Polish Budget Leaves Room For Tax Cuts

by Ulrika Lomas, Tax-News.com, Brussels

11 September 2008

The Polish government has approved the draft 2009 budget document, which supposedly achieves the twin aims of lowering the country's tax burden while cutting the government's budget deficit.

The budget proposes to provide tax relief to individuals and businesses by streamlining the tax system and cutting back on administrative procedures.

This means that from next year, the number of personal income tax brackets will be reduced from three to two and possibly to just one by the year 2011.

Currently, Polish residents pay 19% income tax on their first PLN44,490 (EUR12,830) in earnings, then 30% on the next PLN41,038, and finally 40% on income above PLN85,528. From next year however, taxpayers will face two rates of 18% and 32%.

The budget document also leaves the door open for the introduction of a flat tax in 2011, possibly around the 17% mark.

Despite the tax cuts, the budget also foresees a reduction in the budget deficit by one-third next year to PLN18.2bn, or 2% of GDP, leaving the country on course to adopt the euro currency, possibly in 2012.

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