The current state aid system in Poland provides for preferential treatment of investors who set up their business in the territory of one of the Special Economic Zones (SEZ), i.e. within a legally designated part of Polish territory. The SEZ benefits include, in particular, exemptions relative to corporate income tax for corporations or personal income tax for non-corporate entities. However, in recent years this system has failed to keep up with ever-changing socio-economic challenges. The zones have proved to be a rather inadequate instrument for sustainable development and the rules of support in Poland have become less attractive compared to those offered by foreign competitors.
Therefore, the current Special Economic Zone regulation is to be terminated and replaced with a new bill on supporting investment which introduces a comprehensive new system of public support for investments in Poland, including a new set of rules on public aid. For example, under the new law a business located anywhere in the territory of Poland would be entitled to receive SEZ-like public support, e.g. a tax exemption. It means that tax incentives will be available to a greater number of businesses in Poland and will allow the government to respond much more flexibly to a changing business environment, e.g. unemployment or transportation conditions. Also, under the new law the state aid regulations are to be more transparent, e.g. present legal ambiguities as to the length of granted exemptions will now be all but eliminated and a clearer regime introducing permits for 10 to 15 years would be introduced (as a rule, the higher the intensity of state aid in the region, the longer the period of tax exemption).
The bill sets forth only the general principles of the new regulation on investment support, leaving a number of secondary issues to be detailed in executive regulations.
Most recently, the bill has been approved by the Council of Ministers, and is soon expected to be debated in parliament before being formally passed into law. At present the new system is set to enter into force by the end of this year.
By Pawel Zelich, attorney at law Noerr