advertising revenue to fund health services for coronavirus recovery, the promotion of Polish culture in the media, and the preservation of historical monuments.

The draft law targets tech companies that generate digital advertising revenue, as well as digital and conventional media companies that rely on advertising revenue, according to a project overview from the Polish Ministry of Finance.

Under the proposal, digital companies with global annual revenue of €750 million or more that generate over €5 million in online advertising revenue within Poland would pay a 5 percent annual tax based on the number of in-country users, the project overview says.

For print media, service providers that generate over PLN 15 million from advertising revenue would be subject to tax rates of 2 percent for revenues under PLN 30 million and 6 percent for revenues above. For other media, such as television, radio, and cinema, the threshold would be PLN 1 million, and the tax would be charged at rates of 7.5 percent for revenues under PLN 50 million and 10 percent for revenues above. Tax rates would increase by 2 to 6 percentage points for advertising that features “qualified goods” such as sweetened beverages, dietary supplements, and other goods considered harmful to public health, according to a February 2 MOF release.

According to the MOF release, the proposed tax mimics those implemented in Austria, France, Greece, and Hungary, which target advertising revenue in television, radio, newspapers, and online media. The MOF estimates that the tax would generate around PLN 800 million in 2022. The Cabinet is expected to approve this legislation during the first quarter, with hopes that the legislative process can be completed in time for it to enter into force on July 1.

In addition to straining Polish health services, the pandemic has pushed many social activities online, reducing a sense of community and ties to cultural heritage, the MOF said in a document justifying the proposed tax. It has also led to difficulties in assessing the reliability of media information. Thus, funding is needed for health services, new media projects and platforms — particularly those promoting national heritage — and the conservation, rehabilitation, and preservation of national monuments important to Polish cultural heritage, the MOF said.

Poland’s National Revenue Administration will dedicate 50 percent of the tax revenue generated to the National Health Fund, 35 percent to a newly established Fund for Support for Culture and National Heritage in the Media Area, and 15 percent to the National Monuments Protection Fund, according to the MOF.

In July 2020 Poland implemented a so-called Netflix tax, which charges video-on-demand service providers a 1.5 percent fee to assist the country’s film industry.

With the advertising tax, Poland would join countries such as Austria, France, Spain, India, Italy, and the United Kingdom in an endeavor to tax digital giants such as Facebook, Google, and Amazon based on sales or use revenue generated within their countries.

The European Commission recently opened a public consultation into an EU-wide digital levy that it hopes to use as leverage in case countries in the OECD inclusive framework on base erosion and profit shifting do not reach agreement on modernizing international tax rules for the digital economy by mid-2021.

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