Poland’s Ministry of Development and Technology (MRiT) announced plans to reform the country’s incentives system by introducing cash grants linked to investment profitability.
The cash grant incentive regime aims to maintain Poland’s competitiveness and appeal to investors.
The scheme follows after speculations that the Pillar Two global minimum tax could weaken Poland’s tax-investment incentives such as the Polish Investment Zone and Special Economic Zone tax credits. The reason is the tax-credit incentives may lower the effective tax rate below 15%, resulting in a top-up tax under Pillar Two.
The cash grant support mechanism proposed by MRiT will adhere to the following key principles:
- Cash grants will be linked to the profitability of investments. If a company isn’t profitable in a given year, no grants will be awarded;
- Cash grants will become available after the investment is completed, with a 15-year timeframe to use the allocated funds;
- The support level will be based on a quality assessment, which is as follows:
- 8-12 points: 60% support
- 13-16 points: 80% support
- 17-20 points: 100% support
- Grants will be distributed on a pro-rata basis;
- Under Pillar Two, grants are expected to be seen as income increases, not as reductions in eligible taxes.
