Deregulation, especially in the area of tax and energy law, is the main and long-standing demand of the business community. We have one of the most complex and at the same time strict tax systems in the world, and the lack of systemic solutions in the field of renewable energy development and responsible implementation of energy transition limits the competitiveness of Polish companies and the opportunities for new investments.
The solution seems to be a deregulation package prepared as part of the Sprawdza-MY initiative by businessman Rafał Brzoska, who promises that his proposals will make it easier to do business. The aim is to bring about real, tangible change. Controversial legal mechanisms will be abolished, barriers removed, administrative procedures simplified and red tape cut.
We hope that this project has a chance to permanently change the reality of business and the economic climate, not only in Poland, but also in the entire Central and Eastern European region in the future.
That is why we have joined the team of the Warsaw Enterprise Institute, which is the only think tank advising Rafał Brzoska on this issue, along with a large group of employers’ organisations. Our aim is to contribute to a simple, modern and friendly legal environment for entrepreneurs.
Poland’s energy sector deserves effective deregulation
Łukasz Młynarkiewicz and Agata Dziwisz-Moshe will lead the teams working with WEI on deregulation.
Łukasz, Partner in the Infrastructure, Energy, Environment and ESG Practice Group and Head of the Nuclear Energy Practice points out that the main issues in the energy sector will include:
- Creating a transparent regulatory environment and setting clear guidelines for investments in the sector
- Improving the transparency, quality and stability of legislation
- Streamlining administrative processes to accelerate energy transition
- Adopting solutions to increase available connection capacity and support the integration of new energy sources into the Polish Power System (KSE)
- Promoting long-term strategic planning that includes energy transition and greater business involvement in renewable energy
- Developing wind energy and relaxing setback rules
Poland’s energy transition is trapped in a maze of regulations and complex administrative procedures. The time has come for well-designed deregulation that will unlock the sector’s investment potential, says Łukasz Młynarkiewicz.
Let’s look at the facts: the average time to complete an onshore wind project is currently around 6 years, and for an offshore project like Baltic Power it can be as long as 13 years. This is not a pace that allows us to keep up with European commitments.
We need a transparent and predictable legal environment that provides clear guidelines for investors. It is also crucial to streamline administrative and judicial procedures, which will significantly reduce project implementation time. In particular, there is an urgent need to implement more liberal setback rules for wind-power projects.
It is also important to increase the available connection capacity and integrate new energy sources. Deregulation in this area will open the door to greater business involvement in renewable energy and allow for long-term, strategic planning of the energy transition of the entire economy.
I have no doubt that without thorough deregulation and increased legal stability, Poland’s energy transition will grind to a halt. And time is running out, adds Łukasz Młynarkiewicz.
Practical proposals for deregulating the tax system
In Poland, the tax system often appears to be an obstacle for entrepreneurs rather than a facilitator of economic development. Taxation is therefore the area that entrepreneurs see as most in need of change.
The biggest problems cited by the business community include:
- The length of tax audits and proceedings
- The abuse of criminal tax proceedings to suspend the statute of limitations
- Excessive documentation and reporting obligations required in the course of doing business
- Frequent changes in regulations combined with short vacatio legis, resulting in excessive cost burdens for companies that have to adapt to new regulations.
- Excessive regulatory complexity
- Introduction of multiple ‘quasi-taxes’
Entrepreneurs expect not only a simplification of regulations, but above all a reduction of excessive obligations in the area of transaction documentation and tax reporting.
Another important issue is the elimination of the phenomenon of suspending the statute of limitations for tax liabilities by initiating criminal tax proceedings in a case shortly before the deadline.
Businesses are also calling for solutions to eliminate the excessive duration of tax audits and tax proceedings, for example by proposing that no interest should be charged on late payments in the case of audits lasting more than six months.
Another key issue for the business community is the increase in the number of general tax rulings issued by the Minister of Finance, which will help to clarify ambiguities on an ongoing basis.
The Polish tax system is a dense forest for entrepreneurs in which even the most experienced can easily get lost, says Agata Dziwisz-Moshe, Partner and Head of the Tax Practice.
Every day our clients face problems that should not be happening in a modern economy. Today, taxpayers are often treated as potential fraudsters rather than as honest businessmen who may make a mistake. This approach is particularly evident in the course of tax audits and tax proceedings against companies.
Particularly appalling is the abuse of tax criminal proceedings to suspend the statute of limitations on tax liabilities, a practice that undermines the fundamental principles of the rule of law. The issue of interpretation of rules is also problematic. Businesses need predictability and stability in the tax system, but at present tax authorities often interpret the same provisions in different ways, frequently calling into question the protection to which taxpayers are entitled on the basis of tax rulings they have obtained, she adds. The biggest problem arises when foreign companies are confronted with the reality of the taxpayer’s dealings with the tax authorities in Poland, which in a broader perspective may deter such companies from investing in Poland.
Therefore, the main deregulation proposals of Agata Dziwisz-Moshe’s team include:
- A proposal that the initiation of criminal tax proceedings in a case should not result in the suspension of the statute of limitations
- The abolition of income taxes, which could be replaced by a single, simple revenue tax. This is a radical reform, but one that has the potential to bring many benefits to the economy, businesses and citizens
- Elimination of so-called quasi-taxes, which were not introduced by tax legislation but de facto fit the definition of taxes. This is an important step towards simplifying the entire system and increasing the transparency of the law.
- Introduction of a legal requirement that all laws introducing public levies be prepared exclusively by the Ministry of Finance as government bills. This will ensure that changes to the law are the result of comprehensive analysis by the Ministry, which will ensure their consistency and accuracy. The centralisation of the process will in turn eliminate inconsistencies in the law and increase the efficiency of legislation
- Introduction of the ‘one minus two’ rule – this is a key element of real deregulation of tax regulations, according to which for every new tax regulation, two existing ones should be abolished
- Change of Vacatio Legis – from one month to 12 months, which would be a step towards legal stability and allow better preparation of entrepreneurs for new regulations
- Introduction of the genuine liability of tax administration staff for errors made during tax audits and proceedings
Tax deregulation should be based on a relationship of partnership between taxpayers and the administration. And this is the direction our proposals will take. From simple changes that have the potential to bring immediate relief to strategic solutions, everything should be built on these principles, says Agata Dziwisz-Moshe.
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