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

Warsaw, 24^th August 2020

 

Position of the Union of Entrepreneurs and Employers
on the draft act introducing the so-called Estonian CIT

 

On 12^th August 2020, the Government Legislation Centre published a draft law introducing the so-called Estonian CIT. According to the assumptions therein, beginning in 2021, certain capital companies that will allocate their earned profit for investments in their enterprises will not pay income tax. A similar system of corporate income taxation has been in place in Estonia for 20 years, hence its commonly adopted name.

The Union of Entrepreneurs and Employers believes that the introduction of the Estonian CIT generally promotes investment and the development of entrepreneurship. Moreover, this solution significantly reduces the reporting obligations of companies covered by it, which may lead to even eleven-fold reduction of time necessary to fulfil all obligations related to taxes. With this in mind, we conclude that the Estonian CIT is a step in the right direction.

It should be emphasised that, in accordance with the current version of the draft, the material scope of the act is narrowed down to entities that meet all of the following conditions:

• total annual revenues do not exceed PLN 50 million,
• more than 50% of revenues come from real business activities,
• average annual employment is at least 3 people who are not partners,
• they operate in the form of a limited liability company or joint stock company, the shareholders of which are only natural persons,
• they do not hold any shares in the capital of another company, participation titles in an investment fund or in a collective investment institution.

As we can read in the explanatory memorandum, the target group of the new regulations are companies from the SME sector, which have a high development potential and thus their growth may constitute an impulse for the development of the entire economy. The Ministry of Finance justifies the selection of this group of entrepreneurs referring to problems with access to financing for these entities. It seems that such a definition of the target group of recipients of the new solution is absolutely correct. Large companies already have a catalogue of tools enabling the reduction of CIT in connection with the investments made (e.g. IP-box). Therefore, it seems justified to designate a separate path to stimulate investment for representatives of small and medium-sized businesses running real economic activity (criterion of the source of income and average annual employment).

As emphasised by the representatives of the Ministry of Finance, by way of public consultations, it is possible to “loosen” certain restrictions limiting taxpayers’ access to Estonian CIT. Such declarations of readiness to continue working on the regulation should be appreciated. We believe that the group of entities covered by the new solution should be as wide as possible, which is why we count on the project’s evolution towards an even greater openness to business. One could consider, among other things, modification of the employment criterion so that all persons reported by the employer to social insurance were taken into account (a similar formula was used for the distribution of the Polish Development Fund’s “financial shield”), and not only those employed under an employment contract. In the long-term, it would also be possible to consider a solution enabling companies covered by Estonian CIT to develop through the acquisition of other companies – the draft in the current wording prevents Estonian CIT taxpayers from holding shares or stocks in the capital of another company.

Some doubts may arise when it comes to excluding limited joint-stock partnerships from the subjective scope of the draft act. In the justification, the Ministry of Finance motivates limiting the regulation only to limited liability companies and joint-stock companies with the same method of taxation of these entities in the classic CIT system and the need to develop consistent system assumptions as to the method of taxation and the amount of the tax burden in the lump sum system. The aforementioned argumentation seems convincing, but it would be worth reconsidering the possibility of extending the subjective scope of the new regulation also to limited joint-stock partnerships.

If the above conditions are met, the “Estonian” taxpayer will not pay income tax until the dividend is paid, i.e. until the profit remains with the company or is allocated to investments. On the practical side, taxpayers will be able to choose from two available options. Under the first one, they will stop paying monthly or quarterly advances and making annual settlements. As part of the second, they will pay the equivalent of CIT advances to a special account. Then these write-offs will be recognised as tax deductible costs. Then, as the Ministry of Finance assures, the same economic effect will be achieved as with maintaining classic CIT settlements.

Estonian CIT rates will be higher than the classic ones, yet the Ministry of Finance ensures that the effective tax rate for entrepreneurs who settle their taxes in the new system will be lower thanks to the new mechanism. As before, when the dividend is paid, entrepreneurs will pay CIT and PIT on the dividend. This is a significant difference to the Estonian model system, where there is no double taxation with respect to income generated by the company and then paid as dividends.

It should be remembered that in the classic CIT system, the company has to pay 19% or 9% in case of a small taxpayer. Moreover, the dividend is covered by a 19% PIT. Ultimately, the total tax rate is 26.29% for small and 34.39% for larger entities. Interestingly, in the Estonian system, the nominal CIT rate for larger taxpayers will increase to 25% for larger and 15% for smaller entities. The Estonian system also provides for a five percentage point reduction in the rate for entrepreneurs who meet additional investment requirements. Despite the higher rates, the Ministry of Finance assures that the new system includes a mechanism of deducting the amount of CIT from PIT from the dividend.

As a result, the effective tax rates after the changes are to be as follows:

• 25% for smaller entities or 20% in case an additional investment criterion is fulfilled instead of 26.29% in the classic system,
• 30% for normal taxpayers or 25% in case an additional investment criterion is fulfilled instead of the current 34.39%.

The difference in effective tax rates under the Estonian system indicates that the use of this settlement formula will ultimately result in actually lower taxation of the income generated by a company than in the “traditional” model. Therefore, the proposed system will be attractive to taxpayers both due to the postponement of the moment the tax obligation arises and due to the overall lower effective tax rate.

As we have mentioned earlier, a necessary condition for maintaining the preferential method of taxation is incurring certain outlays on investments. Taxation with Estonian CIT will cover the period of 4 years and will be automatically extended for the following years. If the required expenses are not incurred for investments, the entrepreneur will lose the right to “Estonian” taxation and will only be able to apply for it again after 3 years. In this regard, the possibility of modifying the planned regulation should be considered in such a way that a taxpayer who has lost the right to settle accounts in the amended CIT system could apply for it again at the beginning of the next tax year.

To sum up, we believe that the Estonian CIT is a necessary idea that might significantly support investments and development of entrepreneurship. The regulation in question is therefore a step in the right direction and ought to be evaluated positively.

24.08.2020 Position of the Union of Entrepreneurs and Employers on the draft act introducing the so-called Estonian CIT

 

Fot. loufre / pixabay.com

Warsaw, 19^th September 2020

 

Commentary of the Union of Entrepreneurs and Employers on Ursula von der Leyen’s State of the Union Address

 

The State of the Union Address touched upon key issues that will shape our reality in the years to come. The fact that the President of the European Commission, Ursula von der Leyen, noticed the problems of the internal market and proposed the creation of a new strategy for the Schengen Area, which will undoubtedly improve the quality of the regulatory environment for entrepreneurs, should be assessed positively. Nevertheless, the introduction of a European minimum wage or the excessively rapid increase in climate goals may adversely affect the condition of the Polish economy and the competitiveness of European industry. With this in mind, the Union of Entrepreneurs and Employers reminds that the improvement of the global position of the European Union will not take place without an increase in its economic importance.

On 16^th September 2020, the President of the European Commission, Ursula von der Leyen, delivered her first State of the Union Address, an annual speech to the European Parliament at the September plenary session. Without any doubt, the announcement of an increase in climate targets by 15 percentage points from 40% to 55% by 2030 drew the most attention. Still, the President in her address raised many important issues such as health, social rights, industry and the common market, and digitisation. Moreover, in her speech, the President raised important geopolitical issues, this commentary, however, will focus on issues related to the economy and the internal market.

The coronavirus pandemic and the resulting economic challenges have left their mark on the priorities of the European Commission (hereinafter referred to as “EC”). Madam President began her speech thanking the care workers, nurses, and doctors for their dedication, as well as all other workers who continued to perform their duties even when the lockdown was most severe. These events according to the President showed the great fragility of our society, but also the importance of humanity. Moreover, they constitute a new starting point for the European Union (hereinafter referred to as “EU”) whose task for the coming years is to rebuild the economy, and the driving force of economic growth will be the Next Generation EU Recovery Fund. Speaking of the Recovery Fund, President von der Leyen assured that thanks to the unique model of the social market economy, the EU can achieve stability and prosperity.

The first part of the speech was dedicated to strengthening the EU’s activity in the field of health. The President referred to the introduction of export restrictions on medical goods and breaks in supply chains during the pandemic and stressed that it was cooperation with European industry that allowed us to ensure the right amounts of strategic goods. In this regard, von der Leyen considered it crucial to build a stronger health union and supported the European Parliament’s demands to increase health spending in the future Multiannual Financial Framework (hereinafter referred to as “MFF”). Among the President’s proposals, there were, among others, the postulate of making strategic reserves. The Union of Entrepreneurs and Employers supports initiatives aimed at strengthening the EU’s economic position and independence vis-à-vis partners from other parts of the world. However, we believe that one should be cautious about expanding EU competences and that expansions as such should only take place where action at the EU level brings added value.

The second subject to be addressed was related to jobs and workers’ social rights. The President of the EC recalled the creation of the SURE programme, under which EUR 100 billion will be allocated to national short-term work programmes and similar measures to protect jobs, employees and the self-employed from the risk of dismissal and loss of income. Furthermore, Ursula von der Leyen called for “dignity of work” to be ensured by establishing a European minimum wage. Importantly, the President decidedly emphasised that she was a supporter of collective bargaining systems and that all European solutions would respect national traditions. In our view, to support entrepreneurs during the pandemic is necessary and beneficial. Nevertheless, the Union of Entrepreneurs and Employers has consistently opposed the idea of introducing a European minimum wage. We believe that the minimum wage – if at all – should be regulated on a regional, not national, and certainly not a European level. In our previous studies, we also questioned the EU’s competences in this area.

The economy and the common market were the third issue raised by the President of the EC in this year’s address to the European Parliament. Following a 12% fall in EU GDP in the second quarter of this year, the time has come for a rebound, but the economies of the member states still need support, said Ursula von der Leyen. The Recovery Fund will be of key importance in this process, as will also be the strengthening of the EU internal market. “We must tear down the barriers of the single market. We must cut red tape. (…) And we must restore the four freedoms – in full and as fast as possible,” said the President of the EC and added: “We will work with Parliament and member states to bring this high up our political agenda and we will propose a new strategy for the future of Schengen.” Then, von der Leyen announced an update of the industry strategy and a reform of the competition framework. In our opinion, support for enterprises in a crisis is needed, but in the long run, a good regulatory environment is the most important factor for business performance. The Union of Entrepreneurs and Employers has consistently emphasised that in order to maintain the competitiveness of European enterprises, the EU should focus on reducing red tape and administrative burdens, especially for SMEs. Therefore, we welcome the declaration of the President of the EC and stress that any new EU strategies – be they on industry, climate protection or digitisation – must be accompanied by a regulatory policy aimed at improving the business environment in the EU.

Ursula von der Leyen devoted the next part of her speech to the fight against climate change. By announcing an increase in the target of reducing carbon dioxide emissions from 40% up to 55% by 2030, the President said that she “recognised that this increase from 40 to 55 was too much for some, and not enough for others”. She also added that the climate strategy must go far beyond reducing emissions. Among the initiatives that will be financed from the Recovery Fund, she mentioned, among others, investments in hydrogen and the renovation of buildings that consume excessive energy. In the opinion of the Union of Entrepreneurs and Employers, the European Green Deal (hereinafter referred to as “EGD”) is a reality to which the Polish economy will have to adapt. Obviously, this will require efforts both on the part of the regulator and on the part of market participants. It is also evident that some member states are better prepared for the green transition than others. Therefore, increasing climate goals from the Polish perspective may entail certain threats. At this stage, it is important that President von der Leyen’s declaration of understanding is reflected in the strategy of the EC. Additionally, as von der Leyen herself pointed out, the European economy needs deregulation and the strengthening of the internal market. Henceforth, the Union of Entrepreneurs and Employers calls the Commission to remember about maintaining the competitiveness of European industry when designing the assumptions and requirements of the EGD.

The last point analysed in this commentary touches upon digitisation. “We must make this Europe’s digital decade,” announced the President of the EC. To do so, she proposed various initiatives, including building a European cloud, regulating artificial intelligence, creating a European e-identity, developing infrastructure, fighting digital exclusion, and investing in supercomputers. Undoubtedly, the EU needs to step up its efforts to develop digital technology if it is to maintain a prominent position in a changing world. Understanding the need to create regulations that provide European consumers with an appropriate level of security, the Union of Entrepreneurs and Employers draws attention to the risks that may arise from over-regulation of the digital market. This is especially apparent in the case of artificial intelligence. There currently is a debate whether to extend its definition to automated decision-making processes that are harmless from the point of view of individual rights, and at the same time to cover these processes with potential EU regulation of artificial intelligence. If this scenario does take place, then companies using low-risk technologies will face a disproportionate regulatory burden, which will have a negative impact on their competitiveness. Concurrently, by creating one regulation, we risk that technologies that carry the risk of violation of fundamental rights, such as, for example, remote biometric identification, will be subject to standards that are too low. At this point, the Union of Entrepreneurs and Employers once again calls for maintaining an appropriate balance between the protection of individual rights and the creation of an appropriate regulatory environment for entrepreneurship. Interventionism that is too far-reaching will not allow the European economy to achieve competitiveness and develop and will thus threaten the recovery of the EU’s global position.

The State of the Union Address touched upon key issues that will shape our reality in the years to come. The fact that the President of the European Commission, Ursula von der Leyen, noticed the problems of the internal market and proposed the creation of a new strategy for the Schengen Area, which will undoubtedly improve the quality of the regulatory environment for entrepreneurs, should be assessed positively. Nevertheless, the introduction of a European minimum wage or the excessively rapid increase in climate goals may adversely affect the condition of the Polish economy and the competitiveness of European industry. With this in mind, the Union of Entrepreneurs and Employers reminds that the improvement of the global position of the European Union will not take place without an increase in its economic importance.

The State of the Union Address touched upon extremely important issues that will shape our reality in the years to come. The fact that the President of the European Commission, Ursula von der Leyen, noticed the problems of the internal market and proposed the creation of a new strategy for the future of the Schengen Area, which will undoubtedly translate into an improvement in the regulatory environment for European entrepreneurs, should be assessed positively. Equally positive is the importance that von der Leyen placed on developing technology and improving the EU’s strategic resources. However, we are concerned about some of the proposals. The introduction of the European minimum wage or the excessively rapid increase in the EGD climate goals may adversely affect the condition of the Polish economy, as well as the competitiveness of European industry. With this in mind, the Union of Entrepreneurs and Employers reminds that the improvement of the global position of the European Union will not take place without an increase in its economic importance.

 

19.09.2020 Commentary of the Union of Entrepreneurs and Employers on Ursula von der Leyen’s State of the Union Address

 

Fot. GregMontani/pixabay.com

Warsaw, 10^th August 2020

 

Opinion of the Union of Entrepreneurs and Employers regarding the presented proposals for regulatory changes in the field of development of renewable sources in Poland

 

We would like to begin with emphasis on the immediate need to adapt legislation in this area both to the European climate neutrality policy and to the situation the energy sector related to the pandemic.

We consider all actions aimed at increasing the supply of green energy to be appropriate and necessary – not only in connection with EU obligations, but also due to the needs of Polish industry.

In this regard, we assess the proposed changes very positively. The document presented by the Ministry of Climate concerning the amendment of the ‘act on renewable energy sources and certain other acts’ approaches the issues related to the development of this sector of energy in a comprehensive and coherent manner, changing the provisions in the entire scope related to the investment and operational process of renewable energy sources in the future. The authors of the draft noticed the need for changes not only in the Renewable Sources Act, but also in the Energy Law and the Spatial Development Act. Only this approach creates proper foundations for the development of distributed energy.

The proposed changes may have a decisive impact on the development of widely understood distributed energy, as their scope covers small and medium-sized enterprises, i.e. the most dynamic sector of the Polish economy. The act increases the power parity for entrepreneurs with regard to their own renewable installations.

A rapid increase in investment opportunities in the field of renewable installations by clearly defining the concept of “small RES installation” gives the SME sector an opportunity to boost competitiveness as well as a certain energy independence, so needed in rural areas in particular.

The selection of the size of such an installation in the range of 50–500 kW should also be considered quite apt, as this is the range of averaged power consumption in the sector of small and medium-sized enterprises, as well as medium-sized farms. In the project, we did not find a description of a small installation on a farm, henceforth we ask: do the figures shown above also apply to farms?

The proposed changes are aimed at creating a predictable framework for the development of the renewable sector, extending by law the support systems for individual technologies by 5 years. At the same time, the act emphasises the function of the auction system as a guarantor for financing institutions, recognising this support system as the cheapest and the most effective in Polish economic conditions.

The act also mitigates the problems of investors who, due to the pandemic, will exceed the maximum time limit for producing or selling electricity for the first time. It is also a very good decision, all the more so, as it minimises the bureaucratic process, without too much involvement of the Energy Regulatory Office. The form of declarations when submitting applications for extending the deadline is very accurate in this case.

We fully support the form of reducing bureaucracy in the entire registration process of energy producers from RES proposed in the Act, and thus reducing administrative burdens for the Energy Regulatory Office.

Amendments to the Spatial Planning Act, enabling in practice the rapid development of photovoltaics, constitute another much anticipated initiative, as a result of which, within a few years, there may be a significant increase in the supply of green energy and the stabilisation of the ends of transmission lines.

We are convinced that the entry into force of the act in the proposed form will stimulate the development of renewable energy sources, which must in turn stabilise energy prices for end users. The proposed amendments certainly meet the social demand, securing important solutions for energy producers from RES and for the industry related to investments in RES in its entirety.

However, some controversy is raised by the proposed form of regulation regarding the definition of installed capacity. Although a certain compromise has been reached here with circles in the RES community, which can be considered rational and promising for the development of RES in Poland, we suggest that the definition be refined in the future in such a way that it allows for some flexibility in extracting power from RES installations, especially when modernising such installations.

When assessing positively the proposed legislative changes regarding renewable energy sources, we would like to remind all parties involved that there is an urgent need for further work in this direction.

Unblocking investment opportunities in onshore wind energy by amending the provisions of the so-called “distance act” is the most important legislative task for the legislator today. We would like to remind them once again that onshore wind energy nowadays is the cheapest source of electricity, the development of which has been impeded by the provisions of the act.

Rapid adoption of all legislative acts enabling investments in offshore wind energy is yet another urgent need, because such investments will stabilise the country’s entire energy system.

We also like to remind everyone interested of the need for rapid legislative work in the area of grids and connections allowing for the development of distributed energy.

 

11.08.2020 Opinion of the Union of Entrepreneurs and Employers regarding the presented proposals for regulatory changes in the field of development of renewable sources in Poland

 

Fot. Appolinary Kalashnikova / Unsplash.com

Warsaw, 18^th August 2020

 

Appeal of the Union of Entrepreneurs and Employers
regarding the pay rises of persons holding public office

 

The Union of Entrepreneurs and Employers believes that increasing the salaries of persons performing public functions serves the public interest. The imbalance between the remuneration received and the scale of responsibility is particularly visible in the case of deputy ministers. With this in mind, we appeal to the members of the Sejm of the Republic of Poland (Parliament’s lower house) not to succumb to populist pressure and to reject the veto of the Senate (Parliament’s upper house) regarding the draft act increasing the salaries of people holding public office, and then to immediately amend that act, correcting some of the errors within. Above all else, we draw attention to the need to clearly link the salaries of politicians with the average salary in the national economy, to withdraw from the increase in subsidies for political parties, and to adopt an even greater salary increase for the most important people in the country, i.e. the President and the Prime Minister.

There is no doubt that all of us should care about high-quality public services. One of the basic instruments to achieve the goals of public or private organisations is to have appropriate, competent staff with knowledge, skills, and experience.

Independent market data and expert opinions indicate two phenomena. First, there is a pay gap in the salaries of senior public officials relative to senior management and experts in the private sector. Secondly, the scale of responsibility and the significance of decisions made, the complexity of tasks, the scope of management, the necessary experience, knowledge or the need to ensure financial independence, situate the positions of high officials in the public sector above the level of top managers and experts in the private sector. To sum up, despite the higher importance of positions, people employed in public administration earn several times less than managers in large companies.

The above phenomenon leads to a negative selection of staff in the broadly understood public sector. The low level of remuneration for public sector employees makes it difficult in the long term to keep people with adequate or above-expectations competencies in this sector. Taking the aforementioned into account, it is necessary to ensure such a level of their remuneration that will keep these people working in public administration.

Moreover, the current situation is actually disrupting the natural separation of powers due to the increasingly frequent phenomenon of combining the functions of members of the Council of Ministers and secretaries of state with the function of a member of the parliament. This way, the salary combined from the function performed is supplemented by the remuneration obtained as MP. There is no doubt that this is not a desirable condition – increasing salaries for ministers and deputy ministers would allow limiting (if not completely eliminating) this practice.

At the same time, elective officials should also have a sustained level of remuneration that allows them to maintain their current and future financial independence from decisions made in the exercise of power. We would like to emphasise that the amount earmarked for pay rises for persons performing public functions in the state would be marginal from the point of view of the state budget. Concurrently, it would be an investment in the quality of the administration.

However, the introduced salary increases cannot be the only tool and effect of the amendment. The reform of the wage policy in the public sector should be a reform of the entire remuneration system.

As part of the necessary changes, we postulate to:

1. restore the level of an MP’s salary to the level prior to its 2018 reduction,
2. increase the remuneration of persons indicated in the draft act amending certain acts on remuneration of persons holding public office and amending the act on political parties (Druk/Print 551) to a level directly dependent on the national average,
3. introduce a system of supervision over money spent within public budgets and create instruments conducive to the efficiency of their spending,
4. limit the number of officials in both senior and junior positions.

In the context of the last postulate, low efficiency of activities is noticeable in relation to the scale of employment in public administration. It is a common phenomenon in every democratic system. So is the growth of bureaucracy, which was already noticed at the dawn of modern systems of public administration. Considering the above, the Union of Entrepreneurs and Employers recommends a significant reduction in the number of jobs in the Polish public sector. The first review should be performed after the COVID-19 crisis, and the consequent ones be carried out periodically, e.g. every 4 years. At the same time, the Union is of the opinion that along with the decrease in the level of employment, the salary budget in the public sector should be maintained, so that within the available funds, it is possible to grant an increase in the level of salaries to rank-and-file officials kept in the sector.

Simultaneously, the Union is critical of plans to increase the level of subsidies for political parties which was included in the draft act amending certain acts on remuneration of persons holding public office and amending the act on political parties (Druk/Print 551). Apart from general doubts as to the legitimacy of financing political parties from the budget, the resources at their disposal at the moment seem to be completely sufficient.

We would like to note that there is an argument among the critics of the plans to raise the salaries of persons holding public functions in terms of the wrong timing of the introduction of the change (the COVID-19 crisis). We wish to stress that there never is and will never be a good time to introduce changes of the proposed nature. When a few years ago, the government awarded prizes to high officials during an economic boom, populist slogans about limiting wages in the public sector were as omnipresent as they are today.

We call for a long-term perspective of decision-makers’ thinking about the quality of public administration and to not succumb to populist tendencies in this area.

 

18.08.2020 Appeal of the Union of Entrepreneurs and Employers regarding the pay rises of persons holding public office

 

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