ZPP Newsletter
Warsaw, 9th November 2020
Introducing CIT on limited partnerships may curb investment and employment
- 97% of the surveyed entrepreneurs-co-owners of limited partnerships believe that CIT will reduce their willingness to invest.
- 5% say that CIT will reduce their willingness to increase employment.
- 5% believe that the new tax will reduce the competitiveness of limited partnerships.
- 75% consider altering their business model as a result of legal changes, and 27.75% closing their business.
– indicates the survey conducted in October 2020 by InfoCredit in cooperation with CRIDO and the Union of Entrepreneurs and Employers.
Entrepreneurs and co-owners of limited partnerships unequivocally assessed the impact of introducing CIT on the future of their businesses as negative. The survey results prove right the conclusions of the reports presented this October by CRIDO, InfoCredit and the Union of Entrepreneurs and Employers: “Limited partnerships in Poland – data analysis” and “Taxation of limited partnerships in Europe”.
“Polish, small, family-owned companies are most concerned about these changes. They definitely prevailed in the questionnaire, they answered most willingly and the quickest. Over 87% of the completed questionnaires came from companies employing up to 49 people,” says Jerzy Wonka, Business Development Director at InfoCredit.
The vast majority of respondents, as many as 97%, believe that the tax will lower their willingness to invest. Only 2.75% say it will have no impact on their business, while 0.25% say investments will increase. 86.5% say that CIT will reduce their willingness to increase employment (0.25% – boost their willingness, 13.25% – no impact). 94.5% believe that after the introduction of double taxation, the competitiveness of their companies will decrease (1.25% – competitiveness will increase, 4.25% – no impact).
Entrepreneurs believe that further operations in the form of a limited partnership after the introduction of CIT will no longer be relevant. As many as 65.75% are considering changing the model of business activity, and 27.75% are considering closing their companies. Only 6.5% responded that CIT will change nothing.
“Contrary to the declarations of the Ministry of Finance, the results of the survey showed what we had already known from our reports. The overwhelming majority of entrepreneurs, especially small ones, definitely negatively assessed the idea of CIT on limited partnerships. We hope that the Senate will listen to the voice of Polish entrepreneurs and the organisations representing them and, consequently, such harmful regulations will not be passed. The more so since this process takes place at a time of a creeping lockdown and many other problems that companies have to face. In such circumstances, discouraging entrepreneurs from fighting for their businesses is highly detrimental to the economy,” comments Mateusz Stańczyk, partner in the tax advisory team at CRIDO.
“The results of the survey confirm our assumptions. CIT on limited partnerships is a powerful blow to investments and employment. Moreover, it coincides with the crisis caused by the coronavirus epidemic, during which the entrepreneurs’ willingness to invest has anyway dropped to a record low. We find it difficult to understand why the legislator is so determined to force this solution. It will not reduce tax fraud, because limited partnerships are not the problem here. Not only did we prove this in our reports thus far, but also the Ministry of Finance itself admitted it. According to the information provided by the ministry, the tax authorities challenged tax schemes using limited partnerships only six times. One of the effects of this atrocious regulation may be the difficulty in overcoming the crisis caused by COVID-19 and the practical elimination of limited partnerships from the Polish economic landscape,” claims Jakub Bińkowski, director of the Department of Law and Legislation of the Union of Entrepreneurs and Employers.
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About the survey:
The survey was conducted from 16th to 30th October 2020 in an electronic form. The questions were sent to limited partnerships registered in Poland and included in the InfoCredit database. We received 400 responses. Micro and small businesses were the most responsive. 189 responses came from companies employing up to 9 people (47.25%), 160 from companies employing 10 to 49 people (40%).
See: 09.11.2020 Introducing CIT for limited partnerships may curb investment and employment
Fot. stevepb / Pixabay.com
