President signed the retail tax bill

The much anticipated by the government (less so by store owners) retail tax bill has finally reached the end of its legislative path. Last week, the final step was taken by the President of Poland Andrzej Duda who placed his signature on the act introducing the new levy.

The lawmakers were working on the so-called supermarket tax for over six months. It is expected to deliver much-needed funds to the state budget. The politicians of the ruling party made a lot of promises in the time leading to the general elections that the voters now expect them to bring to life.

The government has some plans to lower the retirement age and increase the income tax threshold for individuals, not to mention some highly ambitious investment plans proclaimed by the Minister of Development Mateusz Morawiecki who wants Polish economy to gear up.

All these will have a very big impact on public finances. The Ministry of Finances needs to find some new, stable sources of state revenue. Polish MPs have already introduced the so-called bank tax on financial institutions’ deposits. Now it is time for supermarkets to chip some money in.

The first concept the politicians had for the new levy was met a lot of criticism on the part of Polish entrepreneurs. State officials had plans to introduce different tax rates for weekends and weekdays trade. There was also some talk of online stores being made to pay the tax. Franchise holders argued the tax will destroy them and they need to be exempt from the new regulation.

The policymakers want the public to believe the tax will help small shop owners who struggle to compete with big supermarket chains. However, it appears the sole purpose of the new regulation is to limit the budget deficit.

The new levy will be charged on revenue. There will be no separate rate for weekend sales. There will be two tax rates: 0.8 percent (for revenue from 17 million to 170 million PLN a month) and 1.4 percent (for revenue over 170 million PLN a month).

Businesses with annual revenue below 204 million PLN will be exempt from the trade tax. The levy will also not apply to online stores and business to business transactions.

The law introducing the tax will come into force on 01 September 2016. It is estimated bring the state budget around 1.9 billion PLN a year.