Poland will introduce regulations on tax evasion

The Polish state intends to prevent in the future, that companies with registered headquarter in Poland are going to transfer their profits towards special purpose vehicles incorporated in countries, where lower tax rates apply than those in place in Poland. The ministry of finance has for that purpose already prepared a draft law with CFC regulations, CFC standing for Controlled Foreign Companies.

As such are predominantly labeled companies, which have their registered headquarters overseas, for example on the Cayman Islands but also in Luxembourg, and which are controlled by their inland, i.e. Poland, domiciled shareholders/companies. The prepared in the draft law regulations are targeted to allow the access by Poland as residence country of the shareholders on the profits of the entity abroad. This shall be enacted in such a form, that the companies operating in Poland pay taxes on the profits of the company abroad they are controlling likewise as stays the case in Poland, that means 19%. CFC regulations are currently applied by 20 countries worldwide, chiefly from the highly developed industrial countries such as the USA being the vanguard, but also EU countries such as Germany, France and Great Britain. However those regulations are shaped in a very different manner. Whether Poland, where exists with an applied tax rate of 19% within an international comparison a relative low taxation, introduces the CFC regulations in its’ tax ordinances only for the purpose to buddy with the leading industry states, or whether the real tax evasion in praxis has reached dimensions, which require the introduction of the CFC regulations, can only be speculated about, because the Ministry of Finance in Warsaw still owes to the public up to now an analysis on the scale of tax evasion.

Source: Economic market Poland, Issue 198, 05/2013