Poland Imposes Selective VAT Increases

by Ulrika Lomas, Tax-News.com, Brussels

29 January 2002

The Polish government has succeeded in pushing some VAT increases through the Sejm, lower house of parliament, which the finance ministry hopes to generate a total of at least ZL2.5bn in additional tax revenues.

VAT on toys goes up from the current 7% to 12%, on tyres and crafted furniture from 7 to 22% and on licenses from 0 to 22%. There is also an new excise tax on electric energy of ZL0.02. Because of objections from ruling coalition partner the Peasants' Party (PSL), the government failed to push through its proposal to extend the deadline for VAT returns from the current 25 to 60 days.

The opposition also prevented the government from imposing a tax on biofuel, but the ruling Democratic Left Alliance (SLD) said it would reintroduce the measure in the Senate, where the amendments to the VAT Act will now go for deliberations. New rates will enter into force in late February or early March.

The government has also announced details of its new "Work and Enterprise" programme of micro-economic initiatives aiming to stimulate the economy to a return to 5 percent growth within 3 years. Finance Minister Marek Belka said that the programme includes an increase in the income tax free allowance to the minimum wage level of ZL760 along with a general simplification of the taxation system.

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