Poland - Taxation



Direct taxes in Poland in 2003 included a personal income tax with three brackets (19% up to yearly income of about $9,000, 30% on income between $9,000 and $19,000, and 40% on income above $19,000, with additional lump sums of about $1,664 and $4,500, respectively, paid at the 30%, and 40% levels); a corporate income tax with a standard rate of 27%; payroll taxes of 36% to 39%, depending on whether the job is hazardous (16% to 20% paid by the employer and 19% paid by the employee) covering retirement, disability, sickness, and occupational hazards insurance; and real estate taxes on land, building and constructions. Income from dividends are taxed at 15% and income from interest, fees and royalties at 20%. The top personal income tax rate has been lowered from 44% to 40%, and the corporate income tax rate lowered from 36% to 27%. Withholding taxes are applied to income of non-residents: 15% on income from dividends and 20% on income from interests and royalties, unless other rates have been agreed to in bilateral tax treaties (BITs). Poland has BITs with at least 66 countries. In the BIT with the United States, withholding rates are 0% on interest income, 10% on income from royalties, and 5% on dividend income if the receiving company owns at least 10% of voting shares.

The main indirect tax is a system of value-added taxes (VATs). There are four VAT rates: 22% on most goods and some services; 7% on processed foodstuffs and construction materials; 3% on unprocessed foodstuffs; 0% on exported goods and services, and "VAT-exempt" applied to several groups of services, including financial services, insurance and health care. Excise taxes are charged on alcohol, cars, petrol, and tobacco products. There is also a civil transactions tax ranging from 0.1% to 2%.

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