The failure of the tax avoidance regulations

Embarrassing government mistakes in legislation, after new regulations on tax avoidance law were passed and signed by Parliament and the President on 17th September, 2014. The Government Legislation Centre had two weeks to publish this law, to enable the new legislation to come into effect next year, but the publication did in fact not materialise.

Therefore, the new provisions will now not come into effect next year and the state budget will lose tax revenue of PLN 3.5 billion. The opposition politicians discuss targeted failure and usual disorder within the state, while directing attention to the fact that lobbyists are trying to avoid imposing rules on tax evasion.

In the meantime, the Attorney General’s Office has begun an investigation, so that the law still comes into force in the new year. Members of Parliament of the governing party (PO), will take action to make sure the law does come into force in 2015, by shortening its vactio legis (the period between the adoption and entry into force of the law), introduced into the Parliament.

To avoid tax evasion within tax havens, under the new rules, so-called Controlled Foreign Corporations (CFC) will be taxed with 19% Personal Income Tax (PIT – foreign transactions taxation). CFC’s will be defined as companies in which domestic taxpayers who own not less than 25% of the shares and the company abroad will be taxed at a lower tax rate than 25% in Poland, or has its registered office in a designated country seen as a tax haven by the Treasury. The new regulations do not apply to companies established in another EU country, provided that they have a genuine economic activity there.

Source: Economy Market Poland