Activities of the special economic zones extended

Activities of the special economic zones were extended after prolonged discussions between the Polish economy and finance departments. The Polish government officially advised, that the expiration date of the special economic zones to end 2026 postponed.

Originally, the special economic zones should exist only until the end of 2020. On 23 July 2013, the council of ministers approved the amended versions of the regulations of the 14 Special Economic Zones (SEZs), which moved the expiration date for each individual zone.

SEZs as one of the main incentives for investment in Poland, has gained a further advantage. The predetermined expiration date of 2020 would have meant that investors would have possibly lost in the following year’s interest in this type of state aid, due to the long period between the entries into the SEZ, the start of the investment, and the income of the income from the tax exemption.

Currently it is expected that entrepreneurs are more likely to crave, investment in SEZs. They may enjoy a tax exemption for income received in the SEZ based on the extension of the special economic zone in 2026, investor’s approval. Such a scenario is even conceivable, if one of the new guidelines on state aid for 2014 – think 2020. Through this entry coming into force in the second half of the year 2014, the intensity of the state aid available to investors decreases. Entrepreneurs who received the approval of the SEZ before the effective date, with the new guidelines, can currently take a larger amount of aid to complete.

Taking into account the above, is the ideal time to apply for approval of a SEZ. In one hand, the expiration date was postponed; on the other hand, business owners can keep the intensity of state aid at the current level.

Among the investors who try and obtain a permit, many will have already invested in SEZ. Therefore, the treasury expects an increasing number of applications for the binding control scheme, with the ability to benefit from common limitations of some approvals to be granted. This is a natural consequence of the possibility of potential extension of tax benefits, based on current assets subject to investors who have obtained their approval in the second half of 2010, are also satisfied with the decision of the council of ministers. Meanwhile, the management of the SEZ looks to a particular run-off date on the license. If the solutions of ministers introduce transitional provisions, the permits until the end date of the SEZs, 31 December 2026, valid.

The decision to amend the regulations of 14 SEZs can still have a more significant impact. You could include a return to the boundary extension of the SEZs. During the last few months, due to sustained negotiations between them being interrupted, many investors who had been waiting for the expansion of the zone on their own private land, and were patient enough to not give up, might be lucky. Unfortunately, the ministry draws restrictions for investors considering the plan to extend the boundaries of their own country, or the inclusion of existing facilities in the SEZ. Not official sources will result in such a possibility, and regions with a relatively low unemployment rate may be completely excluded. However, you probably will not find out until the next inclusion of projects in the legislative process with extensions of SEZs, whether the economy and finance could be some conditions on a common position.

The shift of the zone extension is another positive sign for investors who want to invest in Central, or Eastern Europe. For them, it may be an additional confirmation that Poland is an investor-friendly country, and the tax exemption program is stable and durable.