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CIT is a de facto voluntary tax, it is necessary to make comprehensive changes



Warsaw, 30 June 2022 

 

CIT is a de facto voluntary tax, it is necessary to make comprehensive changes

 

The Union of Entrepreneurs and Employers (ZPP) has for many months been investigating the way in which large foreign corporations make CIT payments in Poland. In our previous publications, we have pointed out that the corporate income tax structure allows for far-reaching tax optimisation and favours the activities of the largest entities that are able to carry out such optimisation effectively. As a consequence, CIT has become an almost voluntary levy and many entities pay only symbolic amounts to the state budget, often much less than 1% of the revenue generated in Poland.

This time, ZPP selected 18 of the largest and most recognisable companies with German roots and operating in our country. Using publicly available data on the website of the Ministry of Finance, we checked what revenues these companies generated, what costs they reported and how much CIT they paid in the period from 2012 to 2020, i.e. the entire period for which the data was disclosed on the MF website. In addition to data on CIT payments, the ZPP also tracked data available on the website of the Office of Competition and Consumer Protection on the amount of state aid granted also in the period from 2012 to 2020.

Analysis of the data shows that of the 18 companies, only four paid CIT in the period under review in excess of 1% of revenue. Interestingly, none of the surveyed automotive companies paid tax above this threshold. In addition, many of the companies received many times more state aid during the nine years of operation than they paid in income tax to the state budget.

For multinational corporations, Poland is a tax El Dorado” says Cezary Kaźmierczak, President of ZPP, “There are, of course, many that contribute very significantly to our budget. Still, many benefit from our infrastructure and access to the Polish market, paying less income tax than some households. That is why we have been proposing for years a simple income tax that would eliminate such situations.”

For example, Volkswagen Motor Polska paid CIT in the amount of 0.003% (!) of the revenue it generated, while at the same time it received the highest state aid among the surveyed entities. The actual (gross) aid to this company amounted to almost 200 times its CIT, of which the company paid around PLN 1.5 million (nominally, the aid was even higher – PLN 1.5 billion, and therefore 1,000 times the tax paid in the period under review).

Other companies associated with the Volkswagen Group also paid only symbolic CIT – Volkswagen Group Polska 0.392 per cent, Volkswagen Poznań 0.648 per cent, while Porsche Inter Auto Polska paid a tax of just one-tenth of one per cent of their revenue.

Some of the surveyed companies also received very significant state aid. In addition to the already mentioned Volkswagen Motor Polska, another Volkswagen company, Volkswagen Poznań, received more than PLN 187 million in real state aid (PLN 644 million in nominal terms). In addition, high gross state aid was received by ZF Automotive Systems Poland (PLN 92 million) and BSH Sprzęt Gospodarstwa Domowego (over PLN 81 million).

The data we have analysed shows that also for German companies operating in Poland, CIT is paid in most cases at a symbolic amount. Poland certainly suffers from a lack of effective and transparent tax law, in every area. The current system leads to outright bizarre cases, and the lost budget revenue resulting from the CIT gap runs into billions of PLN every year.

 

30. 06. 2022 ZPP Report: Taxes of German companies in Poland

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