Polish Government Reviews Retail Tax Legislation
10 Februar 2016 - 4:33PM
Dow Jones News
By Martin M. Sobczyk
WARSAW--The Polish government is reworking draft legislation
imposing a tax on retailers after domestic companies voiced
opposition to the plan while the European Commission in Brussels
also raised objections.
Finance Minister Pawel Szalamacha said on Wednesday the
government was working to offer more favorable terms to stores
operated under a nationwide brand, but otherwise independent from
their franchisers.
Their tax rate should be different from chains where merchandise
is supplied mostly by franchisers who get a profit margin on retail
sales, Mr. Szalamacha said.
The government has said it's trying to level the playing field
for domestic retailers who have been competing with large, often
foreign-owned chains such as Tesco PLC of the U.K. and Carrefour SA
of France. Under a proposal published in late January, a
progressive tax regime was planned for retailers.
Retailers with monthly sales below 1.5 million zlotys ($381,100)
won't pay the new tax, but those with monthly sales of up to PLN300
million will pay 0.7% of revenue while retailers generating monthly
sales above that figure will pay 1.3%, according to the draft
legislation. The ministry also said sales made on weekends and
holidays will be taxed at up to 1.9%.
The finance ministry expects to raise about PLN2 billion in 2016
on the tax that will help finance new welfare benefits.
Carrefour and Tesco are expected to be hit hard by the new tax
because the revenue they generate would put them in the top tax
bracket, said Moody's Investors Service.
The new Polish levy would eat up the two companies' entire
operating profit, the ratings agency said. Jeronimo Martins would
also potentially face a large tax bill estimated at some 110
million euro ($123.7 million), about a quarter of its 2014 gross
profit, Moody's said.
Over the medium term, the tax will be passed on to consumers
through price increases, Moody's said. It's an outcome the
government has worked to prevent.
Mr. Szalamacha said the European Commission has criticized the
tax plan.
"A few days ago we received a letter from the European
Commission in which the Commission in the simplest of terms attacks
the concept of progressive rates," he said. "We don't agree with
this."
The Commission earlier launched a probe to see whether Poland's
governing Law and Justice party, which came to power in
parliamentary elections in October, is in breach of European law by
making changes to the composition and rules of the nation's top
court to blunt its ability to block legislation. The government has
insisted much of criticism is instigated by its domestic political
rivals.
Write to Martin M. Sobczyk at martin.sobczyk@wsj.com
(END) Dow Jones Newswires
February 10, 2016 10:18 ET (15:18 GMT)
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