•  The Polish Order is becoming a fact. A historic increase in the tax free amount to PLN 30 thousand, pro-innovative tax solutions, support in acquiring the "four corners" of our dreams - these are some of the solutions of the Polish Deal, which we will be able to use already in 2022. 

•  The next ones - the Family Foundation and the certification mechanism which will make it easier for entrepreneurs to compete for public procurement will go through the legislative path in 2022 and will be available for use in 2023.  

• The Polish Order is an integral vision of social and economic development. Its aim is to improve the living comfort of Poles and increase innovation in the national economy. 

The tax part of the Polish Order will come into force as early as 1 January. We will benefit from the solution allowing us to build a house for our own use without unnecessary formalities from 3 January. In turn, from 27 May 2022 it will be possible to take a housing loan guaranteed by the state.

The regulations introduced by the United Right's government are a response to the challenges arising from the pandemic crisis. It is already clear that the Polish economy has proved resilient to pandemic shocks and has not lost its growth momentum. This is to the credit of Polish entrepreneurs and employees, who have been able to flexibly adapt their business models to new challenges and conditions. Recent surveys of the Central Statistical Office (GUS), monitoring the innovative activity of Polish companies, have shown its significant growth. An innovative economy means better jobs, an increase in society's wealth and, consequently, higher pensions. The Polish Order will be another pro-development impulse.

- notes Olga Semeniuk, Deputy Minister of Economic Development and Technology.

The Polish Order means changes in the tax scale, i.e. a higher tax-free amount - as much as 30 thousand zlotys, a higher income threshold - as much as 120 thousand zlotys, lower flat rates for many professions, as well as new rules for paying health contributions. As a result, over 530 thousand entrepreneurs will pay lower taxes and contributions. The burden on smaller businesses, companies earning up to PLN 6480 gross per month, will be reduced. Next year will also see the introduction of a comprehensive system of tax reliefs for business, which will make it easier for Polish enterprises, particularly small and medium-sized ones, to raise capital for investment. From January, the tax system will support labour supply more strongly than before, helping entrepreneurs to find the workers they need.

- points out Deputy Finance Minister Jan Sarnowski.

In the Ministry of Economic Development and Technology we work with entrepreneurs and for entrepreneurs. We have been changing the legal environment of doing business in Poland to be more entrepreneur-friendly for 6 years now. The Business Constitution, Small Insurance Fund, company succession are some of the regulations we have prepared to support Polish entrepreneurs. In the Polish Order, apart from the tax part which includes instruments stimulating innovativeness of our economy, there are additional changes included which will serve entrepreneurs. They will make it easier for Polish companies, especially in the SME sector, to compete for public procurement contracts. We are also preparing regulations concerning family foundations,

- Olga Semeniuk, Deputy Minister of Economic Development and Technology, added.

The key projects that are in the Polish Deal also concern the construction and housing sectors. They include a number of solutions that will benefit both citizens, especially Polish families, and entrepreneurs. Thanks to such projects, the Polish economy, including companies from the construction sector, will be able to develop further.

- said Deputy Minister of Economic Development and Technology Piotr Uściński.

Greater revenues from the health contribution will allow us to increase financing of the hospital network and support such important areas of medicine as oncology or child psychiatry. Additional 7 billion PLN will certainly be a noticeable boost for the health care system.

- emphasises Filip Nowak, the President of the National Health Fund.

Tax changes for entrepreneurs

Entrepreneurs have a choice between the general rules, flat tax, lump sum or Estonian CIT. Each of these forms has its advantages. The choice depends on the entrepreneur's individual situation.

Tax scale

Polish Order introduces changes in tax scale. The tax-free amount is increased - to PLN 30 thousand and the income threshold - to PLN 120 thousand. The rules of paying health care contributions are also changed - the contribution amounts to 9% of income, without the possibility of tax deduction.

Example: Hairdresser on business activity. Annual revenue - PLN 240,000, tax costs - PLN 120,000.

• The most optimal form of taxation for an individual settlement is the tax scale. By choosing it, the taxpayer will pay PLN 12,000 in tax and PLN 9,600 in health contributions. That is PLN 21.6 thousand in total.

Lump-sum tax on registered income

The Polish Order means another reduction of flat rates for many professions. For doctors, dentists, nurses, midwives, engineers, the rate drops from 17% to 14%. For computer programmers and other ITC professions, the rate drops from 15% to 12%.

On the other hand, the health contribution for lump-sum payers will be 9% of the assessment base, and this base will be:

• 60% of the average salary with annual revenues not exceeding PLN 60 thousand;
• 100% of the average remuneration with annual revenues between PLN 60,000 and PLN 300,000
• 180% of the average remuneration with annual revenues exceeding PLN 300 thousand.

Example: IT specialist. Revenue - PLN 250 thousand.

• The most optimal form of taxation will be a lump sum. In this form, a taxpayer will pay PLN 28.6 thousand in tax, i.e. PLN 3.2 thousand less than he would pay today. This is the effect of reducing the flat rate from 15% to 12%. In total, such a taxpayer will gain PLN 1.7 thousand annually on the Polish Order.

Flat tax

Entrepreneurs on a flat tax will pay health contributions of 4.9% of their income.

Example: A tax advisor running a sole proprietorship. Annual revenue for 2021 - PLN 150 thousand, costs - PLN 50 thousand. In 2022, he expects his revenue to rise to PLN 250 thousand.

• The most optimal form of taxation will be a flat tax. With this form of taxation, a taxpayer will pay PLN 35.5 thousand in PIT and PLN 9.2 thousand in health contributions. The total burden will amount to PLN 44.7 thousand.

Innovations, investments, expansions

Polish Order is above all a comprehensive support for business - for companies focused on innovation, investment and expansion. It is also an incentive for investors to invest even more in Poland.

One of the problems of companies is the lack of capital for investments. Money can be obtained on the stock exchange, but entering it is always connected with high costs.

The Polish government, however, provides relief for IPOs, i.e. initial public offerings of shares, thanks to which stock exchange debutants can deduct not 100%, but as much as 150% of expenses connected with entering the stock exchange. It also gives a bonus for investments by venture capital funds, which bring together an investor and a modern company looking for funds to increase the scale of its operations - allowing the investor to include as much as 150 percent of the expenses in the tax costs.

The Polish Order also includes allowances for expansion and conquering new markets. A bonus is due for the risk involved, therefore expenses on expansion will be deductible twice - once as tax deductible costs and once as a relief - up to PLN 1 million.

Innovations and investments

From 2022, innovative solutions will be even more rewarded. The relief for a prototype, for robotization, for employing innovative workers combined with a simultaneous possibility of using the R&D relief and IP BOX is a complex system of support at each stage of the production process.

For companies focused on investments, the Polish Order proposes the Estonian CIT. This is a modern way of taxation, which promotes investments and minimises formalities in tax settlements. An entrepreneur does not have to pay tax until he decides to distribute profits from the company. The moment he makes such a decision, he will pay tax under maximally simplified rules.  In the Polish Order Estonian CIT will be even simpler to apply and more attractive, and the effective tax rate even lower than now.

The Polish Order also creates a friendly climate for strategic investors. Strategic investors will get fast, comprehensive and reliable information about the tax they will have to pay if they make their investment in Poland.

Sponsoring

The Polish Order is also a tax incentive for entrepreneurs who engage in socially beneficial activities (CSR) and support sports, culture, higher education and science, and in this way support the development of local communities. Today, such companies can deduct 100% of their expenses, and after the reform - as an additional incentive - they will be able to deduct an additional 50% of expenses.

Fair rules and healthy competition

The Polish Order also includes measures to eliminate unfair competition - limiting the grey market, including illegal employment and transferring income to tax havens. We do not accept that foreign corporations can earn huge profits in our country without paying taxes or paying them at a negligible level. That is why we have introduced a tax on large corporations which do not pay CIT in Poland, and this is not due to large investments, tax breaks or crisis situations, but to tax avoidance and aggressive tax engineering. This tax is also an action for the development of Polish companies.

We support business

The mechanism of certification of contractors in the public procurement law will create an opportunity for entrepreneurs to obtain a certificate that will serve to verify their legal situation and potential. The contractor will use the certificate for the purposes of various procedures, without the need to collect and submit multiple documents for each tender separately.

The introduction of a certification mechanism for public procurement contractors will constitute the implementation of one of the main priorities of the National Procurement Policy, i.e. the development of the SME potential. The essence of the certification mechanism is to reduce the formal obligations of economic operators related to participation in procurement procedures, which will be an important factor encouraging their participation in the public procurement market. Such facilitations are particularly important for SMEs, which have limited organisational resources

Family Foundation

The new institution will serve to improve the legal environment for company succession, particularly due to generational changes. The solution is modelled on foundations of this type operating in many European countries, including Austria, Germany and the Netherlands.

 Thanks to the establishment of family foundations in Poland, the following will be possible:

•  effective, multi-generational succession in family companies, especially in enterprises,
• construction of strong native brands,
• accumulation and protection of capital against fragmentation,
• increase opportunities for new investments.

Polish Order:  Benefits for the housing market

The most important objective of the housing part of the Polish Order is to help provide Poles with the "four corners" of their dreams. The Act on houses of up to 70 sqm, introduces simple legal solutions enabling faster construction of small houses to meet one's own housing needs. In turn, the guaranteed housing credit is a solution for improving housing conditions for Polish families.

Both projects will also have an effect on the housing market. The Housing Polish Order:

•  fosters investment activation of entities specializing in construction and exploitation of flats,
• will increase the number of flats purchased on the primary and secondary market. A guaranteed housing loan for eligible borrowers will reduce one of the significant barriers to the purchase of new housing by households applying for a loan;
• will improve conditions for small businesses to participate in single-family housing construction projects in smaller towns;
• will facilitate access to sources of financing for new investments in individual construction, carried out also outside the largest housing markets of large cities (i.e. a financial supplement to solutions supporting satisfaction of housing needs in the form of construction of single-family houses).