Costly company cars
Polish companies have long called for a complete rebate on all of the 22 percent VAT, which they currently must pay on new company cars. Now the Ministry of Finance has plans to give them just that, and has included the measure in its amendment to the VAT bill. But employers won't be rushing to the showrooms just yet.
According to the draft, companies are supposed to pay 22 percent VAT on 0.5 percent of the initial value of a car per month. However, the Ministry is also planning to hit up employees for private use of company cars. According to the new PIT (personal income tax) draft, employees will also have 3.33 percent of the 0.5 percent of the initial value per day deducted from their income by their employers, along with their regular taxes. The regulations will be introduced from the beginning of 2007.
Mirosław Barszcz, Deputy Finance Minister, says the proposal will decrease the tax charges paid by companies. "Today, the onus of both VAT and PIT is on the taxpayer. Most often as the tax base they take the amount of amortization rebates, which account for 1/60 of the value of the car each month. This is 1.67 percent. It will fall 66 percent," says Barszcz.
Andrzej Wilk, from the Polish Confederation of Private Employers Lewiatan, disagrees. "Additional charges imposed on the employer mean that all the costs are higher and the firm's development conditions are worse. Most companies use passenger cars, and that actually means an increase in costs," says Wilk. According to Adam Ambrozik of the Confederation of Polish Employers, the costs of implementing the changed tax calculations may surpass the money saved on the rebate.
There is also another problem. Currently, the Ministry wants to tax the companies just for possessing passenger cars, which would mean that all employees who have company cars would be taxed, regardless of whether or not they use these cars for private purposes. This contravenes the sixth EU directive.
"If the employee pays for the use of the company's car, it won't be taxed. The regulation will only refer to the situation when it is not paid for," says Barszcz.
