President signs new tax bill into law

2021-11-16 20:20 update: 2021-11-17, 18:49
Polish president Andrzej Duda. Fot. PAP/Radek Pietruszka
Polish president Andrzej Duda. Fot. PAP/Radek Pietruszka
New tax rules that will benefit the lowest earners but will hit those earning higher wages will take effect in Poland from 2022 after President Andrzej Duda rubber-stamped the changes on Tuesday.

The new laws, which are being introduced late into 2021, affect as many as 26 already-existing legal acts and have raised concerns among Polish entrepreneurs who say they have been given too little time to become familiar with over 700 pages of new regulations.

In a statement on Tuesday, the President's Office said that the new law aims "to create a friendly and just tax system which will allow Poland to take a dominant position in the race for investments."

The new tax legislation, promoted under the government's New Deal reform package, includes two major changes in the Polish tax system, but one is raising the biggest controversy in Polish society.

The tax-free allowance for individual taxpayers will be raised to PLN 30,000 (EUR 6,460) - from PLN 3,091 (EUR 666) for middle-earners and from PLN 8,000 (EUR 1,723) for low-earners - which is good news for all.

But on the negative side, the 9-percent healthcare insurance contribution will no longer be tax-deductible, which will raise the effective tax rate by the same percentage. Entrepreneurs are the only group that have managed, after protests, to negotiate a lower net insurance contribution.

The tax reform will benefit low-earners and old-age pensioners, while high earners are set to lose out. The changes will be neutral to negative for most entrepreneurs, business lobbies say.

The middle class have been insulated against the negative impact of the new solutions, but economists warn that the cushion will wear out as years pass due to the fixed nature of the now-increased tax-free allowance amid a steady growth of higher healthcare contributions, which will move up along with earnings.

But the Office also observed that one of the legislation's aims is to "seek new solutions that support growth and stabilise budget revenues that have been strained by the (coronavirus - PAP) pandemic." (PAP)