What significant changes in the law on special economic zones have been introduced and how should they be assessed? What benefits and how can entrepreneurs in Poland benefit? Look through our guidebook, and you'll find out what you can expect from this year.
SEZs were to accelerate the development of the poorest regions of our country and reduce unemployment, which has been achieved to some extent.
About 2,000 companies, created and maintained above 350,000 jobs and capital raised with a total value above 120,000,000,000 PLN, and in recent years 3 to 80% Industrial investment projects were located in Special Economic Zones.
From 30 June 2018 the rules of operation of the Special Economic Zones have changed, Act dated 10 May 2018 to support new investments (Journal of Laws of 2018, item 1162) defines the criteria for receiving support in almost all of Poland, as well as conditions for applying for relief.
Under what preferential conditions can business be conducted in the SEZ?
An entrepreneur who wants to invest in the selected area shall submit a request to the Management of the SEZ area for a decision on support. The investment is verified on the basis of qualitative and quantitative criteria in accordance with the Regulation of the Council of Ministers.
A company that meets the criteria in accordance with the Regulation of the Council of Ministers receives support in the form of income tax exemptions. The relief is granted for the costs of new investment or employment of a certain number of employees in connection with the new investment.
The support decision shall be issued for a time specified, not less than 10 years and no longer than 15 years. If, on the date of the decision to support the new investment, the site in which the new investment is to be located is located within the limits of the SEZ, the decision to support the new investment seems to be for the period 15 years.
What relief can you expect from investing in SEZ?
When investing in SEZs, the company can count on receiving support in the form of income tax exemption for CITl ub PIT, depending on the way the entrepreneur operates.
The new investment located in the SEZ receives a decision on time, not less than 10 years and no longer than 15 years.
Often offered relief to new investors by municipalities are property tax exemptions. Investors can also count on an investment grant from the government. An attractive facility is also the possibility of obtaining grants from county labour offices and support from EU funds.
Additional benefits to investors
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the availability of attractive, armed land with all necessary infrastructure,
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the possibility to purchase or rent existing real estate in the SEZ; in some zones there is - the possibility to implement projects in the BTS system (built to suit) and their subsequent leasing,
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the possibility to benefit also from other investment incentives offered in the SEZ, including, in particular, real estate tax exemptions, an investment grant from the government, grants from county labour offices and support from EU funds (public aid is added together i.e. the total level of support for the company from all sources must not exceed 30-70% investment expenditure),
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administrative support from SEZ management companies on legal and organisational issues related to the implementation of investments (media providers, local authorities etc.) and so-called post-investment care,
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matching company strategy with supported actions,
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additional promotion if the projects are innovative,
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the possibility of shaping local economic policy
We can receive a tax credit for setting up a new company, increasing the production capacity of an existing company, diversifying the production of the company by introducing products not previously produced in the company or a fundamental change in the production process of the existing company.
Additional requirements exist for the enlargement procedure. It is important that before submitting an application for a permit to operate in the SEZ, an investor cannot start a project which is the basis for applying for a tax exemption in the Specialist Economic Zone.
Significant changes in law
Currently, obtaining new income tax exemptions in Special Economic Zones for subsequent investors is possible on new conditions. Old rules for investment in SEZ areas prior to introduction Act dated 10 May 2018 to support new investments (Journal of Laws of 2018, item 1162) will function to the end 2026, for exemptions and decisions issued before the introduction of new rules.
According to the new regulations:
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- tax exemptions are available throughout the country and are allocated for a limited period of time,
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- the quality criteria introduced are adapted to the specific location conditions,
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- the quantitative criteria depend on the rate of unemployment in the county and the size of the enterprise,
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- preferential conditions for investment in less developed areas,
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- investments adapted to micro, small and medium-sized companies,
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- possible faster decision making on support.
To date, the area supported was 25,000 ha, which is 0.08% the country's surface area, and access to other investment sites was only possible in the framework of a long-term procedure to change the SEZ's borders.
In line with the new assumptions, territorial constraints will no longer be available, which is intended to increase the level of investment, especially the large ones. The elimination of territorial barriers is important, in particular, for entrepreneurs in the small and micro categories who will be able to develop their activities in places of their current functioning.
The criteria on which tax exemptions can be obtained have also changed. Apart from quantitative criteria, the Act also introduces qualitative criteria which will have to take account of the assumptions regarding regional development. The amount of investment depends on the unemployment rate in the district and the size of the company. Large companies therefore have to pay more to obtain state aid.
At present there is a possibility to suspend decisions on support for a given financial year, which means that in some years there will be no possibility of obtaining support for new investments.
The legislation plans to introduce a tax avoidance clause to eliminate situations where the main purpose of obtaining a decision or one of which there was an income tax exemption or where the investment activities were unrealistic.
Finally, it is worth noting that although investments within the Special Economic Zone are very attractive due to reliefs and benefits that investors can count on, their formula slowly becomes exhaustive, and will be replaced by the Polish Investment Zone, which will include 100% the territory of the country.
Author: Paweł Boś, Law student at Leon Kozminski Academy in Warsaw, employee Russell Bedford