Country Rankings - Poland
Apr 20, 2018 Poland: crypto-taxThe merits of virtual currencies continue to be debated. Some say that they represent the future of money and are a natural extension to an increasingly digitized world. Others argue that virtual currencies – but Bitcoin in particular – are an economic bubble waiting to pop, with dire financial consequences to follow. Not only this, their anonymity means that they are the perfect vehicles for the laundering of dirty money and the funding of terrorism, according to some governments and regulators. Nevertheless, it appears to be the case that, with a few exceptions, virtual currencies are slowly gaining acceptance as a part of the financial landscape by the authorities, including tax authorities. We can glean this from the volley of tax guidance and reminders that have been issued in recent weeks, from the US to Poland, and from Israel to South Africa. Indeed, some countries, including Australia and the UK, are keen to promote their use, hoping to become leaders in this new technology. Yet, if virtual currencies do indeed have a future, the inconsistent tax treatment from one territory to the next is unlikely to help them grow. Because at the moment, we've got the US defining virtual currencies as "property" on the one hand, and Australia comparing them to a sort of "barter arrangement" on the other, with various other interpretive shades in between – I particularly like South Africa's description of cryptocurrency as "assets of an intangible nature." No kidding! It's no joke though if, all of a sudden, in the time it takes a tax official to bang out some vague interpretive guidance and upload it to an obscure part of the finance ministry website, your virtual currency investments are rendered worthless, and you're left with a substantial tax bill into the bargain, as has happened in Poland. Indeed, it has been said that the Polish guidance could, either by accident or by design, tax the virtual currency sector out of existence. Traders could present an argument that, if virtual currencies aren't defined properly in law, then tax authorities have no legitimate grounds to tax them. What's one man's barter arrangement is another man's asset of an intangible nature, it seems. It'd be a brave person to test this argument out in the courts though, especially when there could be billions-worth of tax at stake, as there supposedly is in the US. Nevertheless, the global chequerboard of interpretive guidance is a reason, maybe, to take this matter out of the hands of individual jurisdictions and given to the OECD to decide as part of BEPS. That'd be yet another external tax force for Ireland to worry about.
Mar 02, 2018 Poland: specialMoving on, and free zones are presently all the rage(including in South Africa). So much so that Poland has decided to go the whole hog and transform itself into one big, country-sized special economic zone. The fact that the world seems to have lost count of the number of its free zones tells you something about the rate at which they have proliferated in the post-World War Two era, and particularly in the last couple of decades. According to the World Freezone Atlas published in 2010, there were 1,735 free zones, dotted all over the globe. However, an OECD study published two years previously suggested that there were as many as 5,000 free zones. Perhaps the true figure is somewhere in the middle – something like 3,500 perhaps, as the World Trade Organization suggests. The actual answer, I think, depends very much on your definition of a free zone, because they come in all shapes and sizes. On the one hand, you have the all-singing, all-dancing Dubai-style free zone, within which companies are exempted from most taxes and many regulatory requirements and are, for all intents and purposes, treated as non-residents. At the other end, you have free ports, where goods can be stored, exported, and re-exported free from many of the usual customs formalities. And then you have many shades in between. Free zones are now spread so far and wide across the world that it's probably easier to name the locations where they tend not to exist, rather than the places in which they do. Notably, the European Union is something of an island in a sea of free zones. And that's because rules preventing state aid make it difficult for member states to get away with providing targeted tax incentives. This makes EU member state Poland's case quite intriguing, therefore. Perhaps the Government has reasoned that there is no state aid case to answer if, in theory, every business meeting certain requirements is entitled to free zone treatment, as opposed to just a select few. The European Commission might have something to say about that though, so it's entirely possible that we haven't heard the last of this story. The Polish development is also interesting from another point of view – the UK's point of view, to be more precise. Because theoretically, the UK, once Brexit is done and dusted and the country is no longer bound by state aid rules, would be free to establish fiscallyprivileged special economic zones anywhere it sees fit. Indeed, such a possibility has already been mentioned in parliament in the context of the debate on legislation setting out the framework the future arrangements between the EU and the UK on tax and trade. And by creating a number of free ports, the UK could mitigate some of the bureaucratic problems importers and exporters expect from withdrawing from the Customs Union. Of course, this depends on the sort of trading arrangements that are agreed in the upcoming trade negotiations. And it wouldn't be surprising if the EU attempts to include a state aid element in any free trade agreement to prevent new "tax havens" springing up off the shores of north-west Europe. If it fails to include such clauses, it probably wouldn't matter anyway. The existing EU state aid rules have become so flexible as to be used to challenge anything tax-related that the EU doesn't particularly like, irrespective of whether the country in question is a member state. Just ask Switzerland. Or Ireland, for that matter. Imagine the fallout, then, if the UK dared to go the "full Polish" and declare the whole country a free zone. The Commission would have a field day with that!
May 10, 2017 Poland: bustGambling is big business the world over. But it is an ethically challenging one. It is perhaps human nature to gamble at least to a certain degree: many of us take risks at some point in our lives hoping that the gamble will pay off in the form of a wealthier or happier life. But gambling can also be a compulsive activity for some, leading to undesirable outcomes, such as addiction, financial ruin, and corruption in sport. And these days, one only has to turn on one's computer to be able to gamble on all manner of events, from horse races, to elections and the existence of extra-terrestrials, 24/7, 365 days of the year. In the knowledge that it is virtually impossible now for the tide of online gambling and gaming to be turned back, many governments have decided that the best approach is to regulate the industry, rather than block it. In some countries, this process is termed "liberalization" rather than regulation, for what is actually happening is that state-owned gambling monopolies are being broken up, and online providers permitted to enter the market – legitimately – for the first time. However, it seems to be the case that with regulation and liberalization comes taxation. And some governments appear to be getting the balance very wrong. One might argue that given the need for consumers to be given extra regulatory protection, there is a case that providers of gambling services should make an extra contribution in taxation. The industry as a whole seems to accept this – but only up to a point, and there comes a time when it's simply not worth their while participating in a newly regulated market if the fiscal conditions are all wrong. A case in point is Poland, where there has been a mass exodus of online bookmakers, including most recently the iPoker network, from its newly "liberalized" gambling market, which features a 12 percent turnover tax. Now 12 percent doesn't sound a great deal, but when it is applied to gross revenue, rather than the difference between bets paid in and winnings paid out, it's quite a significant whack. One hopes that other countries undergoing similar gambling reforms will take heed of the Polish example. But based on the preference for turnover taxes in this sector, I'm not at all confident. Poland itself was warned this would happen by the Remote Gambling Association well before the new gambling legislation was introduced.
Mar 20, 2014 Poland: likes gasIt seems a no-brainer that Poland should incentivize shale gas production, which could contribute significantly to lessening its dependence on Russian supplies via Ukraine. Unfortunately 'shale' is one of those words that has acquired cult status for environmentalists, and amid the resulting crescendo of conflicting claims and counter-claims, the truth slips away. I think of those pictures of Oklahoma and Texas during the oil rush, with more nodding donkeys than blades of grass. Of course environmentalists hardly existed back then, but it's difficult to believe that they would have successfully stood in the way of farmers who could suddenly get rich by digging a not very deep hole in their backyards. The difference in the UK at least (I am not so sure about Poland) is that subsoil mineral rights belong to the Crown (i.e. the Government) so that landowners and householders have nothing to gain from fracking and horizontal drilling, and possibly (no-one knows) something to lose through subsidence, over-crowded roads, pubs invaded by oil-workers and the (mostly imaginary) rest. The UK Government has made some fairly feeble gestures towards rewarding communities which sit on gas reserves, but it seems to be doing the minimum consistent with electoral advantage. There are apparently a lot of Tory constituencies with fracking potential – if this is indeed a sign that Providence is right-wing, then it's probably a poisoned chalice. Anyway, Poland isn't likely to be entering into such nice calculations; it's more a question of national interest.
May 16, 2013 Poland: gets colderPoland gives "advice from the European Commission" as its excuse for creating a Controlled Foreign Corporation regime; that's like asking a lawyer if you should draw up a will. Perhaps it's surprising that Poland doesn't have a CFC regime already; but that doesn't excuse what amounts to a new tax. The proviso that a company in a country with a tax rate more than 25 percent below that in Poland will pay the tax seems very antagonistic, and it's hard to square with EU single market rules: 75 percent of 19 percent is 14.25 percent, so that would catch Cyprus (12.5 percent), Ireland (ditto), and Bulgaria (10 percent), although Poland does have double tax treaties with all three of those countries, which might help, depending on the fine print. Then of course there are all the usual offshore suspects, which don't have DTTs with Poland; so there won't be too many new Polish start-ups in the Bahamas or Guernsey in future, and that's probably what lies behind the Commission's advice. For that matter, a Polish company taking advantage of the UK's new 10 percent Patent Box rate would presumably be caught, again driving the Polish holding company into the arms of the DTT. But it's not clear that the DTTs would help: they don't necessarily stop a tax being imposed, they just allocate taxing rights; so a Polish IP subsidiary in the UK would pay the tax, and what then if the holding company is loss-making?
Apr 18, 2013 Poland: mistreat ChinaOne country which is conspicuous by its absence from the TPP talks is of course China. Although there are ongoing negotiations between the Middle Kingdom and various other countries, and China has FTAs with a scattering of other countries, notably including ASEAN and New Zealand, on the whole it is lagging. And it considers itself as an injured party in trade affairs, complaining this week about the level of "dumping" and "counter-vailing" measures it is subject to, particular emanating from the USA. A lot of the problem revolves around the designation of China as a "non-market economy" (NME). For anyone who, like me, finds it extraordinary that China should still be regarded as an NME, a word of explanation is in order: an NME is a country in which the State subsidizes enterprises or indulges in other non-market behaviour, despite WTO rules against it. So, an NME is allowed to cheat, if you will; but the other side of the coin is that for an aggrieved counter-party, the burden of proof is lower in anti-dumping proceedings. China's accession agreement to the WTO allows it to retain NME status only until 2015; but the change is not in China's gift, and both the USA and the EU persist in regarding China as an NME, despite frequent requests from China for them to treat it as a market economy.