Poland Ready To Close EU Tax Chapter

by Ulrika Lomas, Tax-News.com, Brussels

25 January 2002

The European Commission has accepted Poland's request for a six-year phasing-in of minimum EU excise tax levels, meaning that the tax chapter can shortly be closed in Poland's accession process.

The agreement would allow Poland to defer implementing EU levels of excise tax until 1st January 2009. Official ratification of this position is expected at the next negotiating session on 21-22 March.

EU rules would mean that as of 2009 excise tax cannot be lower than 57 percent of the retail price of the most popular cigarette brand. During the transition period, as of 1 January 2003, excise tax could not be lower than 60 euro per 1000 cigarettes and 64 euro beginning the following year. The new rules are aimed to level up cigarette price differences between EU and candidate states. If enforced today, the new rules would nearly double the price of cheap popular cigarette brands in Poland.

However, a recent attempt by the Government to increase its take of VAT and excise taxes appears to have fallen flat on its face. A slump in car sales has been directly reflected in budget revenues from VAT and excise, which fell by 18 percent in 2001. According to Samar, which monitors Poland's auto market, the state budget collected just ZL3.5bn in tax revenues from car sales, including ZL2.709bn from VAT, and some ZL821m from excise tax.

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