New Law - The Eearly Warning System

The Business Journal's acclaimed twice-monthly update on legislation that will affect your company, prepared exclusively by Ewa Pawłowska of CEC Government Relations. She can be e-mailed at ewap@cec.com.pl.

Approved by the Government

Amendment to the CIT Law

Purpose: Reduces the corporate income tax rate from 27 percent to 19 percent. Tax on dividends and other corporate capital gains would increase from 15 percent to 19 percent. At the same time, tax breaks and holidays would be eliminated. The amendment would also reduce profitability requirements for creating a capital group for tax purposes from 6 percent to 3 percent, determine the exact moment of securing income for energy, telecommunication, radio communication as well as water and sewage related service providers, move the exact moment of securing income on short positions on borrowed stock to the date of return or planned date of return and allow companies to write off up to 15 percent of income for contributions made to charity.

Affected: Companies paying corporate income tax, especially energy, telecom, radio communication and water and sewage related service providers

Timing: Approved by the government in June. Awaits consideration by the lower house.

The Sejm

Bill on Payment Guarantees for Construction

Purpose: Prevents delays in payment for construction work by allowing contractors to demand payment guarantees from real estate investors.

Affected: Real estate developers, construction companies, banks

Timing: Submitted by a group of parliamentarians in March 2002. First reading in May 2002 and second reading in June 2003.

Amendment to the Accounting Law

Purpose: Harmonizes Polish and EU law by eliminating the obligation of foreign branches of banks and other financial institutions to announce financial results achieved in Poland. At the same time, the amendment would obligate foreign branches to announce the consolidated financial results of parent companies.

Affected: Foreign branches of banks and other financial institutions

Timing: Government approval and submission to parliament in April. First reading in May and second reading in June.

Act on Reorganizing the Fiscal Administration

Purpose: Completes consolidation of the tax authorities and further increases their effectiveness in collecting taxes. This vast bill would amend 27 legal acts currently in effect. It would create separate tax offices to deal with large companies and those with foreign capital, expand the customs administration's powers by excise tax collection and introduce European standards to Poland's fiscal administration.

Affected: Large companies (annual turnover exceeding E5 million), foreign companies, companies with foreign capital, holding companies, banks, importers

Timing: Final amendments proposed by the Senate in June await consideration by the lower house.

The Senate

Law on Payment Deadlines

Purpose: Discourages late payment for delivered goods or services and harmonizes Polish and EU law. The bill would introduce mandatory penalty interest for contracting parties who fail to pay for goods or services delivered as of the 31st day after an invoice is delivered. All contracts seeking to limit this right to mandatory penalty interest would be null and void. Lastly, the bill would simplify the process of securing court orders for payment of overdue accounts receivable.

Affected: All companies

Timing: Government approval, submission to parliament and first reading in April. Second and third readings in June. Awaits consideration by the Senate.

Amendment to the Road Transport Law

Purpose: Further harmonizes Polish and EU law. It would establish regulations regarding transport licenses, employee professional qualifications and financial requirements for transport companies more precise. The infrastructure minister could refuse to grant or alter international transport licenses in cases where it would be impossible to ensure an adequate amount of foreign permits.

Affected: Road transport companies, companies transporting people or goods, courier companies

Timing: Government approval, submission to parliament and first reading in October. Second reading in May and third reading in June. Awaits consideration by the Senate.

Approved Legislation

Amendment to the Penal Code

Purpose: Introduces more severe sanctions for corruption and simplifies confiscation of property procured through criminal activity. The amendment would break the solidarity of those giving bribes and public officials accepting them by granting those giving bribes immunity if they report to the police that a public official demanded and accepted a bribe.

Affected: The regulatory and business environment

Timing: The lower house approved final amendments proposed by the Senate in June. Awaits the president's signature.

Postal Services Act

Purpose: Harmonizes Polish and EU law by moving in the direction of market liberalization. It would increase access to universal postal services while improving their quality. The act would give the state postal service, Poczta Polska, a monopoly on handling mail and packages weighing up to 350 grams in 2003 and gradually reduce this weight to 50 grams in 2006. Poczta Polska could also serve as a financial intermediary and would be allowed to provide a majority of banking services.

Affected: Courier companies, banks in small towns

Timing: The lower house approved final amendments proposed by the Senate in June. Awaits the president's signature.

Amendment to the Telecommunications Act

Purpose: Harmonizes Polish and EU law further. It expands the current definition of basic telecommunications service packages, allows subscribers to select operators for telecommunications and Internet services, gives telecom and Internet operators access to the infrastructure of dominant operators for a fee and grants subscribers the right to retain telephone numbers despite changes in residence. This amendment also establishes clear guidelines for refusing registration of telecommunications companies.

Affected: Stationary and mobile telephone operators, Internet service providers

Timing: Signed by the president in June. Awaits publication in the Dziennik Ustaw.

Amendment to the Law on Tenant Rights

Purpose: Allows for the lease of housing for a predetermined or undetermined amount of time. According to currently binding regulations, leases may be signed with tenants for a minimum of three years and may be terminated for only three reasons, namely the return of the owner of the property from being away, end of schooling or end of employment in a particular capacity. These regulations have negatively impacted the housing rental market.

Affected: Housing owners and real estate investors

Timing: Signed by the president in June. Awaits publication in the Dziennik Ustaw.