A sweeping Polish coronavirus recovery package aims to encourage spending, innovation, and public investment with tax incentives for businesses and tax breaks for pensioners and low- and middle-income earners.
In a May 15 Ministry of Finance release, the government said the Polski Ład (Polish Deal) would make the tax system fairer for about 18 million Polish citizens by increasing the tax-free allowance for individuals, entrepreneurs, and families and raising the threshold for the highest income tax rate of 32 percent beginning in 2022.
Under the Polish Deal, the tax-free allowance for individuals and entrepreneurs would increase from PLN 8,000 (about $2,100) to PLN 30,000 (about $8,000). As a result, Poland’s lowest earners and up to two-thirds of retirees will pay no income tax, Deputy Finance Minister Jan Sarnowski said in the release.
A 17 percent tax rate would apply to income above that amount and below a new threshold of PLN 120,000 (increased from PLN 85,528). The 32 percent tax rate would apply to income above PLN 120,000. According to the MOF release, that rate would apply to the first Polish zloty earned above PLN 10,000 per month.
Poland will also offer a “middle-class allowance” to employed individuals whose annual income ranges from PLN 70,000 to PLN 130,000, Sarnowski said.
The recovery package will also unify the amount of health insurance contribution and its method of calculation. Employees and entrepreneurs will both be subject to a 9 percent rate, the release states.
Poland will also offer research and development relief and IP box relief, according to the release, adding that companies will benefit from incentives for investment in automation to encourage the recruitment and retention of tech workers in Poland.
“We want to invite capital to Poland and create favorable conditions for the relocation of production from other parts of the world. We want to be competitive with other countries which also see such needs of the new reality,” Finance Minister Tadeusz Kościński said in the release. “Therefore, as part of the economic restart package, we propose many pro-investment solutions, also in the tax system. We offer discounts for companies that invest in automatic solutions, robots, and highly technologically advanced solutions.”
Poland has also sought to encourage businesses to stay with a draft bill submitted in March that would improve the tax treatment of family businesses.