Incetives for investments in Poland

Background
The Polish economy is one of the most attractive economies for foreign investors.
The attraction is the result, among other matters, of the size of the population – some 39 million – and an infra-structure that includes developed road and rail systems as well as 3 ports and enables speedy handling and marketing. In addition, the State has adopted a policy of canceling subsidies for industry, cancellation of price supervision and more.
In particular, legislation has been adopted that allows foreign investors to transfer, with comparative ease to countries outside Poland, any profits from operations in Poland whether from dividends or as the result of the sale of assets and shares.
As a general rule, Polish law does not discriminate between local and foreign ownership. Nevertheless, in certain tenders there is an advantage to local businesses over competition from foreign residents that allows them a price tolerance of up to 20% more. There are also restrictions in tenders in that at least 50% of the labor force and 50% of the materials will be local.
Despite that stated, almost the entire market is open to foreign investors. There are still restrictions as regards the prior approval of foreign investments. Also for example, not even minimal ownership is permitted in the construction of airfields and the erection of casinos.
In certain sectors foreign ownership is restricted to less than 49%. These sectors include, among others, radio and television broadcasting, air transport, fishing and more.
To encourage foreign investments, in 1992 the State set up PAIZ – “Foreign Investments Agency” that provides information and services to foreign investors.

Investment Benefits

There are a number of benefits for certain investments. Generally these are investments of a minimum sum, investments in areas of unemployment and investments that contribute to export.
These benefits are given to local investors as well.
Investment Deduction
The investor may deduct some of the expenses that he invested in the purchase of machinery, equipment and buildings from his taxable income.
The investment incentive can not exceed the rate of intensity for the region, in most Poland’s regions the aid rate is 50%. The incentives in Poland are granted to investments exceeding EUR 10 million,or EUR 0.5 million, when creating new jobs as defined by law.
For small and medium firms(SME’s) in Poland, the intensity rate is 65%.
The incentives are given to investments conducted for at least 5 years from the completion of the investment project.
In addition, benefits are granted to investors in areas of unemployment subject to certain conditions. The investor will be eligible to deduct up to 50% of his investment.
Poland Free Trade Zones
A number of free trade zones have been established in Poland, most of them for a period of 20 years.
The benefits in the law remain in force as long as the Free Trade Zone Law remains in force. The main benefits are as follows:
Exemption from income tax to the limit of the investment, or creation of new jobs for 2 years, in the free trade zone.
The maximum tax exemption depends on the intensity rate for the region. e.g for a region of 50% intensity, an investment of EUR 1 million would give a net grant of EUR 500,OOO,which at corporate tax rate of 19%(500,000 divided by 0.19) would result in tax exempt income of EUR 2,631,579.
Poland R&D Incentives
R&D investments in Poland, which are not subject to state aid rules, can get 100% subsidies.
Source: World Wide Tax Portal

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