Trade tax was to level the playing field, but in the electronics/household appliances industry, only Polish companies will pay it

Warsaw, 12^th January 2021

Trade tax was to level the playing field, but in the electronics/household appliances industry, only Polish companies will pay it

The trade tax had two goals: to level the playing field in terms of competition between smaller and larger companies, and to indirectly counteract the expansion of foreign retail chains in Poland. In practice, however, in the electronics and household appliances industry, only Polish companies will pay this tax. Their biggest competitor, the German corporation Media Markt, divided its stores into separate companies and will not pay a penny. This proves that the trade tax will not only fail to achieve the goals intended by the legislator, but will also be a burden to domestic enterprises, thus worsening their position on the market.

The Union of Entrepreneurs and Employers has repeatedly appealed to the government not to introduce any new taxes during the pandemic. We stick to our position and call for the collection of trade tax in 2021 to be stopped. Moreover, the Union has consistently opposed the introduction of sectoral taxes, as well as reminded that the long-term solution to the problems related to tax avoidance lies in a profound reform of the tax system and should consist in the elimination of the corporate income tax and replacing it with a revenue tax.

The effects of introducing such a trade tax are clearly evident on the example of the electronics, household appliances and IT industry. Its characteristic feature is the disproportion between suppliers (global concerns) and sellers (local enterprises). Profitability is in the range between 2 and 4%. The second trade tax rate in the amount of 1.4% will consume a significant part of the profit of household appliances sellers. This in turn will worsen the competitive equilibrium between Polish and foreign enterprises, especially since the latter group will not pay that tax at all.

Discussing the effects of the introduction of the trade tax from 1^st January 2021, it is impossible to ignore the economic consequences of the coronavirus pandemic. It is the position of the Union of Entrepreneurs and Employers that it is incomprehensible and unacceptable to add burdens on enterprises during such an unprecedented crisis. Furthermore, increasing the burdens will also lead to an economic slowdown that we cannot afford at the moment.

In the years 2021-2027, Poland will receive funds hitherto unseen. In the new budget perspective, Poland will receive EUR 160 billion from EU funds. EUR 57 billion will come from the Reconstruction Fund created to help member states face the challenges of the coronavirus pandemic. By comparison, over 16 years of EU membership, Poland received approx. EUR 181 billion. In the light of such enormous funds, it seems obvious that the budgetary pressure to introduce new taxes should be much lower, and the Polish government should not introduce new burdens on entrepreneurs struggling with the effects of a crisis.

See report for more: 12.01.2021 Report by the Union of Entrepreneurs and Employers: Effects of the introduction of the retail sales tax from 1^st January 2021