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Poland: Tax Reform in the Light of EU Accession

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Poland: Tax Reform in the Light of EU Accession A WORLD BANK COUNTRY STUDY TAX REFORMS IN THE LIGHT OF EUACCESSION THE CASE OF POLAND The World Bank Washington, D.C. TABLE OF CONTENTS ACRONYMS AND ABBREVIATIONS ................................................................................iv ACKNOWLEDGEMENTS....................................................................................................... v EXECUTIVE SUMMARY........................................................................................................ vi CHAPTER I: VALUE-ADDED TAX..................................................................................... 1 A. Comparative Survey................................................................................................... 1 B. The Agricultural Sector.............................................................................................. 2 C. Other Special Schemes............................................................................................... 4 D. Rate Structure............................................................................................................. 8 E. Intra-Union Transactions: The Debate...................................................................... 10 F. VAT Information Exchange System (VIES) ............................................................. 12 CHAPTER II: EXCISES........................................................................................................... 17 A. Overview.................................................................................................................... 17 B. Tobacco Products....................................................................................................... 18 C. Alcoholic Beverages .................................................................................................. 21 D. Mineral Oils................................................................................................................ 22 E. Horizontal Directives ................................................................................................. 23 F. Non-Harmonized Excises........................................................................................... 24 CHAPTER III: TAXES ON CAPITAL INCOME................................................................. 33 A. Comparative Survey of Corporate Tax Systems........................................................ 33 B. Effective Tax Rates on Capital Income...................................................................... 35 C. Tax Harmonization..................................................................................................... 38 D. Tax Competition......................................................................................................... 41 CHAPTER IV: TAX ADMINISTRATION ISSUES.............................................................. 46 A. Introduction................................................................................................................ 46 B. Executive Management and Organization of Tax Administration............................. 47 C. The Business of Tax Administration.......................................................................... 53 D. Information Technology for Tax Administration....................................................... 61 E. Conclusion...................................................................................................................65 F. Recommendations ...................................................................................................... 66 ii LIST OF TABLES Table 1.1 Comparative Review of VATs Table 1.2 Treatment of Farmers Table 1.3 Poland: VAT Rates Table 2.1 Poland: Excise Duty Receips, 1997 Table 2.2 Poland: Harmonized Excise Duties on Tobacco Products, 1998 Table 2.3 Taxes on Cigarettes in the European Union as of 1 April 1998 Table 2.4 Old and New Tobacco Excise Structure Table 2.5 Poland: Harmonized Excise Duties on Alcohol, 1998 Table 2.6 Poland: Harmonized Excise Duties on Mineral Oils, 1998 Table 2.7 Poland: Non- harmonized Excises, 1998 Table 3.1 Corporation Income Taxes in Poland and Selected CE and EU Countries, 1998 Table 3.2 Effective Total CIT+PIT Rates on Various Forms of Corporate Earnings, 1998 iii ACRONYMS AND ABBREVIATIONS AAD Accompanying Administrative Document CIT Corporate Income Tax CG Corporation Government EC European Commission ECOFIN European Council of Economic and Finance EEC European Economic Community ELO Excise Liaison Office EU European Union EUR Euro GDP Gross Domestic Product IMF International Monetary Fund IT Information Technology MoF Ministry of Finance OECD Organization for Economic Cooperation and Development PIT Personal Income Tax PZl Polish Zloty REED Excise Exchange of Information RR Reduced Rate SOEs State-Owned Enterprises VIES VAT Information Exchange System VAT Value Added Tax WTO World Trade Organisation iv AKNOWLEDGEMENT The project team leader for this report was Jaime Vazquez-Caro. Principal authors include Professor Sijbren Cnossen and Carlos Cavalcanti. The preparation of this report benefited from structured discussions by a team of experts on tax administration, including Jan Rudowski, Under Secretary of State in Ministry of Finance; Pawel Samecki, Under Secretary of State in the Committee for European Integration; Jaroslaw Pietras, Under Secretary of State in the Committee for European Integration; Zbyszko Pawlak, Main Specialist in Taxes and Direct Payments Department; Stanislaw Dzierzyc, Chief Inspector in Taxes and Direct Payments Department; Lidia Rzyskiewicz, Main Specialist in Taxes and Direct Payments Department; Agnieszka Sienkiewicz, Main Specialist in Taxes and Direct Payments Department; Janusz Wozniak, Main Specialist in Taxes and Direct Payments Department; Stanislaw Rurka, Vice Director in Indirect Payments Department; Hanna Majszczyk, Vice Director in Indirect Payments Department; Halina Brzozowska, Main Specialist in Indirect Payments Department; Janina Cichocka, Main Specialist in Accounting Department; Irena Iskra, Main Specialist in Accounting Department; Telesfor Zyznowski, Main Specialist in Accounting Department; Agnieszka Bartczak Zuraw, Under Division Official in Department of International Economy Integration; Zbigniew Górski, Vice Director In Control Treasury Department; Slawomir Michalak, Chief Inspector in Control Treasury Department; Krzysztof Wybieralski, Vice Director in Foreign Department; Agnieszka Rudinak, Chief Inspector in Foreign Department; Beata Nehrebecka, V-Premier’s Advisor in Foreign Department Tomasz Skurzewski, Specialist in Foreign Department; Michal Zalewski, Director of Informatics Department; Waldemar Szumiel, Vice Director of Informatics Department; Janina Derwiszynska, Vice Director of Informatics Department; Joanna Pietrewicz, Senior Specialist in National Economy Financial Department; Maria Olkowska, Main Specialist in National Economy Financial Department; Zbigniew Banasiak, Director in Tax System Reform Office; Dorota Oraczewska, Main Specialist in Tax System Reform Office; Justyna Przekopiak, Specialist in Tax System Reform Office Czeslaw Pisarkiewicz, Vice Director in Staff and Instruction Office; Tadeusz Zajm, Vice Director in Resort Supervision and Control Department; Dariusz Szalkowski, Chief Inspector in Resort Supervision and Duties Control Department; Jadwiga Leicht, Senior Specialist in Duties Department; Leszek Jasiun, Chief Inspector in Duties Department; Jolanta Bogdanowicz, Division Official in Duties Department; Wojciech Malinowski, Main Specialist in Duties Department; Jadwiga Zelechowska, Manager in Duties Department; Michal Kolasinski, Main specialist in duties Department; Wieslaw Gralak, Main Specialist in Duties Department; Zofia Piasecka, Chief Inspector in Central Customs Office; Andrzej Januszewski, Main Specialist in Central Customs Office; Alicja Zkolska, Main Specialist in Central Customs Office; Malgorzata Barbachowska, Vice Chief Accountant in Central Customs Office; Józef Maszczyk, Chief Inspector in Central Customs Office; Daniel Baldys, Chief Inspector in Central Customs Office; Basil Kavalsky, Country Director for Poland and the Baltic States, World Bank Warsaw; Susanne Birk Jacobsen, Administrator, European Commission; Kim Allen Bak, Head of Division, Ministry of Taxation, Denmark; Carmen Aleza Enciso, Assistant to the Deputy Director of Consumption Taxes, Spain; Tomás Alonso, Tax Administration, Spain; Rafael Arana-Mendiguren, Spanish Customs Advisor, Spain; Olle Zinn, Customs Cooperation Group, EU, Sweden; Hasse Nilsson, Director, National Tax Board, Sweden; Sune Persson, Head of VAT Unit, Regional Tax Administration, Sweden; Elizabeth Klaus, VAT Expert, Austria; Jacques Carré, Executive Secretary, IOTA; Susanne Birk Jacobsen, Administrator, European Commission; Daniel Oks, Principal Economist, World Bank Washington; Katherine Baer, Tax Administration Specialist, IMF; Joanna Lejmbach, Warsaw Project Coordinator, World Bank Warsaw; Zoltán Vajda, Research Assistant, World Bank Budapest; Vivien Gyuris, Research Assistant, World Bank Budapest; and Anita Correa, Team Assistant, World Bank Washington. v TAX REFORM IN THE LIGHT OF EU ACCESSION THE CASE OF POLAND Executive Summary 1. This report was prepared at the request of the Polish authorities as an independent assessment of the reforms in internal tax policy and administration needed to comply with EU directives. During the preparation of this report two other major reports were issued: The White Paper on Tax Reform and an IMF-World
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