Harmonization leads to a hike in online charges
The Polish parliament voted to increase VAT on Internet charges to 22 percent. The move follows pressure from the European Commission, which had been threatening to fine Poland if it did not bring VAT charges in line with European rates. The EU does not exempt Internet access charges from VAT.
Previously, individual users in cultural and educational institutions did not have to pay VAT on Internet access costs, and only some entrepreneurs were subject to the tax.
Internet providers are being rather cautious about how this will influence prices. Poland already has one of the most expensive rates for Internet access in Europe and this new legislation will probably reduce the number of surfers.
According to a study by Polish Telecom (TP SA), if access prices increase proportionally with the VAT hike, up to 115,000 current users will not be able to afford the higher broadband rate (Neostrada) and a further 100,000 users will not be able to pay for standard dial-up connections.
Large portal owners, whose main source of revenue is advertising, are concerned. Due to the price increase, median viewing time is expected to drop, leading to smaller advertisement exposure and therefore a drop in income.
The increase in the number of Internet providers on the market, eroding TP SA's monopoly, should help in buffering the price increase. Tele2 is already promising to try to avoid passing the cost increases on to individual customers or to at least share the price rise. On the positive side, as of 2005, Internet users will be able to claim a tax exemption of zł.760 per year.
(A.D.)
Previously, individual users in cultural and educational institutions did not have to pay VAT on Internet access costs, and only some entrepreneurs were subject to the tax.
Internet providers are being rather cautious about how this will influence prices. Poland already has one of the most expensive rates for Internet access in Europe and this new legislation will probably reduce the number of surfers.
According to a study by Polish Telecom (TP SA), if access prices increase proportionally with the VAT hike, up to 115,000 current users will not be able to afford the higher broadband rate (Neostrada) and a further 100,000 users will not be able to pay for standard dial-up connections.
Large portal owners, whose main source of revenue is advertising, are concerned. Due to the price increase, median viewing time is expected to drop, leading to smaller advertisement exposure and therefore a drop in income.
The increase in the number of Internet providers on the market, eroding TP SA's monopoly, should help in buffering the price increase. Tele2 is already promising to try to avoid passing the cost increases on to individual customers or to at least share the price rise. On the positive side, as of 2005, Internet users will be able to claim a tax exemption of zł.760 per year.
(A.D.)
