tributable retained earnings, are not aggregated with income from other sources. This type of income is taxed at 20%.
Tax-exempt income/More than 40 types of income are ax exempt. The most important are as follows.
1. Monetary damages received on the basis of administrative law, civil law and other legal acts.
2. Receipts from property insurance and personal insurance claims.
3. Interest on savings and demand accounts (except for business accounts) and interest on State Treasury bonds.
4. Money won in legally registered games of chance and lotteries.
5. Income of individuals if that income derives from funds established by international financial institutions or from resources allocated by other countries on the basis of agreements concluded between the Council of Ministers) and those institutions or countries.
6. Cash equivalents provided to employees when they need to use their own tools, goods and equipment to perform work.
7. Reimbursement of an employee's costs for relocation to another place of employment and reimbursement for the costs of settling in the new place (up to 200% of the monthly salary due to the employee in the month of transfer).
8. Limited daily allowances and other amounts due to employees for the duration of business trips.
9. Additional pay granted to employees temporarily transferred to work away from home and other benefits granted according to the principles and limits outlined in the rules for state employees.
10. Limited value of accommodation provided by an employer for employees working away from their place of permanent residence.
11. Limited payments to employees who use their private cars for company business.
12. Income originating outside Polish territory if an agreement for the avoidance of double taxation signed by Poland and the foreign country provides for such exemptions.
DEDUCTIONS
Business deductions/There is a standard annual deduction for employees equal to 3% of the income ceiling of the first tax bracket (PLN888.72 for 1999). If an employee derives income from several sources, the sum of deductions in a given tax year cannot exceed 4.5% of the above amount. An individual doing independent work may claim various allowances, depending
on the type of activities performed.
Nonbusiness expenses/The employee's portion of social security
contributions is deductible from gross income before tax. Other expenses that may be deducted from gross income are housing expenses (subject to limitation), membership fees of organizations that the taxpayer must join and donations (for legal persons only, up to the limit of 10% or, in some cases, 15% of gross income).
Other major deductions include 19% of expenses incurred for private medical care, purchase of professional equipment and
education/self-training(subject to limitations). Additionally, health insurance contributions are tax deductible.
Personal allowances/For 1999 there is personal allowance of PLN394.80 for all taxpayers.
INVESTMENT INCENTIVES
Investment relief for qualifying investment expenditure is available to individuals performing business activities in Poland in the form of a deduction from pretax profits for personal income tax purposes. The investment deduction is generally limited to 25% of the individual's taxable income in the year in which the investment is made. If in that year the proportion of revenue from exports exceeds 50% of total revenue
or if revenue from exports exceeds the equivalent of ?8 million, the taxpayer may deduct from taxable income investment expenditure up to 50% of this income.
Examples of qualifying investment expenditure include the following.
1. Purchase or self-production of assembly machinery and equipment.
2. Construction or extension of buildings.
3. Purchase of means of transport, with the exception of cars.
4. Purchase from the State Treasury of an enterprise or organized part of an enterprise's assets, with the exception of the purchase of land.
5. Purchase of licenses, patents or know-how.
If before the commencement of the business activity a taxpayer incurs investment expenditure not less than the equivalent of Э2 million, this expenditure may be deducted from taxable income in the tax year and in the three tax years following the end of the tax year in which activities commenced. This deduction will be limited to 25% of the taxable income of each of these years.
Special investment reliefs are also available to businesses investing in regions with high structural unemployment.
TAX CREDITS
A taxpayer's income originating abroa
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