Warsaw, 26^th June 2020

 

Appeal of the Union of Entrepreneurs and Employers to the government: cover the whole catering industry with a uniform 8% VAT rate

 

There can be no doubt that food catering industry is one of the sectors hit hardest by the coronavirus pandemic. The industry has basically been shut down as a result of the restrictions put in place to fight the virus. Some of the restaurants did not survive this difficult period, for others the fight is only just beginning – they are still on the market, but their turnover is much lower than a few months ago.

“The[se] companies were significantly helped by means of the financial shield offered by the Polish Development Fund Group, enabling them to survive the period when they were in fact not earning at all,” said Cezary Kaźmierczak, the president of the Union of Entrepreneurs and Employers. “The problems did not end when the restaurants opened though: their profitability is currently limited by both reduced demand and the need to incur costs to adapt to higher sanitary standards,” he adds.

The contribution of the food catering industry to Polish GDP is approx. PLN 37 billion, and the market is dominated by micro and small entrepreneurs. The industry employs nearly a million people, mainly youth. Over the last few years, we have noticed a clear upward trend in the restaurant market.

“Despite successive regulations reducing the profitability of the food catering business, restaurants were doing increasingly better,” said Zbigniew Kmieć, the Union of Entrepreneurs and Employers’ Chief Agriculture and Food Expert. “Poles were becoming more affluent and thus began to eat out more often, which had a direct impact on the development of this market,” he concluded.

Due to the repercussions of the coronavirus pandemic, there is a enormous risk of not only breaking this trend, but even of a collapsing of the catering market in Poland. Entrepreneurs from the industry are pessimistic about the prospects for the industry in the short term, stressing that they may be forced to make the most difficult decisions, including those about closing down for good.

Considering the difficult situation, a number of countries have decided to apply a uniform, low VAT rate for this sector. These countries include Germany, Greece and Bulgaria, while Romania is considering applying a 0% rate for the food catering industry.

“We should also make such a decision in Poland,” emphasises Cezary Kaźmierczak.

It is worth noting that, according to the new VAT matrix, catering services are, in principle, already subject to the 8% rate. Unfortunately, there are a number of exceptions to this rule.

“The regular, higher rate applies to, among others, serving non-alcoholic and alcoholic beverages or seafood dishes,” adds Jakub Bińkowski, director of the Law and Legislation Department of the Union of Entrepreneurs and Employers. “Due to the structure of the revenues of restaurants and similar businesses, but also the logic of the system, it would be reasonable to cover the entire sector with a uniform 8% rate without any exceptions.”

The experts of the Union of Entrepreneurs and Employers stress the unique nature of catering services and how labour intensive it is. Introducing a single, low VAT rate on everything in this industry would increase the profitability of restaurants. The additional profit would partially return to the State Treasury as part of the income tax, and it could also be used to repay subsidies granted by Polish Development Fund Group.

25.06.2020 Report by the Union of Entrepreneurs and Employers: Let’s save Polish restaurants

Fot. Tama66 / pixabay.com

Warsaw, 9^th June 2020

The Union celebrates its 10 years

Ten years of operations of the Union of Entrepreneurs and Employers coincides with the most dynamic period of economic development in the history of Poland. Small and medium-sized companies are responsible for 51% of Poland’s economic growth after 2010. Nowadays, SMEs account for 99.8% of all entities conducting business activity, employ 68.7% of the total number of people employed, and together represent 10 million voters.

It is no wonder then that the number of institutions and politicians who feel they are the fathers of SME’s success is increasing so quickly.

Back when we were starting, there were only five of us and we only needed a couple of rooms is an attic. In the minds of various officials, but also many Poles, the stereotype dating back to the Polish People’s Republic regarding private owners, small producers, slyboots and dodgers was still commonplace. They were treated as such in the offices whenever they wanted to start a business or demanded equal treatment by the tax office.

Ten years ago, we were convinced that this was a one-year project. We believed that this long was enough to inform politicians about the disproportionate rules and taxes imposed on entrepreneurs and what privileges corporations enjoy, and as a result to change it. We thought it was enough to indicate some good practices, and that politicians hand-in-hand with officials would introduce and implement them themselves. We were wrong about how much time we would need, nevertheless we were able to fix a number of important matters over the years. And there’s still more to come. We are constantly trying to explain the importance of repairing the legal and institutional environment to the authorities both in Warsaw and Brussels, where we were forced to open an additional office.

Today, the Union of Entrepreneurs and Employers represents 51,889 companies associated in 14 regional and 20 industry organisations. Our member-companies employ 576,917 people.

A thriving small and medium-sized enterprise sector is really the only common denominator of all the world’s most developed economies. It doesn’t matter if their competitive advantages result from new technologies, a powerful financial sector or production capacity, they all rely on an extensive and flexible network of small and medium-sized companies.

Poland today has found itself in a place of historical opportunity. The stabilisation of the labour market and where we will be placed within the pyramid of global prosperity will largely depend on how we shape our financial and economic policies in this very moment. Just like 10 years ago, so today it does seem to us that we only need a few globally proven legal and institutional solutions to put Poland on the fast track to the top of the most developed countries in the world. To our members – the terrific people who every day drive our economy further and who granted our nation prosperity and a quality of life incomparable to anything that had ever been achieved in Poland before – we wish high spirits, further development and many successes.

The Union of Entrepreneurs and Employers

 

P.S. Today, in the courtyard of the former Central Committee of the Polish United Workers’ Party, celebrations were to be held on the occasion of the 10^th anniversary of the founding of the Union. For reasons known to everyone, they were postponed until December 3^rd later this year. We are really looking forward to it.

 

See the video: 10 years of the Union of Entrepreneurs and Employers in 10 minutes