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Polish order. Tax changes and a new health insurance premium for entrepreneurs. Comment of the chief economist of PKO BP, Piotr Bujak

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How will tax changes from the Polish Governance affect the situation of entrepreneurs? According to the chief economist of PKO Bank Polski, Piotr Bujak, entrepreneurs whose burdens will increase as a result of the changes will not lose on the Polish Lada. Why? According to Bujak, it will be possible thanks to the maintenance of fast and sustainable economic growth, which will contribute to the growth of total income of entrepreneurs.

The Ministry of Finance on Monday afternoon published draft tax act that is part of the Polish Deal. The changes proposed by the Ministry of Finance in the draft include, among others, the tax-free amount of up to PLN 30,000.


Polish Order – the impact of tax changes

The expert referred to the draft tax act, which was sent for public consultation on Monday. Its purpose is to lower the tax wedge and increase its progressiveness. The project includes, among others increasing the tax-free amount to PLN 30,000 PLN, increasing the tax threshold to PLN 120 for people paying 32 percent. rates or the introduction of “middle class allowances”.

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– Increasing tax progression is a good direction because the current system was not fair. The tax burden on lower earners was greater than on high-income individuals, said Bujak. He recalled that the increase in progression was recommended to Poland, among others by the Organization for Economic Co-operation and Development (OECD) or the European Commission.

He pointed out that one of the greatest benefits of the project is the reduction for approx. 60 percent. taxpayers of the tax and contribution wedge, which “will increase consumption demand and, as a result, will be very beneficial for the development of the economy”. Moreover – as he noted – “lower tax and contribution burdens will act towards increasing the economic activity of this group of people who today assume that it is not profitable for them to work”.

In his opinion, reducing the tax and contribution burden will also be beneficial for small and medium-sized enterprises, especially those with a relatively low level of income.

Will entrepreneurs feel the tax changes of the Polish Order?

The economist admitted that some entrepreneurs who use preferential forms of taxation or settlement of contributions today will experience an increase in the burden, but – as he noted – these are companies with relatively high income. “Entrepreneurs, whose contribution and tax burdens will increase, will not lose on the Polish Lada, because maintaining fast and sustainable economic growth, which is favored by this program, will increase their total income” – he indicated.

He also added that the project provides for a number of concessions for entrepreneurs, as well as, for example, specialists from sectors important for the economy, which should compensate them for greater burdens.

Polish Deal – own business

Calculations regarding the impact of the proposed tax changes were presented by the Confederation Lewiatan. According to the organization, “entrepreneurs running companies in the form of sole proprietorships will lose the most from the proposed changes”. As indicated, there are several hundred thousand production, trade and service companies.

The organization’s calculations show that the entrepreneur, taxed with a flat tax, which today pays PLN 190,000 from the tax base of PLN 1 million. PLN tax, after the change will have to pay 280 thousand. PLN (19% of tax and 9% of health insurance), i.e. by 90 thousand. more.

Polish Order – self-employed

According to Lewiatan, the Polish Deal will also hit the self-employed. “They conclude B2B contracts, are not bound by the labor code or exclusivity clauses. They are often sought-after specialists (managers, engineers, IT specialists, programmers) who carry out activities subject to general tax or flat tax” – explained.

Lewiatan’s calculations show that in their case, after the entry into force of the new regulations, the burdens will increase by almost 50 percent. As shown in the example, an engineer providing services under a B2B contract, subject to flat tax, earning income after deducting social security contributions (PLN 1,457.49) in the amount of PLN 15,000, currently pays PLN 2,850 in tax, after the changes it will be PLN 4,200. This means an increase of PLN 1,350 per month. The amount is PLN 16,200 per year.

Polish Order – lump sum

Moreover, changes were proposed in the payment of health insurance contributions for entrepreneurs paying a lump sum on registered income and a tax card. The Lewiatan Confederation stated that these are most often entrepreneurs conducting small service or craft activities (construction, taxi, hairdressing, cosmetic, carpentry, interior cleaning services, etc.).

“Due to the lack of the possibility of deducting health insurance contributions from the tax, their burden will also increase” – emphasized.

The organization gave the example of a carpenter taxed in the form of a lump sum on recorded income, who earned an income of PLN 7,000. “The lump sum (5.5%) calculated on this amount is PLN 385. Today, after deducting the health insurance contribution (PLN 328.78), the entrepreneur pays the tax office PLN 56 to the tax office. In total, his burden for the lump sum and health insurance is PLN 441 “- indicated.

After the changes – as shown by Lewiatan’s calculations – he will pay PLN 385 in lump sum (5.5%) and PLN 128.10 in health insurance (one third of the lump sum 1.83%). Therefore, it is about PLN 513.10 in total. As emphasized, the increase in tax and health insurance contributions will amount to 16.30 percent. It was reminded that in addition to the tax and health insurance contributions, the entrepreneur must also pay PLN 1,457.49 in social contributions.

Polish Order – proposed changes

The Polish Order is a new socio-economic program for the post-pandemic period, endorsed by the parties forming the United Right. Its foundations are 7 percent. GDP for health; tax reduction for 18 million Poles (including tax-free amount up to PLN 30 thousand and raising the tax threshold from PLN 85.5 thousand to PLN 120 thousand), investments that are to generate PLN 500 thousand. new jobs, apartments without own contribution and a house up to 70 sq m. no formalities, and a pension up to PLN 2,500 without tax.

Main photo source: Shutterstock

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