Ministry of Finance reveals details of the new retail tax

It has been known for some time that Polish government has plans to introduce a new levy on retail sales. The original idea was to tax large retail chains, like Tesco or Lidl. The number of small shops in Poland has been continuously going down for some time.

Ministry of Finance finally revealed some information on the upcoming tax. The new levy is to be paid by the whole retail sector, including franchise networks, petrol stations, and even online stores.

The tax will be progressive and calculated based on the retailer’s income on sales. The planned rate is 0.7% charged on monthly income between 1.5 million and 300 million PLN and 1.3% on the amount above 300 million PLN.

Entities with monthly net income on sales below 1.5 million PLN (or 18 million annually) will be exempted from paying the levy.

What came as an unwelcome surprise, is 1.9% tax charged on income accrued during weekends and bank holidays. According to Polish Trade Organization, 40% of sales in Poland takes place on Saturdays and Sundays.

Certain goods will be tax-exempt. These will be meals, medication, natural gas, water, heat and electricity.

It is estimated that in 2016 the retail tax will bring revenue of 2 million PLN. These funds are to finance the much talked about “500 plus” child benefit programme the government plans to introduce.

The upcoming tax act has many opponents. Some insist it will inevitably lead to a hike in the prices of goods. Others point out to the additional compliance obligations and difficulties in assessing the taxable amount. The levy is to have detrimental effect on Polish trade and retail sector.

Polish Chamber of Trade, an association gathering over 30 thousand members, highly criticised the plans of the Ministry of Finance, saying that the changes will hit small and medium enterprises who will struggle to compete with large foreign retailers. They claim the amount of income exempt from tax should be much higher.

The full draft of the new act is has not yet been revealed to the media.

Paweł Szałamacha, Poland’s Minister of Finance, assures that the draft act is compliant with the EU legislation.

The project of the tax act has been submitted to the Prime Minister’s Office. The new tax is planned to be introduced in late March.