Social partners' incomes to be taxed

Download article in original language : PL0406103NPL.DOC

New legislation means that from January 2005 the revenues of Polish trade unions and employers' organisations are to be subject to corporate income tax. The social partners have protested against this measure, but as of June 2004 without any success.

It was announced in 2003 that Poland's corporate income tax legislation would be amended. One effect would be to oblige a new category of organisations to pay tax on their incomes - a category that includes trade unions and employers' organisations. In July 2003, all the representative trade unions and employers' bodies sent a letter to Jerzy Hausner, the Minister of the Economy, asking that those parts of social partner organisations' revenue earmarked for their core activities be exempt from income tax. The signatory employers' organisations (PL0209104F) were:

  • the Employers' Union of the Business Centre Club ( Business Centre Club - Związek Pracodawców , BCC ZP );
  • the Confederation of Polish Employers ( Konfederacja Pracodawców Polskich , KPP );
  • the Polish Confederation of Private Employers, ( Polska Konfederacja Pracodawców Prywatnych , PKPP ); and
  • the Association of Polish Crafts ( Związek Rzemiosła Polskiego , ZRP )

The signatory trade union organisations were:

  • the Independent and Self-Governing Trade Union Solidarity ( Niezależny Samorządny Związek Zawodowy , NSZZ Solidarność );
  • the All-Poland Alliance of Trade Unions ( Ogólnopolskie Porozumienie Związków Zawodowych , OPZZ ); and
  • the Trade Unions Forum ( Forum Związków Zawodowych, FZZ ).

While the signatories of this letter acknowledged the value of the proposed tax amendments in general and the good which they could do for business entities, they argued that, if the amendments were implemented in their current form, they would eat into the financial resources of employers' organisations and trade unions, thus limiting their capacity for effective operation.

Despite these protests, the relevant amendments to the Corporate Income Tax Act were duly passed in November 2003 and will come into force on 1 January 2005. However, on 13 January 2004 Minister Hausner, speaking at a session of the OPZZ union confederation’s presidium, acknowledged the criticism of the new provisions formulated by the unions and expressed himself in favour of retaining the exemption from income tax for those trade union revenues that are earmarked for their core activities. To date, however, this statement has not been translated into any concrete actions - to some extent, this may be due to current political instability.

Whatever the current political situation, the social partners’ displeasure at the prospect of having their incomes taxed has continued unabated. Accordingly, the unions have kept up their vocal criticism. On 11 May, OPZZ addressed a letter to Marek Belka, the new Prime Minister, stressing the detrimental effects that taxation on union incomes will have on its activities. OPZZ also reminded Mr Belka that on 19 April 2004 - before becoming Prime Minister - he declared during a session of OPZZ’s presidium that he would analyse the merits, or otherwise, of the new law.

To date, however, no steps have been taken to address the demands of the social partners in terms of lightening their new tax burden. Furthermore, new developments in this are are unlikely in the near future. The new cabinet yet has to be endorsed by parliament, and it remains unclear whether it can win such approval or whether parliamentary elections will have to be held ahead of schedule. Obviously, it is this issue, and not the tax situation of trade unions and employers' organisations, which currently preoccupies Prime Minister Belka and his cabinet. The continuing political instability may mean that the social partners' demands on this point will not be addressed for a long time to come.

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