- According to a draft act which is currently at the legislative stage, tax reliefs granted thus far only in special economic zones will become available to every entrepreneur.
- The basic condition for their award will be investment in innovative solutions in one’s own enterprise.
- The existing Special Economic Zones will disappear by the end of 2026.
As indicated by the authors of the draft Act on Support of New Investments, currently debated by the Sejm, at the end of 2016 more than 332 thousand people were employed in special economic zones (SEZ), and the value of the invested capital was nearly PLN 112.3 billion. These data demonstrate that SEZs make an important element of Polish economy – both from the point of view of entrepreneurs and employees. However, special zones – among other things due to limitations related to their location and difficulties with expanding their borders – increasingly lose their attractiveness and, in turn, cease to fulfil their tasks. In the light of the above, the legislator decided to depart from that model and turn entire Poland into one big “economic zone.” Under the proposed solutions, entrepreneurs may receive two types of support from the state: tax exemption and different information services provided by specially appointed institutions.
A “Nationwide” special economic zone
The essence of the proposed amendments boils down to the possibility of being granted income tax (CIT and PIT) exemptions in the entire country – and not, as previously, only within the areas of special economic zones. In other words, an entrepreneur applying for a tax relief will not have to conduct its activities in a zone. The only requisite for the award of such support is implementation of a “new investment.” By that notion, the authors of the draft understand a number of activities. In the first place, establishment of a new enterprise or increase in the production capacity of an existing business. A tax relief may also be sought by entrepreneurs willing to expand their activities by launching products which previously had not been manufactured in their enterprise or to essentially modify the manufacturing process. In other words, the new provisions will cover predominantly innovative ideas: both as regards their introduction “from scratch” and implementation within the framework of an existing activity.
Investments in the “nationwide” zone
Even if an entrepreneur plans to undertake one of the above activities, this does not mean that any investment whatsoever may give rise to an income tax exemption. The eligible activities must involve investments in tangible fixed assets or intangible and legal assets. These concepts were defined in the Accounting Act. Without going into details of the complex legislation, it suffices to point to the exemplary catalogue – prepared by the legislator – of what may fall under the above notions. According to that list, tangible fixed assets include, without limitation, real estate (including perpetual usufruct of land and separate premises in a building), machines and equipment, as well as livestock. On the other hand, intangible assets are, among others, economic copyrights, related rights, licenses, concessions; rights to inventions, patents, trademarks, utility models and designs, as well as know-how. In both cases, they must be fit for commercial use for a period of over one year. As a result, tax exemptions will refer only to activities that directly serve the purpose of implementing a new investment.
PIT and CIT exemption requirements
The basis for the support will be a decision of the minister responsible for economy issued for a period spanning from 10 to 15 years. Only after its issuance an entrepreneur will be able to take advantage of PIT or CIT exemptions – on the same terms as presently in SEZs. This means that the value of such support may not exceed the permissible public aid quota and the support may only cover the type of activity specified in the decision. In addition, withdrawal of the decision will imply not only the loss of the possibility to take advantage of the PIT and CIT exemption but also the need to pay the tax due for the entire period of support. Apart from that, entrepreneurs who presently operate in special economic zones may avail of the currently applicable provisions until 2026 – which makes a point in time at which the Council of Ministers had already planned to abolish SEZs.
Not just tax exemptions
Apart from tax exemptions, the authors of the proposed draft intend to introduce another type of aid for entrepreneurs administered by “area managers.” According to the draft, the entire country is to be divided into special areas in which the managing entities will be obliged to carry oud special actions in support of entrepreneurship. This division, however, will not affect in any way the possibility to take advantage of the support. From the point of view of entrepreneurs, it will have a mere auxiliary character. The main responsibilities of an area manager will include off-charge facilitation of the manager’s property to entrepreneurs, free provision of information to entities applying for the support, or promotion of business activity. In other words, an entrepreneur willing to launch a new investment will be able to obtain all assistance from the institution managing a given area.
The proposed solutions offer Polish entrepreneurs a good chance for development. However – if the draft enters into force in its present shape – many detailed solutions will be introduced by secondary legislation. As a result, any comprehensive evaluation of the new perspectives for the domestic business will be possible only after the adoption of such regulations.