TaxNewsFlash-Europe

September 3, 2008
No. 2008-33

Poland

New Opportunities for Special Economic Zones

In Poland, new amendments that are effective on 4 September 2008 could make special economic zones (SEZs) more attractive by providing new opportunities for investors. The new provisions under the Act on Special Economic Zones allow for the enlargement of a SEZ territory by 70%, increased from the prior limitation of 12 thousand hectares to 20 thousand hectares. As a result, entrepreneurs may have more land available and may run operate activity on preferential terms in more convenient localizations.

The new provisions also continue to allow for the inclusion of private land into SEZ territory. This opportunity applies with respect to land already used by an investor for the business activity. The new provisions clarify what criteria must be met in order to include private land into the SEZ. Details under the new rules are expected to be provided in a future decree, and the anticipated effective date for the rules to be provided by such decree is expected to be 15 September 2008.

Amended rules also address the preferential criteria concerning the extension of SEZ provisions with respect to private land in Eastern Poland.

New provisions also eliminate discrepancies with respect to the amount of public aid available. The maximum amount of public aid will be calculated on the basis of the maximum amount of qualified expenditures which is to be defined in the permit for the SEZ activity and will reflect the level of aid for the region. Under the new provisions, a SEZ permit may be amended, provided that this does not decrease the number of new jobs defined in the original permit by more than 20%; does not increase the amount of public aid; and does not modify the criteria for granting the private land the SEZ status.

Other changes to the SEZ rules are expected. Draft decrees currently under inter-ministry coordination would extend the availability of SEZs until the end of 2020. Under current rules, SEZs are set to exist until 2016-2017. The recent amendment extends the period in which entrepreneurs may benefit from SEZ tax exemption provisions and affords them an opportunity to use an available tax exemption. Based on unofficial information, a change in this area could concern only the investors conducting their business activity within the SEZ territory under the SEZ permit issued after the amendment is effective.

The new provisions are viewed as an opportunity for entrepreneurs. Depending on location, investments may benefit from the support in form of an income tax exemption equal to up to 50% of the qualified expenditures. For small and medium size enterprises, the percentage of the tax exemption could be even greater—as much as 70%.

For more information, contact a KPMG tax professional in Poland:

Mirosław Michna, +48 (12) 424 94 09, mmichna@kpmg.pl

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