As part of the Polish Deal, the Ministry of Finance intends to fight the shadow economy. This includes hiring employees illegally and paying part of the salary without paying social security contributions. The new regulations are to bring the budget PLN 1.5 billion – the finance ministry said.
“It is estimated that the solutions provided for in the draft act, implementing the announcements included in the Polish Deal program, aimed at combating the shadow economy, including employment and paying for work ‘under the table’, will bring effects in the total amount of PLN 1.5 billion “- informed the Ministry of Finance.
Polish Order – fight against the shadow economy and illegal employment
– Currently, the tax system does not adequately protect people who do not agree to work illegally. It is necessary to protect the employee and discourage those employers from engaging in illegal practices who do not care about the security of their employees, their insurance and employment stability. This is not fair to them, but also to other companies, those that act honestly, explains Jan Sarnowski, Deputy Minister of Finance.
In its draft, the Ministry of Finance included the abolition of these provisions, which now require the employee to pay the tax not paid on his salary, together with penalty interest in a situation when he informs the labor inspection or tax office about receiving part or all of his remuneration “under the table”. The provisions under which such an employee is now subject to criminal liability for not declaring the tax for the year in which he earned his income will also disappear.
– The proposed regulations are to completely reverse this situation – provide protection to the whistleblower who will inform the relevant services and shift the burden to the dishonest employer. We hope that after the change, employees will not be afraid of fighting for their rights, for what they are entitled to, said Sarnowski.
Tax changes in the Polish Lada – the responsibility of the employer
The new regulations are also aimed at introducing the tax liability of the employer. For each month of illegal employment, the unreliable employer will be assigned income in the amount of the minimum wage. Income from business activity will also be income from illegal employment and income from the employment relationship in the part in which the employer did not disclose them to the competent state authorities.
“It will be an income corresponding to the employee’s tax-exempt income. On the part of the employee, it is assumed that income from illegal employment and income from the employment relationship will be exempted from income tax in the part in which the employer did not disclose them to the competent state authorities” – wrote the Ministry of Finance.
An additional penalty for unreliable employers is to exclude from the tax deductible costs the remuneration paid for illegal employment and the remuneration paid “under the table”. In this way – as is clear from the explanations of the Ministry of Finance – the dishonest employer will take over the burden of taxing the remuneration of the illegally employed employee with income tax. The employer will also not be taxed at the cost of the pension insurance contribution on the remuneration for illegal employment and on a part of undisclosed remuneration, despite the fact that they will be financed from his own funds as a contribution payer.
Also, social security contributions due from the wages of an illegally employed worker and wages paid “under the table” will be entirely financed by the employer. It will be similar in the case of health insurance premiums. They will also be financed by the entrepreneur in the event of illegal employment or lowering of the base amount of employee contributions, informed the Ministry of Finance.
The new regulations, according to the plans of the Ministry of Finance, are to enter into force on January 1, 2022.
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