EU to investigate tax incentives for Polish shipyards

The European Commission has launched an investigation into tax incentives for Polish shipyards as it is concerned it might give them an unfair competitive advantage. Under the new law introduced in September2016, shipyards are allowed to pay a 1 percent flat tax rate on sales from shipbuilding and conversion instead of the generally applicable income corporate tax (19 percent) or natural person tax (18 or 32 percent of taxable income for individuals and 19 percent for entrepreneurs). The Commission said such a measure could be seen as “operating aid”, which is illegal under EU rules. On the other hand, the EC approved investment aid scheme for small and medium-sized enterprises in the shipbuilding sector in Poland that grants and subsidies, saying the program would encourage new investments and modernize the sector.