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Legislation Monitoring Centre
In Poland there is neither an internet portal nor an institution for employers responsible for monitoring the legislation process of regulations that determine the rules for business activity. At present employers  learn about changes in the law mainly from mass media or simply through the grapevine, usually with delay.



Polish tax law is unclear, unstable and often absurd


Polish tax law is extremely inconvenient for anybody who wants to conduct business activity in this country. According to the Paying Taxes 2015 report, prepared by the audit company PwC and the World Bank, Polish entrepreneurs need 286 (36 working days) an average a year to make 18 tax payments – which puts Poland in 87th place (of 189 countries) with regards to the simplicity of tax payment. Compared to other EU states, we rank even worse – both when it comes to administrative obligations and the very number tax payments that have to be made (the EU average is 189 spent on 12 payments). These figures paint a very negative picture of Poland as a country war taxpaying is particularly inconvenient and time-consuming.


Fig. 1: Number of hours needed to fulfill tax obligations in EU states



Source: Own elaboration based on Paying Taxes 2015.


This opinion is confirmed by entrepreneurs – 1/3 of respondents in the research conducted as part of the „Reliable Company” program, when asked about what the most bothersome obstacles in economic activities were – responded that it was the tax obligations. Financial directors of companies participating in the V KPMG Tax and Accounting Congress rated the Polish tax system at 2.4 points on a five-point scale, with the overall stability of tax regulations highlighted as the weakest element.


This is hardly surprising, considering that according to an analysis prepared by ECDDP – an independent tax adviser company – almost all articles in tax acts were subject to change (1600 changes in total were made in 2001-2011. The VAT Act is particularly unstable. In seven years since the act came into force in 2004, 698 regulations were changed, with article 2 alone (containing definitions) was changed 14 times. The stability of Polish VAT law does not look well compared to other EU states either. In 2004-2014, the VAT Act was amended 39 times, over twice as many times as corresponding acts in Austria and Slovakia in the same period.


Fig. 2: Stability of VAT acts in selected countries in 2004–2014



Source: Own elaboration based on the following websites: http://www.isap.sejm.gov.pl, http://www.finance.gov.sk, http://www.financnisprava.cz/, https://www.riigiteataja.ee, http://www.riksdagen.se, http://www.finlex.fi, http://www.gesetze-im-internet.de, http://www.ris.bka.gv.at, http://www.boe.es, http://www.normattiva.it.


Sadly, frequent changes in the VAT Act do not translate to its quality and transparency. What is more, the act is full of legal absurdities and its logic leaves a lot to be desired. Oranges, grapefruits, lemons and bananas have a VAT rate of 8 percent, while apples, cherries, apricots and sweet cherries are subject to a rate of 5 percent. According to an explanation provided by the National Tax Information Office, this is motivated by differences in vitamin content, manners of processing and taste of particular fruit, as well as the use of fruit in cakes and desserts. This means that tropical and citrus fruit have a higher tax rate, as one can use apples, but not bananas, to make apple pie.


A beacon of hope for retailers may be provided by a recent ruling of the Regional Administrative Court  in Cracow, which states that a cocoa-flavoured instant drink and instant coffee are similar products and as such should be subject to the same VAT rate. The obligation for  domestic courts to established whether products are similar for the purpose of VAT taxation stems from a ruling by the EU Tribunal of Justice from September 11th 2014. The abovementioned ruling, the first of its kind in Poland, may prove to be a turning point in the way courts treat similar cases.


The most frequently used method of resolving ambiguities in the application of tax law in our country is the issuing of tax interpretations by the Ministry of Finance – individual, issued by request by the deputies of the Minister of Finance, and general – issued personally by the Minister, since 2012 also by request). In 2008-2014, there were 230 101 of the former and 71 of the latter. The fact that for the last four years the ministry has issued 30 000 individual interpretations per year, shows a very significant demand for the clarification of the application of tax law, resulting from the constant amending of the law with regulations of questionable quality. On the other hand, the low number of general interpretations suggest that the criteria of the request for such an interpretation are very hard to meet.


Fig. 3: Number of individual interpretations issued by the Ministry of Finance in 2008–2014



Source: Own elaboration based on data from the website of National Tax Information Office.

* Figures for 2008 come from the NIK report entitled Adherence to taxpayers’ rights in selected tax offices and tax chambers published 2013.


Fig. 4: Number of general interpretations issued by the Ministry of Finance in 2008–2014



Source: Own elaboration based on data from the website of National Tax Information Office.


Despite the auxiliary character of tax interpretations, they are often  criticized for low quality. According to a Supreme Audit Office report from 2013, a relatively high number of interpretations is subject to appeals to the Regional Administrative Court (in 2011, 6 percent of all interpretations, 7 percent in 2012). Unclear tax regulations and delays in changing erroneous individual interpretations issued by tax chamber directors were named as the official reasons.


Changes are needed. The presidential amendment to the Tax Ordinance introducing the in dubio pro tributario principle should be first in line. It would of course be preferable if that principle applied to the actual state of things, rather than the interpretation, but the Ministry of Finance is, for obvious reasons, against such a solution and focuses on the draft of a new Tax Ordinance. A Tax Ordinance unifying tax law in Poland is the only way to improve taxpayers’ situation, but – according to prognoses made by the ministry – it could come into force in 2017 at the earliest. Meanwhile, due to the imminent parliamentary elections one has to be ready for the possibility that by the end of the year, the government and its priorities will change, making the wait for the Ordinance even longer. For this reason, it is vital that the presidential draft is passed before the end of this term. However, the politicians’ will – or rather lack thereof – may be a problem.