Polish Ministry Wants New VAT Rates

The Ministry of Finance wants to simplify VAT rates. They have recently published a draft bill introducing changes to the act on value-added tax of 11 March 2004. There are numerous goods will soon fall under a different tax rate. The goal is to make the VAT matrix clearer and fairer.

The VAT rates in Poland have been set at 23%, 8% and 5% ever since 2011. Nothing will change in this respect. However, the lawmakers want to make the assignment of goods to rate groups more transparent and unified. The lower tax rates are to apply to a greater range of similar products. Today, taxpayers are often confused as to what tax rate they should use. For example, different amounts of VAT rates are applied to types of bread products depending on their best-before date. The same goes for local and exotic fruit.

Consumers will be happy to hear that prices of certain goods may soon drop due to lowered VAT. These include baby products, basic food items (including spices) and magazines. E-books are paper books that will finally get the same treatment. In general, in the case of similar products, the rule is to bring the rate down rather than up. A novelty is Current Rate Information that will state clearly what rate applies to what products or services.

The new VAT rates matrix is going to be introduced on the 1^st of January with respect to most of the goods. However, in certain cases, like magazines and books, this will happen on the 1^st of April 2019. Taxpayers will have a lot of time to get acquainted with the new tax rates and check what rates are correct for what they are selling.

The Ministry of Finance admits the rate matrix and the surrounding regulations we have today are bulky, complicated, and ineffective.

What This Means for Businesses in Poland

Tax policy changes in Poland have direct implications for both domestic and foreign-owned businesses. Companies operating in Poland must stay informed about regulatory developments to optimize their tax position and maintain compliance. The Polish tax system includes CIT (19% standard, 9% for small taxpayers), VAT (23% standard rate with reduced rates of 8% and 5%), and various sector-specific levies.

For international entrepreneurs and investors, understanding the Polish tax landscape is essential for business planning. Poland offers several attractive incentives including the Polish Investment Zone (up to 15 years of CIT exemption), R&D tax relief (up to 200% deduction), and the IP Box regime (5% effective CIT rate on qualified intellectual property income). Professional tax advisory can help identify the most beneficial structure for your specific situation.

The interplay between Polish domestic tax law and international tax treaties is particularly important for foreign-owned entities. Transfer pricing regulations, withholding tax provisions, and anti-avoidance rules (GAAR) require careful navigation to ensure both compliance and optimization.

If you are doing business in Poland or considering entering the Polish market, Zalewski Consulting can help. Learn more about our tax advisory services in Poland, or contact us for a free consultation.