Simplify to succeed

Out of the 175 countries whose tax systems were analyzed in the latest joint World Bank and PricewaterhouseCoopers Paying Taxes report, Poland was ranked 71st worldwide and tenth within the EU. The Maldives and Ireland were said the most corporate-taxpayer friendly systems.

"Taxes paid by businesses are not just corporate income tax. There are plenty of other taxes that can be even more burdensome for companies," says Rita Ramalho, economist from the Monitoring, Analysis and Policy Unit at the World Bank in Washington. "Reading the law and figuring out the tax liability of the company are an important part of relieving the overall tax burden," she explains.

Ramalho says simplification of both the law and the legal language are critical to ensuring taxpayer friendliness. Poland could well heed such advice, as all tax procedures in the country take an average entrepreneur 175 days to complete, compared to 74 days in Ireland. At the same time, Polish firms have to make 43 tax payments per year, compared to just five in Sweden and eight in Ireland.

The corporate income tax rate in Poland is relatively low at 19 percent, but when indirect burdens are added, the total rate rises to 38.4 percent.

Katarzyna Czarnecka-Żochowska from PricewaterhouseCoopers says the simplification of the tax system comes down to the fact that everyone should pay taxes in Poland according to simple and transparent rules, meaning at a low tax rate with the total abolition of tax rebates.

"Getting rid of unnecessary formal requirements would also be a step forward. It is essential to change the relations between the two parties - the tax office and the entrepreneur. They should be based on trust and partnership," says Czarnecka-Żochowska.