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By Bogdan Turek
Oct. 27 — Poland's Ministry of Finance is preparing legislation to ensure foreign companies operating in the country pay the corporate income tax they owe, said Wieslawa Drozdz, a spokesperson for the ministry.
In an interview with Bloomberg BNA Oct. 27, Drozdz did not specify how the ministry will crack down on companies avoiding their tax liabilities, but said the finance ministry's priority is to make foreign companies aware that if they use aggressive practices to avoid paying income tax, inspections of their tax affairs will be unavoidable.
The move aims to make tax collection more efficient and to generate additional revenues to fund social and economic programs of the new incoming government, which won the parliamentary elections Oct. 25. In addition, the legislation would implement recommendations under the Organization for Economic Cooperation and Development's project on Base Erosion and Profit Shifting (BEPS).
Dominik Gajewski, lecturer at the Warsaw School of Economics, who specializes in international tax law and corporate tax avoidance, said that the scope of nonpayment among foreign companies is huge and that they know how to exploit existing loopholes.
“Foreign companies use about 600 legal structures which let them lower their taxes,” he said.
Research carried out by Bisnode Polska, a commercial data collecting company, on 2013 tax payments also highlighted the huge contrast between the corporate tax payments of foreign and Polish companies.
The research showed that mining company KGHM, established in Poland and one of the largest producers of copper and silver in the world, paid 1.13 billion zlotys ($291.3 million) in corporate income tax, while Jerónimo Martins Polska, the Polish subsidiary of Portugal-based international supermarket group Jerónimo Martins, paid only 302 million zlotys ($77.8 million).
Furthermore, the survey found that Lafarge, the world's largest building materials supplier, paid 46.6 million zloty ($12 million) in tax payments at a time when the sale of cement in Poland was high due to the construction of highways in the country.
Irena Ozog, a tax policy analyst at Business Center Club (BCC), Poland's largest business organization, told Bloomberg BNA Oct. 27 that the disparity in tax payments made by domestic and foreign entities has been made worse by a shortage of financial inspectors in the country.
Ozog said that the government needs to increase the number of tax auditors to scrutinize the tax affairs of foreign companies and provide “constant training” to existing financial inspectors to ensure they keep up with the ever-changing aggressive tax practices used by multinational companies.
In response, Drozdz said the finance ministry has been training inspectors since 2014, specifically on how to implement recommendations in the OECD's BEPS project. In addition, she said, the ministry has formed “competence centers” to help local tax offices deal with profit shifting by multinationals.
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