Tax exemptions and tax breaks in Special Economic Zones

Service Business

There are more and more Special Economic Zones in Poland. The reasons for this state of affairs should be seen in their positive impact on the development of the economy of a given region and in the fact that they constitute a relevant tool in the fight against the weaknesses of Polish industry. Good conditions for running a business and the exemptions and tax exemptions offered by the zones attract crowds of investors.

Briefly about what a Special Economic Zone is

The Special Economic Zone (SEZ) is an isolated and uninhabited part of the country's territory. On its territory, various economic entities have the right to conduct their own business activity on preferential terms. In addition, SEZ emphasizes cooperation between business and science and provides many jobs, reducing unemployment. It also supports the development and intensification of the existing industrial assets and economic infrastructure in a given region and prevents their destruction, develops exports and maintains the ecological balance. The result of its creation is an increase in the competitiveness of manufactured goods and services.

Ad rem - tax exemptions and tax breaks in Special Economic Zones

Public aid granted to investors, specified in the provisions of Polish law, consists in providing them with appropriate conditions for running a business and, above all, in exemption from income tax (tax exemption for natural and legal persons on income earned on the basis of operating in the zone). The aim of such a procedure is to attract as many companies as possible to the zone.

Tax exemptions and reductions are intended for companies that meet several guidelines:

  1. Employment of employees in a specific number and on a predetermined date - in this way, the manager of a given zone meets the obligation to fill a sufficient number of jobs, but at the same time restricts the possibilities of companies with less potential. The manager must carefully consider the required number of employees, because too large, stretched over a long period of time, may discourage enterprises, and too little will attract, above all, young companies (it should be remembered that, indeed, small projects are more developmental, but they are accompanied by a higher risk).

  2. The criterion of the investment value - similarly to the above - too high requirements make entrepreneurs pejoratively, while investments of small value become non-profitable for the region, and their income is overestimated due to the saved income tax exemption.

  3. Specified duration of the investment - in Special Economic Zones, the emphasis is on long-term contracts, thanks to which the investor gains a kind of stabilization related to the environment, and the zone a relative invariability of influence and relations of enterprises in the region.

  4. Compliance of the investment with the development plan of a given zone.

However, it should be remembered that a given company can obtain an income tax exemption only on a part of its income earned in the zone. Thanks to this, the zone protects itself against establishing in it branches of enterprises that would produce goods outside its territory, and at the same time benefit from its help and reliefs.

With all lucrative tax exemptions and reliefs, it should be remembered that Special Economic Zones fulfill various purposes and should not be perceived only as an area free of tax obligation. They are primarily an integrated instrument for intensifying industry and combating unemployment. Companies that take into account only the tax exemption, after its validity period expires, they resign from operating in the zone and the zone incurs further costs on this account. Moreover, when choosing one and not another zone, enterprises should be guided by the infrastructure, staff and sales market that exist there.