Warsaw, 1^st October 2020

 

Busometr: Investments are sinking, but the labour market is still in good shape

 

The “Busometr” index of business mood for the 2^nd half of 2020 amounted to 42.4 points (a drop from 44.5 points in the previous half-year) which means that entrepreneurs’ moods during the COVID-19 epidemic are worsening. Investments suffered hardest, while the labour market still enjoys a surprisingly good mood.

The drop in entrepreneurs’ moods has been recorded successively since the record-breaking 2^nd half of 2018, when the “Busometr” index amounted to 56.8 points. However, it is impossible to ignore the fact that the sentiment survey for the 2^nd half of 2020 took place in very particular conditions of the epidemic and economic perturbations related to it.

“We expected business moods to worsen,” explains Cezary Kaźmierczak, President of the Union of Entrepreneurs and Employers. “What may be surprising is that the difference caused by COVID is relatively small. We have seen regular declines since mid-2018 when the economy was at its peak. The epidemic caused this trend to continue rather than accelerate significantly.”

The analysis of individual components of the Busometr index suggests that entrepreneurs’ sentiments vary depending on the specific part of the economic reality being in question.

Exactly 50% of respondents believe that the economic situation will deteriorate in the months to come. Owners of micro-enterprises are most pessimistic about the future – in their case, the component “Economic situation” is significantly lower than for small, medium and large companies.

The lowest in history result of the “Investments” component is certainly something to be worried about. The index in this respect amounted to 29.5 points compared to the record-breaking 53.7 points in the 2^nd half of 2018. Almost 70% of companies declared that they plan no investments at all.

“The problem with investments in Poland is of a structural nature, but the uncertainty related to COVID and the constantly changing regulations only deepen it,” stresses Jakub Bińkowski, the Union’s Director of the Law and Legislation Department. “The lowest result of the ‘Busometr’ index in history shows that a policy adjustment is necessary in this area.”

The Union of Entrepreneurs and Employers calls the government to abandon the incessant amendments to the conditions of running a business in Poland. The price of regulatory risk is rising rapidly, and companies are afraid to invest. One has to call it by its name: if the government does not calm down in terms of changes, there will be no investment. It will get even worse.

The following are the government’s surprises from only the last two months:

• the sugar tax;
• CIT for limited partnerships;
• rain tax;
• the announcement of the excise tax on used cars;
• advertising tax;
• the announcement of a digital tax;
• the ban on breeding fur animals and ritual slaughter;
• a restrictive implementation of the audio-visual directive.

In all this chaos, it is extremely difficult to plan and run any business activity. We call for reflection. There is no obligation to run business activity in Poland.

Considering the conditions in place as a result of the epidemic, the level of the “Labour market” component is surprisingly positive – 14% of companies plan to increase wages and employment, while job and wage cuts are planned by 7% and 5% of companies, respectively. The results of the survey seem to confirm the thesis that Polish entrepreneurs are not afraid of the negative effects of the pandemic and are trying to maintain employment.

 

***

 

Busometr ZPP – the Index of Economic Mood in SME Sector is an economic index showcasing the level of optimism in small and medium enterprises, and their plans for the next six months.

Three components affect the index: (1) the economic situation, (2) labour market (remunerations and employment) and (3) investments.

A value within the range of 0-100 is assigned to each component.

The Union of Entrepreneurs and Employers along with Maison&Partners conduct the research among a representative group of small and medium enterprises (up to 250 employees). Busometr ZPP is published every six months. The sample size is N = 600 respondents from the SME sector.

The survey is carried out since 2011.

 

01.10.2020 Busometr ZPP. Forecast for the 2^nd half of 2020

Warsaw, 2^nd October 2020

 

CIT on limited partnerships will increase the burden on tens of thousands of Polish entrepreneurs

 

• Covering limited partnerships with CIT will lead to a significant increase in taxes for nearly 73,000 Polish entrepreneurs.
• The most thriving businesses will suffer the most, as they will not have the chance to benefit from the lower 9% CIT rate, and the actual taxation of the shareholders of these companies will increase to 34-38% instead of the current 19-23%.
• Only 1% of limited partnerships have foreign partners, and their share in the total number of partners of limited partnerships amounts to 0.4%, which means that the possible risk of a tax-free transfer of profits abroad is marginal.

– according to the report presented at the joint conference of CRIDO, the Union of Entrepreneurs and Employers and InfoCredit.

 

Dramatic consequences for business

In connection with the planned tax changes (as of 2^nd October 2020), there will be a significant increase in the tax rate for nearly 73,000 Polish entrepreneurs. Approximately 75% of companies with lower turnover will be able to benefit from the 9% CIT rate instead of the hitherto 19%. However, as many as a quarter of limited partnerships responsible for 90% of revenues generated by these businesses (i.e. nearly PLN 300 billion annually!) will pay 19% CIT. Effectively, the tax rate on the partners of these companies, mainly Polish entrepreneurs, will increase to 34% or, in the case of people paying the solidarity levy, to 38%.

Even Estonian CIT won’t help

The new tax benefit in the form of the so-called Estonian CIT does not include limited partnerships. Even assuming that some entrepreneurs will decide to transform their business into a capital company (LLC or joint-stock), others will probably remain in the current form. Apart from the preferential tax regime, this form of activity is popular, in particular, among entrepreneurs operating in the trade and service industry, as there is no capital expenditure which is a condition for using this form of taxation.

Limited partnerships are not widely used for international tax optimisation

Contrary to the justification of the proposed changes, the data do not indicate that limited partnerships are used in international tax optimisation schemes. In Poland, approximately 43,000 limited partnerships conduct active business activity. According to the analysis of CRIDO experts based on data from the InfoCredit database, 92% of limited partnerships are businesses of natural persons from Poland. As many as72,705 Poles run their businesses in this form.

Should one compare, only 0.4% of partners in limited partnerships in Poland are foreigners. The first place is taken by Germany (151 partners) for whom this form of business activity is quite commonplace and is indicated as one of the reasons behind Germany’s economic success. Our Western neighbour is followed by Luxembourg (113 partners), Cyprus (41) and the United Kingdom (39).

The whole country and many industries are in question

Limited partnerships are scattered all over the country. Most of them can be found in the following voivodships: Masovia (11,290), Greater Poland (5611), Lesser Poland (4744) and Silesia (3792). They operate in various sectors, most of them are involved in industrial processing, construction, and trade. Many transport, logistics, and catering companies operate in this way. This form has allowed many Polish entrepreneurs to develop, who with a “flair” for running business could at the same time limit the risk for their family.

“The combination of a 19% single taxation rate with reducing the risk of running a family business is a positive stimulus and motivating factor for the development of entrepreneurship. The example of Germany, whose economic power grew out of family businesses run in the form of limited partnerships, proves this concept to be right. The planned double taxation of limited partnerships will not only be a negative signal for Polish entrepreneurs, but will also put domestic companies in a worse market position in relation to their foreign competitors. Because considering the so-called Parent-Subsidiary EU directive, a foreign investor from the EU will pay no more than 19% of income tax,” comments Mateusz Stańczyk, Partner at CRIDO.

“Covering limited partnerships with CIT is a bad idea. The data do not indicate that these companies were entities used for international optimisation schemes. They are, on the other hand, an attractive form of business for Polish, dynamically developing businesses. It should be emphasised that this is yet another proposal to increase the taxes to emerge in a relatively short time. Meanwhile, the tendency of entrepreneurs to invest is, according to our research, the lowest in years and it is not without reason. Multiple changes in regulations, the sudden introduction of new levies, the lack of elementary legal security for companies are the main reasons why the investment rate in Poland is far from the 25% GDP expected by the Strategy for Responsible Development,” claims Jakub Bińkowski, Director of the Union’s Department of Law and Legislation.

“Today, more than ever before, any proposal to change to the tax system should also be analysed in the context of employment. Greater burdens for tens of thousands of Polish entrepreneurs may mean a diminished willingness to create new jobs or keep the existing ones. InfoCredit will soon conduct a survey among entrepreneurs so that they can assess the proposed changes in taxation in the context of employment and their market opportunities. We will share the results of this survey with you in October. For many months now, the InfoCredit index has been signalling that as the number of jobs is decreasing, the number of sole proprietorships is increasing. And these have a much smaller ability to achieve market success than companies with an established position,” says Jerzy Wonka, Development Director at InfoCredit.

 

***

 

About the analysis

The above analysis was carried out on the basis of information from InfoCredit databases. For the purposes of this report, experts from InfoCredit and CRIDO studied the data and analysed approx.. 43,000 limited partnerships that actively conduct business activities, including 26,462 which published financial statements for 2019 and / or 2018, reporting revenues totalling approx. PLN 330 billion annually. The available data made it possible to identify the shareholders of approx. 41,500 limited partnerships.

 

02.10.2020 Limited partnerships in Poland – data analysis

 

Fot. stevepb / pixabay.com

Warsaw, 13^th October 2020

 

Necessary tightening measures in the customs and VAT system for foreign e-commerce vendors

 

The Union of Entrepreneurs and Employers, in its latest report, analysed the customs and tax system in terms of shipments from non-EU e-commerce vendors. The Union notes in its study that the e-commerce sector is gaining importance in the global, and thus also Polish economy. This phenomenon is influenced, among others, by the coronavirus epidemic. According to the Union, this market in Poland will grow in 2020 by 20%.

E-channels allowed domestic producers to survive during the epidemic crisis by filling the gaps in in traditional sales channels. By 2025, e-sales will account for 20% of the market. In other words, who will not sell online in 5 years will lose every fourth customer – claims the Union of Entrepreneurs and Employers.

“Poland is a large and attractive market for e-commerce platforms and vendors. Poles en masse fell in love with online shopping. However, the playing field for retailers and consumers is uneven. There are no equal rules of competition between Polish and Chinese e-commerce. Chinese companies have a number of domestic public support instruments at their disposal and make use of the gaps in the Polish system of public levies in a highly non-competitive manner,” says Marcin Nowacki, Vice-President of the Union of Entrepreneurs and Employers.

“Naturally, we all want to pay as little as possible for goods. It is in all our interests to ensure the greatest possible variety of products, fair competition, and diversity of entities operating in the e-commerce industry. At the same time, the rules of operation in this sector must be equal and transparent,” adds Piotr Palutkiewicz, the Union’s Deputy Director of the Law and Legislation Department.

The Union of Entrepreneurs and Employers has presented a number of recommendations aimed at ensuring fair and high competition in the e-commerce industry. The solutions include, among others the need to introduce an IT system for the payment of customs duties under e-administration and its integration with e-commerce platform systems.

“Simultaneously, thanks to the introduction of a modern and customer-friendly system for paying customs duties, it will be easier to control, as well as pay taxes and custom duties for items shipped from non-EU markets. As a result, the State Treasury may gain over PLN 2 billion annually,” adds Marcin Nowacki.

The Union also indicates that EU funds from the National Reconstruction Plan after the COVID-19 crisis should be used to introduce solutions in the field of e-administration, customs, and tax.

“There is also work to be done by Polish authorities related to the implementation of EU rules into the Polish legal system regarding the principles of concluding contracts over distance and effective enforcement of standards in force in the Community,” adds Piotr Palutkiewicz.

The authors of the report also point to further necessary actions, such as the appointment by non-EU vendors of a representative in the European Union who will be responsible for the proper enforcement of consumer regulations, or the undertaking by Poczta Polska (Polish Post) of actions to help Polish exporters sell products on non-EU markets (especially in China) via the e-commerce channel. This would also allow Poczta Polska to generate additional revenues. The Union also calls for the initiation and active participation of Poland in the reform of the Chinese postal charges system in force under the Universal Postal Union. This action should be carried out both on the level of the European Union and in other international circles.

“As a result of implementing our recommendations, unfair competition on the part of Chinese vendors and e-commerce platforms would become limited. The protection of Polish consumers would be ensured at an equal level, regardless of the location of the purchasing platform. Owing to this, the competition of Polish and foreign vendors and online sales platforms would take place on an equal basis, and Polish entities operating in the e-commerce sector would have equal opportunities to expand on international markets,” concludes Nowacki.

 

See report: 13.10.2020 Necessary tightening measures in the customs and VAT system for foreign e-commerce vendors

 

Fot. rupixen.com / Unsplash.com

Warsaw, 12^th October 2020

 

Union of Entrepreneurs and Employers on a strategy to combat the second wave of the epidemic: radical organisational changes and compliance with sanitary restrictions are needed, we cannot afford another lockdown

 

The number of coronavirus infections is growing exponentially, data on occupied beds and respirators are becoming increasingly worrying. Subsequent changes in tactics announced at press conferences raise the question whether the country has managed in recent months to prepare for the second wave of the epidemic. According to the experts of the Union of Entrepreneurs and Employers, the lack of a clear strategy and effective procedures show that institutions in charge of Polish healthcare squandered the virus’s “dormant” period.

“One can assume that the Ministry of Health was busy “putting out fires” in March and April, but the period since May was the time to reconsider the course of action for the upcoming autumn and to equip the appropriate institutions. It was known, after all, that the second wave of the epidemic would come,” claims Cezary Kaźmierczak, President of the Union of Entrepreneurs and Employers. “We have been observing the total chaos and helplessness of institutions for several weeks. The procedures either don’t exist or they don’t work, we are testing a lot less people than we should, and the supply of beds and respirators is shrinking. The Minister of Health failed to prepare a real strategy to fight the coronavirus, because it is difficult to call the document published on the Ministry’s website a strategy.”

The basic goals of the Union’s strategy to combat COVID-19 are to reduce virus transmission through mass testing, to secure the maximum possible efficiency of the healthcare system and to ensure business continuity. According to the Union’s experts, despite the declarations of politicians that closing the economy again is out of the question, the restrictions introduced consistently affect business to a great extent and in practice mean a progressive lockdown.

“The Polish economy suffered enormously due to the lockdown. For the first time in years, we have recorded growth in GDP, the budget deficit has increased to a record size, we have spent tens of billions of zlotys on the necessary aid programs,” emphasises Jakub Bińkowski, the Union’s Director of the Law and Legislation Department. “We spent that money to buy the time needed to prepare the healthcare system to fight the virus. This was not done and now the costs of the sanitary regime are again being transferred onto business. It is unacceptable.”

The strategy presented by the Union of Entrepreneurs and Employers assumes far-reaching changes in the model of combating the epidemic. The Union’s experts call for the creation of a specialised agency, similar to the Polish Development Fund PFR, reporting directly to the prime minister, which would take over administrative and managerial tasks. From the medical point of view, the strategy is based on the recommendation of mass testing (currently Poland ranks 84^th in terms of the number of tests per million inhabitants globally) and the strict enforcement of key sanitary restrictions resulting from the current broadly accepted consensus DDM (distance – disinfection – masks). At the same time, the Union is against any restrictions on running a business; the Union has consistently considered it appropriate to eliminate the yellow zone throughout the country.

An integral part of the strategy is the case study on the strategies to combat COVID-19 implemented in Sweden and Germany. The experiences of these countries are not conclusive, yet they provide useful insight into possible effects of various strategic models.

“Sweden ‘went rogue’ and, being in the European avant-garde, introduced no particular restrictions during the first wave. The country paid a high price for this in terms of economics, but above all, in terms of health, reporting a very high number of infections and deaths,” says Kamila Sotomska, Analyst at the Union’s Department of Law and Legislation. “The country has been going through the second wave of the epidemic relatively mildly so far, but there’s no saying whether this is the result of an approach adopted earlier this year. Also Germany seems to be coping with the virus well. This is obviously a consequence of high healthcare expenditure, but also of mass testing. It is an approach in this respect that we propose to replicate in Poland.”

“It must be said as it is: the authorities in whose competencies it was to prepare the strategy of combating COVID-19 in the autumn did not do their job,” concludes Cezary Kaźmierczak. “Therefore, we have done this work instead and we hope that the approach to fighting the epidemic will be modified rapidly. We have less and less time to respond to the increasing number of infections and to prevent our healthcare system from collapsing.”

 

See the study: 12.10.2020 The Strategy to Combat COVID-19: Recommendations of the Union of Entrepreneurs and Employers

Warsaw, 25^th September 2020

GOOD COMPANY STATUETS AWARDED TO THE MOST INNOVATIVE AND FASTEST GROWING COMPANIES IN LESSER POLAND

The Union of Entrepreneurs and Employers chose the best companies in Małopolska – a region in the south of Poland know in English as Lesser Poland. Among the winning companies, there were enterprises from the engineering, technology, chemical, IT, advertising and marketing sectors.

As part of the first edition of the Dobra Firma 2020 Programme, seven statuettes were presented at the gala at the Best Western Efekt. The event was held under the patronage of the President of the City of Kraków, Jacek Majchrowski, the Voivode of Małopolska, Łukasz Kmita, and the Marshal of the Małopolska Voivodeship, Witold Kozłowski. The event’s partners included: the Industrial Development Agency ARP, the Polish Agency for Enterprise Development PARP, the Polish Development Fund PFR, Info Veriti business intelligence agency, the monthly magazine on business and innovation My Company Polska and the regional Polish national TV station TVP 3 Kraków.

During the qualification process, the Union’s experts carefully analysed financial data summarising several years of activity provided by Info Veriti, the potential to innovate and grow as well as the reputation of a broad group of companies from the Lesser Polish region. Having evaluated the data, a team of experts selected a set of 52 enterprises operating in Małopolska most dynamically, 7 of which became the programme’s laureates.

The winners are:

in the Most Effective Company category

• HAND MADE MARCIN PALARCZYK ARTUR LALEWICZ sj. – a 360 advertising agency providing their services to the largest Polish brands, offering a well-thought-out strategy and advertising creation.
• LEIER POLSKA S.A. – a company operating in more than 40 locations, which include brick factories, precast concrete plants, acoustic screen factories, car dealerships, mechanical plants, facilities specialising in soil for horticulture, and hotels as well as places where real estate management and rental services are provided.

in the Best Innovator category

• ATMAT Sp. z o.o. – a dynamically growing Polish production company specialising in the industrial engineering industry.
• SYNTHOS DWORY 7 Sp. z o.o. – the Group’s activity is based on the sale of chemical products used as raw materials and intermediate products in a wide range of industries, in particular in the automotive industry, packaging industry and construction industry.

in the Most Efficient Employer category

• NKK SYSTEM NOWAK, KUKUŁKA, KORNIJASZ sj. – a company providing services for institutional and individual clients, offering IT equipment, computers, peripherals, and ready-made solutions for business.
• TOBACCO TRADING INTERNATIONAL POLAND Sp. z o.o. – a company operating on the Polish market of high-quality tobacco products and related accessories. It is at the forefront of companies specialising in the import and distribution of tobacco and complementary products.

The Union’s Special Prize was awarded to MORE BANANAS Sp. z o.o. Sp.k. – a company specialising the advertising and public relations campaigns in social media.

The full list of winning companies is available at nagrody.zpp.net.pl.

Cezary Kaźmierczak, the President of the Union of Entrepreneurs and Employers, comments: “As part of our activity, we wish to distinguish the best Polish companies and entrepreneurs who, in spite of the difficult conditions for development, consistently strive forward, implement innovations, and provide stable, employee-friendly jobs. It is thanks to such companies that the Polish economy is handling the current economic crisis better than others. For the last 10 years, all of us at the Union have been actively working towards improving the operating conditions for companies in Poland. We initiate many and support all initiatives aimed at eliminating from the Polish legal system any and all restrictions on economic activity that exceed EU requirements, thus levelling the competitive opportunities between Polish and European enterprises.”

***

The awards in the Dobra Firma (Good Company) project are awarded by the Union of Entrepreneurs and Employers, also known as ZPP. Founded in 2010, the Union is the fastest growing and most active organisation of Polish entrepreneurs. Its members include over 52,000 companies, 15 regional and 20 industry organisations. Every year, ZPP publishes over 30 reports, studies and films as well as over 100 legislative comments, positions and opinions. It organises numerous debates and meetings. Its goal is to make Poland the country with the best business conditions and tax system in Europe. ZPP is apolitical and supports the free market and common sense, regardless of political affiliations. Moreover, the Union is a member of the Social Dialogue Council and has a representative office in Brussels.

Warsaw, 23^rd September 2020

The new version of dobry.biz – the platform for aid and cooperation for members of the Union of Entrepreneurs and Employers – has been launched

Thus far, an effective programme that would significantly contribute to supporting the SME sector in Poland has not been implemented yet.

Over the last two years, we have been closely monitoring what is happening on the market, fully aware of the fact that dobry.biz must evolve. We have browsed dozens of portals and websites, learnt from our mistakes, and listened to our members. This way, we created dobry.biz anew with the following in mind:

• to make it more transparent,
• that it provides real assistance to our Members – offers them the ZPP Assistance package, including legal assistance as well as advice on financing and subsidies,
• that it gives access to valuable knowledge and information, all in one place – the Law and Legislation Bulletin, templates of letters, specialist articles, examples of legal advice, interviews with experts,
• to allow for company and offer presentations,
• to inform about promotional campaigns and special offers – a weekly newsletter,
• to design a new offer search layout,
• to include new possibilities – adding a company’s employees,
• to connect it with social media.

Feel invited to get to know our new website, to find out all its possibilities and the benefits of creating a community of entrepreneurs on the dobry.biz profile on Facebook.

We are here for you
Your dobry.biz team

Warsaw, 2 October 2020

 

Commentary to the Opinion of the European Economic and Social Committee on the European Minimum Wage

 

On 18 September 2020, the European Economic and Social Committee has adopted its’ Opinion on decent minimum wages across Europe or so-called European minimum wage. This explanatory opinion was requested by the European Parliament with a view to the forthcoming Commission’s initiative. The European Economic and Social Committee (‘EESC’) did not come to a consensus on a number of contentious points, including the EU competence to act in the field of minimum wages.

The Union of Entrepreneurs and Employers have participated in the European Commission’s consultations regarding the subject of European minimum wage and has critically assessed the proposal due to a number of reasons. First, the regulation of the minimum wage remains within the exclusive competence of Member States, and that EU instruments referring to these issues should be of a non-binding nature, should they be at all adopted. Second, even though the Commission has stated that it will respect national traditions, to include collective bargaining mechanisms, however, this proposal suffered from lack of precision. Third, the Commission analysed the issue of minimum wages solely from workers’ perspective, and hence overlooked the fact that the introduction of additional regulations may increase the scarcity of full-time employment in the labour market, which – so it would seem – is not consistent with the EU concept of social policy.

The EESC opinions reflect a divide between the Workers’ and Diversity Europe Groups and the Employers’ Group. On the one hand, the EESC has acknowledged inter alia that important disparities remain in the statutory minimum wage levels in the Member States and minimum wages are an important aspect of the EU’s social market economy model. On the other hand, the EESC noted that any potential changes may have an impact on employment, competitiveness and macro-economic demand. Moreover, while the Workers’ Group and the Diversity Europe Group were of the opinion that a binding instrument is necessary, the Employers’ group highlighted that introduction of mandatory requirements can lead to adverse consequences in the labour market. Furthermore, the Employers’ Group recalled that the European institutions do not have the competence to act on “pay”, including pay levels. What is, however, more important is that such action could undermine the autonomy of social partners and efficiency of collective bargaining systems, especially in the Member States where there are no statutory minimum wages.

The Union of Entrepreneurs welcomes the fact that the European Economic and Social Committee took due account of the concerns presented by the Employers’ Group. We hope that the European Commission will take issues such as lack of competence or potential adverse effects on the European economy under consideration in its’ subsequent work related to the European minimum wage. 

 

02.10.2020 Commentary to the Opinion of the European Economic and Social Committee on European Minimum Wage

 

Fot. MabelAmber / pixabay.com

Warsaw, 24th September 2020

 

Marcin Nowacki and Tomasz Wróblewski have been nominated to be members of the European Economic and Social Committee. As of 21 September, they represent the Union of Entrepreneurs and Employers in the European decision-making process

 

The European Economic and Social Committee (“EESC”) is an advisory body established by the Treaties. It consists of three groups representing respectively Employers, Workers and Diversity and provides expertise to the European Parliament, the Council and the Commission. Its’ 326 members are employers, trade unionists and representatives of social, occupational, economic and cultural organizations, who are appointed for a renewable 5-year term by the Council on a proposal by the Member States.

– I am honored that I can contribute to the work of the European Economic and Social Committee. – Marcin Nowacki, Vice President of ZPP, stated and added – What is crucial for companies’ performance in the market is a good regulatory environment and the European Economic and Social Committee has a crucial role to play in the creation of better European legislation for businesses.

Most importantly, however, the EESC participated in the European law-making process. It issues between 160 and 190 opinions and information reports a year. Opinions can be requested by the European Commission, Parliament or Council. The EESC has also the right to provide an opinion of its own motion. In this way, the EESC ensures that important socio-economic interests are well-represented in the Union’s decision-making process.

According to Tomasz Wróblewski, WEI President, the function of an EESC member is an privilege and a responsibility – Direct participation in the European decision-making process is an opportunity that is not available to many and I intend to use it to duly represent the interests that are important for Poland on the international arena.

Furthermore, the EESC organizes several annual initiatives and events with a focus on civil society and citizens’ participation such as the Civil Society Prize, the Civil Society Days, the Your Europe, Your Say youth plenary and the ECI Day.

– The first step towards improving the EU’s trade balance is increasing the competitiveness of European businesses. Companies in third countries often face smaller regulatory hurdles that allow their businesses to grow and thrive more easily. To increase the competitiveness of European businesses, the EU should focus on decreasing red tape and administrative burdens, especially on SMEs – Nowacki noted.

Marcin Nowacki, Vice President of the Union of Entrepreneurs and Employers, President of European Enterprise Alliance,  Board Member at Warsaw Enterprise Institute

In the years 2006–2007, director of the Investor Acquisition Department at the Łódź Special Economic Zone S.A. In the period 2008–2009 he was the director of the Entrepreneurship Department at the Marshal’s Office in Łódź (Regional Government). He participated in the management of over 40 investment projects with a total value exceeding EUR 1 billion. Marcin has been involved in the Union of Entrepreneurs and Employers (ZPP) since 2011. Today ZPP belongs to the group of three largest employers’ organizations in Poland. As part of the ZPP, he coordinates departments responsible for law and legislation as well as relations. Marcin also oversees all foreign relations and partnerships, including the ZPP Representation in Brussels, participating in key regulatory processes for Polish entrepreneurs in the EU. Initiator and head of the European Enterprise Alliance, an organization of entrepreneurs registered in Brussels associating organizations of employers from the region of Central and Eastern Europe. Marcin Nowacki is also a chairman of e-commerce working group at the SME Connect, Brussels-based SME platform.

Tomasz Wróblewski, President of the Warsaw Enterprise Institute

President of WEI. Creator of such titles as “Newsweek Polska”, “Forbes Polska”. He started his professional work in the United States. After graduation from the University of Houston he cooperated with Newsweek and Washington Post. After returning to Poland he successively served as director of RMF antenna, deputy chief executive of “Wprost” and then chief executive of “Newsweek Polska” and “Forbes”. He worked as Vice President of Polskapresse publishing house. He also held the post of editor-in-chief of Dziennik Gazeta Prawna and Rzeczpospolita.

 

fot. Giampaolo Squarcina / ma lic. Flickr.com

Warsaw, 21^st August 2020

 

Position of the Union of Entrepreneurs and Employers on the Polish nuclear power programme

 

Nuclear energy is considered to be a promising branch of the entire global energy sector. Changing technological solutions constitute in this regard an important issue. Some of the Western European economies have recently departed from PWR (pressurised water reactor) devices, some of them have focused on researching other types of reactors (such as ITER – International Thermonuclear Experimental Reactor) designed for nuclear energy of new quality. It can be expected that these efforts of many countries will bear fruit within 10-15 years. PWR reactors on the other hand are a good, proven and failure-free technology that is constantly being modernised and adapted to the increasingly demanding safety conditions.

In Poland, the decision to invest in this type of energy source must be considered on many levels. This decision is of political, substantive, economic and social character.

First of all, it is difficult nowadays to imagine any social or political acceptance for a capital investor or a technology supplier from China or Russia, that is countries specialising in PWR technologies. Presently, everything indicates that it will be the United States to invest in the Polish nuclear energy programme. The only unknown variables are time and cost. It is worth mentioning that there are numerous examples of agreed upon budgets being exceeded by several dozen percent, as well as up to several years of construction delays. This does not mean, however, that these instances necessarily have to repeat themselves in the case of Polish investments.

Investing in nuclear energy in Poland is a political decision, closely related to the broadly understood national security, including that of military nature. We would be joining the group of countries with extended nuclear capabilities. Such an investment must be adequately protected.

The programme presented by the Ministry of Climate focuses to a larger extent on substantive and economic aspects, merely mentioning the political dominion of decision. The Union of Entrepreneurs and Employers, however, views its political aspect as the chief motive when making such a decision. One may notice this, among other things, in in the financing model of this power plant as proposed by the Ministry of Climate, which seems to be adapted to the possibilities and conditions of the American partner.

If the security of our country increases significantly as a result of the construction of a nuclear power plant, such a decision ought to be made.

Of course, the economic conditions of such a decision are also highly important, henceforth the need for tough negotiations with the future co-investor.

It seems that following the arguments presented above, the direction of investment becomes obvious, especially since it should not be difficult to explain the reasons for such a decision to both the public and European stakeholders. In our view, a positive decision to invest in nuclear energy should be taken at the highest level and be preceded by an explanation stage dedicated to the public. Additionally, in accordance with the requirements of the Treaty establishing the European Atomic Energy Community, this decision will be subject to approval by the European Commission and this issue should be taken into account in the to be undertaken.

A negative investment decision must also be based on solid foundations, the more so as the programme has already cost taxpayers more than PLN 500 million.

It seems that there is neither basis nor even the possibility of completely decommissioning coal-fired power plants in Poland by 2045. By reducing the share of coal to 50% by 2030 and to 30% in the energy mix by 2035, we will probably obtain the approval of the European Commission for a form of transformation that will assume the complete liquidation of coal-based energy by 2050. The development of renewable and gas energy over the years will fully meet the country’s energy needs in terms of electricity and heat (based on gas and electricity). At present, the country’s total highest demand amounts to approximately 28,000 megawatts. However, a political problem may arise in the form of the question as to how should we satisfy the fuel needs of a wide park of gas generating units – in Polish economic conditions there is a risk of the need to establish trade relations in this respect with the Russian side, which may raise concerns about the influence of Gazprom on Poland’s energy security.

Considering the level of the country’s energy security, the development of distributed energy seems to be optimal. We will leave the guarantee of the system operation to modern supercritical coal-fired units, gradually replaced by gas units. At the same time, over the period of 20 years, we will ensure a peaceful and harmonious transformation process for the mining industry, avoiding unnecessary social tensions.

To sum up, we are not opposed to the construction of a Polish nuclear power plant, but the criteria for such an investment must be broader than those presented in the proposed document. The programme should be properly presented to the public. When choosing a technology, the target power of the installation should be taken into account. At the same time, in the future, further development of the programme based on other nuclear installations should be considered. Nuclear energy should also be included in Poland’s new energy mix.

It is necessary to precisely (using a timeline) plan for subsidising nuclear energy together with a system of cooperation between nuclear energy and other sources, with particular emphasis on distributed energy.

The political sensitivity of this subject requires extremely prudent diplomatic actions, covering not only diplomacy itself, but also business and science, allowing for certain compromises in the name of generally understood superior values. This will apply in particular to our European partners.

Also, the decision to abandon the Polish nuclear energy programme should be very precisely motivated and based on hard data from the same areas as in the case of a positive decision.

As part of this position of the Union of Entrepreneurs and Employers, we enclose a set of comments to individual provisions of the drafted document.

26.08.2020 Position of the Union of Entrepreneurs and Employers on the Polish nuclear power programme

 

Fot. Frédéric Paulussen / Unsplash.com

Warsaw, 18th August 2020

 

New taxes proposed by the European Union threaten Poland’s development

 

The topic of the funds negotiated by Poland has dominated the discussion revolving the conclusions of the last summit of the European Council. Meanwhile, little attention has been paid to the introduction of European taxes. In a new report, the Union of Entrepreneurs and Employers presents a number of threats resulting from the proposed European levies. Plastic, digital and carbon taxes as well as the extension of the ETS do not comply with the requirements of the European Parliament. They also lead to a deeper fiscal harmonisation, and thus the unification of business conditions in the EU. From the Polish perspective, the new taxes pose a risk of a disproportionately heavy burden on the economy and greater dependence on financing from the EU budget.

There is no doubt that the COVID-19 pandemic and the resulting challenges for the EU require extraordinary measures. Therefore, the proposal to create the Next Generation EU fund as an addition to the traditional EU budget should be treated as an opportunity to rebuild the member states’ economies. However, the taxes created to finance the fund will have effects that go well beyond the coronavirus crisis.

“The conclusions adopted at the summit in the field of taxes are very dangerous for Poland and may cause us to be permanently poor compared to Western Europe. Poland has few tools to compete with the West. The legal and institutional order is one of them. Harmonisation of the law deprives us of this advantage,” says Cezary Kaźmierczak, President of the Union of Entrepreneurs and Employers.

In a new study, the Union of Entrepreneurs and Employers analyses proposed European taxes based on criteria established by the European Parliament. As a result, it identifies a number of threats and a trend of deepening fiscal integration – extremely dangerous from the Polish point of view.

“At the moment it remains possible for Parliament to veto this agreement. It seems that it is in the interest of Poland and Polish business to find an agreement between the Council and the Parliament and to refine in the best way possible the mechanisms that would limit the negative impact of new taxes on the development opportunities for the Polish economy, while at the same time taking steps to rebuild the European economies after the pandemic,” emphasises Kamila Sotomska, Analyst at the Department of Law and Legislation of the UEE.

In a report by said Union, it is indicated that plastic, digital and carbon taxes and the extension of the ETS system may not meet the conditions set by the European Parliament, including:

1) economy: the taxes proposed by the Council do not comply with the principle of universality of taxation contained in this criterion.

“The Union of Entrepreneurs and Employers consistently opposes the introduction of any sectoral levies. One of the key features of the tax system should be universality, whereas imposing additional burdens on arbitrarily selected sectors of the economy is unacceptable,” says Cezary Kaźmierczak.

“We support activities aimed at transformation towards a circular economy, but it seems that tax instruments are not appropriate for solving this type of problems,” adds Kamila Sotomska.

2) justice: in line with this notion, situations where a greater burden is placed on more disadvantaged member states should be avoided. Although the plastic tax provides a discount for member states whose recycling systems are at an early stage of development, the UEE believes that the levy will disproportionately burden poorer EU countries. Poland will become the fifth largest tax payer, paying EUR 429 million to the EU budget. The effects of this new regulation may be particularly severe for local governments or operators of waste incineration plants and landfills. By comparison, the cost of managing a tonne of waste in thermal treatment installations (which currently amounts to PLN 300-700) will have to be increased by PLN 3,500 in tax.

As the UEE points out in their report: “the introduction of a digital tax will have a negative impact on the condition of the Polish economy, and thus may not fulfill the premise of justice between member states. The dynamic development of the digital industry shows its growing share in the creation of Polish GDP – in 2014 it amounted to 3%, in 2016 approximately 6.2%, and in 2025 it may amount to 12%. Moreover, the share of established digital companies increased significantly: from 3% in 2015 up to 20% in 2019, and Poland remains in fourth place among the EU members in terms of the number of IT graduates. So there is no doubt that it is in our interest to create and maintain favourable conditions for the development of the digital industry ”.

3) red tape and administration: this criterion means that the costs of introducing a tax must be small in comparison with the resulting profits. However, the levies proposed by the Council will not meet this condition, as they have negative practical, legal, and political consequences.

The amount of carbon tax is to be determined based on the amount of carbon dioxide emitted in the process of production of a given good. Determining the carbon content poses a number of practical and legal problems, e.g. it would force companies to disclose supply chain details, i.e. trade secrets.

We will also run into serious problems in terms of digital taxation. According to the OECD, it would be almost impossible to divide the economy into a digital and a traditional economy, and would it require putting arbitrary boundaries into place. Given the income ceiling set at EUR 750 million, the digital tax will be a de facto tax on US companies. As America is opposed to any country’s proposition to regulate the digital sector, such unilateral action will lead to political tensions and the weakening of the EU’s position in relation to its partners in other parts of the world.

“The Union of Entrepreneurs and Employers recommends actions that will mitigate the negative effects of taxes proposed. For Poland, the ability to compete with other countries in terms of institutional environment for entrepreneurship should be of key importance. At the moment, we are not taking enough advantage of our situation, but the shift towards ‘fiscal federalism’ will practically deprive us of it,” concludes Cezary Kaźmierczak.

 

20.08.2020 New taxes proposed by the European Union threaten Poland’s development. Memorandum of the Union of Entrepreneurs and Employers on the conclusions of the summit of the European Council