LOCAL TAXES

The Investment offers of The Town Ostrów Wielkopolski :

The real estate tax value is established by the council of the town Ostrów Wielkopolski - resolution NRXV/208/2003. The real estate tax value in the town Ostrów Wielkopolski is as follow :

1. The tax ground rate connected with business activities , regardless of classify in the Land and Buildings Register : 0,52 PLN per 1 square meter of floor space
2. Buildings and a part thereof for building or a part thereof, connected with business activities and for part of residential buildings occupied for business purposes - 15.70 PLN per square meter of floor space thereof.
3. Land underneath lakes and land occupied by retention reservoirs and water power plant - 3.35 PLN per 1 hectare

The Investment offers of The Commune and Town Raszków :

Taxes established by the council of the commune and town Raszków :

• the current tax ground rate : -----
• the current buildings rate : 0.11PLN per square meter
• other taxes : agriculture tax : 86,42 PLN / ha ( conversion hectare ).

The tax exemption will be given to an investment for a following period of time :

• 100% of the tax value for 1 year in case of creating 3 or 6 new work places
• 100% of the tax value for 2 years in case of creating 7 or 12 new work places
• 100 % of the tax value for 3 years in case of creating 13 or 20 new work places, however in the third year the tax exemption will reach only 75% of the tax value.
• 4 years in case of creating 21-26 new work places , however in the first two years the tax exemption will reach 100%, in the third 75% and in the fourth 50% of the tax value
• 5 years in case of creating more than 26 workplaces, however in the first two years the tax exemption will reach 100%, in the third 75%, in the fourth 50% and in the fifth 25% of the tax value.

The Investment offers of The Commune and Town Odolanów :

The real estate tax value is established by the municipality and town Odolanów council - resolution NRXV/64/2003. The real estate tax value in the municipality and town Odolanów is as follow :

1. The tax ground rate connected with business activities , regardless of classify in the Land and Buildings Register : 0,52 PLN per 1 square meter of floor space
2. Buildings and a part thereof for building or a part thereof, connected with business activities and for part of residential buildings occupied for business purposes - 16.2 PLN per square meter of floor space thereof.
3. Constructions / buildings : for constructions / buildings - 2 % of the value thereof
4. The ground tax regarding to 1 conversion hectare : 86.42 PLN / 1 Conversion Hectare.

The Investment offers of The Commune Przygodzice :

The real estate tax value is established by the municipality and town Przygodzice council - resolution from 5th December 2003. The real estate tax value in the municipality and town Odolanów is as follow :

1. The ground rate tax:
   
   • for land connected with carrying out business activities : 0.62 PLN per square meter
   • land underneath lakes and land occupied by retention reservoirs - 3.38 PLN per hectare
2. Buildings or a part thereof :
   
   • for building or a part thereof, connected with business activities - 14.50 PLN per square meter of floor space thereof
   • for part of residential buildings occupied for business purposes - 0.49 PLN per square meter of floor space thereof.

The Investment offers of The Commune Sieroszewice :

• the ground rate tax : 80.00 PLN per one conversion hectare
• for building or a part thereof, connected with business activities and for part of residential buildings occupied for business purposes - 0.51 PLN per square meter of floor space thereof.
• another taxes : another grounds : 0.06 PLN - 0.56 PLN

The Investment offers of The Commune SoPnie :

• the ground rate tax : 0.50 PLN
• - for building or a part thereof, connected with business activities - 0.14 PLN per square meter of floor space thereof.

The Investment offers of The Commune Ostrów Wielkopolski :
The ground and buildings rate tax:

• for land connected with carrying out business activities : 0.60 PLN / m2 per square meter
• for building or a part thereof, connected with business activities - 16.76 PLN per m2 of floor space.
• another taxes : another grounds : 0.10 PLN per square meter

The exchange rate : 1 EURO - 4.68 PLN ( 1 / 02 / 2004 )

CENTRAL TAXES

Personal Income Tax (PIT Declaration)

Tax payable by: natural persons who have permanent residency in the territory of Poland or whose temporary residency therein has exceeded 183 days in a given tax year. Such persons are liable to income tax on their total revenue, regardless of their origin (unlimited tax liability).
Foreigners who are temporarily residing in Poland as the employees of:

• foreign small manufacturing enterprises,
• companies with the participation of foreign capital,
• representation and branch offices of foreign enterprises and banks,

are liable to tax only on revenue gained from work performed in Poland under a contract of employment or service relationship, regardless of where their salary is paid, and on other revenue obtained in Poland (limited tax liability).

Tax rate
Tax-free allowance - 530.08 PLN
Progressive scale - 19% 30% 40%

Assessment:

TAXABLE BASE
OVER	UP TO
	37,024 zlotys	19% of taxable base less 530.08 zlotys
37,024 zlotys	74,048 zlotys	6,504.48 zlotys plus 30% of surplus over 37,024 zlotys
74,048 zlotys		17,611.68 zlotys plus 40% of surplus over 74,048 zlotys

Flat-rate tax: profits (revenue) obtained from certain sources in Poland do not amount to other profits (revenue) and are subject to a flat-rate tax. Such sources include:

• interest on loans, except where loans are granted for business purposes , as well as interest and discount on securities - in which case a tax rate of 20 percent applies,
• dividends and other revenue from participation in the gains of legal entities - in which case a tax rate of 15 percent applies,
• winnings in the competitions, games and mutual bets, or prizes related to bonus sales - in which case a tax rate of 10 percent applies,
• artistic, literary, scientific or journalistic activities performed in person - in which case a tax rate of 20 percent applies,
• service contracts (umowa zlecenia) or contracts for performance of specific work (umowa o dzieło) concluded with and performed exclusively for the benefit of a legal entity, an organisational entity without legal personality or an entrepreneur , on the condition that the like services are not provided to the general public - in which case a tax rate of 20 percent applies,
• the revenue from undisclosed sources or not matching up with disclosed sources are liable to a tax rate of 75 percent.

The double taxation treaties to which the Republic of Poland (for example a treaty between the Republic of Poland and the German Federal Republic dated December 18, 1972) is a party provide for the reduction of rates of tax on income (revenue) provided, however, that a taxpayer submits a certificate of residency, issued by the appropriate tax authorities, confirming that he or she has a tax residence abroad.

Corporate Income Tax (CIT Declaration)

Tax payable by: legal entities, including limited liability companies and joint stock companies, and tax capital groups. Taxpayers with their registered office or management board located in the territory of Poland will be subject to the taxation of all revenue, regardless of their origin. Taxpayers who do not have a registered office or the management board located in the territory of Poland are liable for payment of taxes only on the revenue obtained in Poland. Income is a revenue after a deduction of allowable expenses. Presently over 60 different categories of expenses may be treated as allowable (Art. 15 of the Law on Corporate Income Tax). Taxable base is income less donations or other costs, or revenue (e.g. tax on interest, royalties, dividends). Tax year corresponds to a calendar year, unless otherwise established in the statute or a deed of partnership of the taxpayer, or in any other instrument of constitution, and notifies the Revenue Office thereof. In such case, a tax year is a period of twelve consecutive months. Tax rates:

• from 1 January till 31 December 2002 - 28 percent of taxable base,
• from 1 January till 31 December 2003 - 27 percent of taxable base,

A tax capital group (podatkowa grupa kapitałowa) consists of at least two commercial companies with legal personality, linked by equity. A tax capital group is a taxpayer if all of the following conditions are met: A tax capital group may consists only of limited liability companies or joint stock companies having their registered office in Poland, which:

• Comply with the requirements concerning equity and the holding of a dominant position by one of the companies,
• are not in arrears with taxes which constitute the revenue of the State ,
• are a holding company or subsidiary companies that have entered into a notarised agreement establishing a tax capital group, which is valid for at least three tax years and has been registered with the Revenue Office.

Withholding tax (dividends, interest, royalties): a tax levied on the revenue of taxpayers who do not have a registered office or the management board located in the territory of Poland. Only the revenue obtained in the territory of Poland is subject the withholding tax. Interest, royalties: a tax rate of 20 percent applies to the revenue earned from interest, royalties, titles to inventions, trademarks and decorative patterns, including from the sale thereof, the disclosure of a secret or a formula or a production process, permitting the use or granting the right to use industrial equipment, including means of transport and commercial or scientific equipment, as well as the transfer of industrial, commercial or scientific know-how.

A tax rate of 20 percent applies to revenue from remuneration for services related to entertainment or sports, provided by natural persons or legal entities having residency or a registered office abroad and organised by natural persons or legal entities conducting the business of organising artistic, entertainment or sports events in Poland. Dividends: a tax rate of 15 percent applies to the revenue from dividends and other forms of participation in the profits of legal entities having their registered office in the territory of Poland. Exemptions: the companies belonging to a tax capital group are exempted from the tax on dividends insofar as the revenue gained from dividends of other companies of that group are concerned.

The Tax on Goods and Services (VAT)

1. Tax construction

To explain the concept underlying the tax on goods and services (VAT), a description of the input tax and the output tax is provided. The input tax is a tax included in the price of the purchased goods and services, while the output tax is computed as a value of a total turnover multiplied by the appropriate tax rate. Article 19 para. 2 of the VAT law provides that the input tax is the sum of all taxes specified in the invoices issued in acknowledgement of the purchase of goods and services, less rebates specified in Article 15 para. 2 of the VAT law, while in the case of imports - the sum of all taxes specified in a customs document, subject to the amounts resulting from decisions referred to in Article 11b of the VAT law (decisions concerning tax re-assessment or recognition of non-existence of a tax liability or the refund of unjustly collected amounts). The output tax is included in the value of goods and services supplied directly by the taxpayer and is the product of a tax rate and the value of a specific product or service. The burden of this tax falls upon the consumer purchasing goods or services from the taxpayer. In accordance with Article 19 of the VAT law, the taxpayer is entitled to deduct the input tax, charged on the purchase of goods or services, from the output tax. Article 21 of the VAT law provides that if the input tax is higher than the output tax in a given accounting period, the taxpayer may, without prejudice to paragraphs 2 to 9, set that difference against the output tax in the future periods. In accordance with para. 2 of the provision referred to above, the taxpayers who sell goods liable, in whole or in part, to a tax rate lower than the one specified in Article 18 para. 1, i.e. 22 percent, are entitled to the refund of the tax difference, referred to in para. 1, from the Revenue Office, except that if the input tax surplus incurred by the taxpayer selling goods which are liable to a tax rate lower than the one specified in Article 18 para. 1 exceeds the equivalent of 22 percent of the whole turnover liable to the lower rates, only the surplus up to that amount will be refunded into the bank account. The remaining surplus will be settled in the manner prescribed in para. 1 (Article 21 para. 4 of the VAT law). The taxpayers who sell exclusively the goods liable to the tax rate referred to in Article 18 para. 1, i.e. 22 percent and have a surplus of the input tax over the output tax are entitled to the refund in the amount not higher than the input tax charged on the purchase of goods and services which are classified by the taxpayer, under the separate provisions, as the fixed and intangible assets subject to depreciation (Article 21 para. 3 of the VAT law). The tax may be refunded directly, i.e. by the Revenue Office into the taxpayer's bank account, or indirectly, in which case the taxpayer deducts the input tax surplus in the future accounting periods. It should be noted that the above-mentioned provisions of the VAT law strictly define the circumstances in which the surplus of input tax over output tax may be refunded directly and in which indirectly. Furthermore, in accordance with the adopted judicial interpretation, Article 21 of the VAT law gives neither the taxpayer nor the Revenue Office a choice of the form in which the tax will be refunded (vide the verdict of the Supreme Administrative Court (SAC) of 5 May 2000, I S.A./Ka 1719/98, unpublished, the SAC verdict of 17 November 1997, I S.A./Wr 225/96, unpublished, the SAC verdict of 21 May 1998, I SA./Gd 1250/96, unpublished). Therefore, depending on whether the goods sold by the taxpayer are liable to a tax rate of 22 percent or lower, he is entitled, on the conditions described above, either to deduct the tax difference from the output tax in the future periods or to claim its refund from the Revenue Office. The taxpayer entitled to the direct tax refund will have the tax refunded into his bank account within 25 days of filing a tax return. The Revenue Office may extend that time limit if it needs to conduct additional checks in order to verify whether the refund is justified. If it is determined that the refund is justified, the taxpayer will receive the amount due plus interest calculated at a rate applicable to the deferment of tax or payment of tax by instalments. In the case of a taxpayer who for 12 months before filing a tax return had been paying on time the goods and services tax, the excise duty and other tax liabilities constituting the receipts of the state budget, the Revenue Office is required to refund the tax difference, on the taxpayer's application, no later than 15 days after a tax return has been filed. The tax difference which has not been refunded by the Revenue Office within the above-mentioned time limit of 25 days is treated as a tax surplus subject to interest specified in the provisions on the tax liabilities (Article 21 para. 6 of the VAT law). The travellers, i.e. natural persons without a permanent residence in Poland, are also entitled to claim the refund of the tax paid on the purchase of goods which were subsequently exported out of the Polish territory in an intact state, subject to the conditions laid down in the law. VAT on engine fuels is not refunded. The law specifies the circumstances in which the tax abatement or refund does not apply. This, for instance, happens when the taxpayer has purchased goods or services in order to produce or re-sell goods or supply services which are exempted from the tax. Pursuant to the Art. 2 of the Law on tax on goods and services and excise duty, the tax is payable on the sale of goods and the supply of services against payment in the territory of the Republic of Poland. Tax is also payable on export and import of goods and services.

2. Taxable base.

Turnover is the basis for taxation. Turnover is the sum total of payments for the supply of goods, less tax. Turnover is diminished by a sum of documented, legally allowable and compulsory rebates (discounts, bonuses etc.), the value of returned goods and reimbursed undue payments within the meaning of the provisions on prices, as well as the amounts arising from corrected invoices. The basis for taxation of the activities specified above is basically the value of goods or services calculated according to the purchase price used in trade with the major recipient and if there is no major recipient - according to standard prices used in a given place or on a given marked as of the day of transfer, exchange or donation, decreased by the amount of tax due. In the case of imports, the basis for taxation is the customs value of goods plus customs duties. In the case of imports of goods subject to excise duty, the basis of taxation is the customs value of goods plus customs and excise duties. In the case of the import of services, the basis for taxation is the payment made by the recipient of a service.

3. Tax rates

The basic tax rate is 22 percent. A tax rate of 3 percent is levied on goods enumerated in Annexe 1 to the VAT law (e.g. dairy products, stock-raising products, horticulture products), whereas goods and services enumerated in Annexe 3 (e.g. agricultural equipment and tools, mountain rescue services) are subject to a tax rate of 7 percent. Exports of goods and services, including exports of services exempted from VAT and excise duty, enumerated in Annexe 2 to the Law, as well as exports of goods and services by farmers paying a flat-rate income tax or by persons paying income tax on the basis of a flat-rate scheme called a "tax card" (karta podatkowa), insofar as activities covered by such scheme are concerned, are liable to zero-rated VAT on the condition that the taxpayer keeps appropriate records. Exported goods qualify for zero-rated VAT if a taxpayer has obtained, prior to submitting a tax return for a given month, a document confirming the export of goods outside the State borders of Poland . If this condition is not met, the sale of goods is not entered into records for a given month, instead carried forward to the next month (subject to zero-rated tax), again provided that a document confirming the exportation of goods is obtained prior to filing a tax return for such month. If the document referred to above has not been obtained by such time, tax rates appropriate for the sale of like goods will apply. A taxpayer who has obtained the document of export at a later date may adjust output tax in the month in which such document has been obtained. (Zero-rate tax apples also to the sale of specialised magazines)

4. Exemptions for taxable persons.

VAT is not collected from taxpayers: whose total sales of goods as well as export of goods or services did not exceed the equivalent in PLN of EUR 10,000 in the preceding tax year, who pay flat-rate income tax in the form of a tax card, insofar as activities covered by such card are concerned. From 1 January 2001, the exemptions referred to in point 2 do not apply to the taxpayers specifically mentioned in the Law, namely those who:

• onduct trading business, including door to door sales and peddling, and provide other services specified in the Law, and took up taxable activities before 2 March 2000 and on 1 March 2000 employed at least two workers within the meaning of the tax card provisions,
• who took up taxable activities between 2 March to 31 December 2000 and at any time in that period employed at least two workers, and carry out activities referred to in point 1,
• who took up taxable activities after 31 December 2000 and carry out the activities referred to in point 1.

The exemptions referred to above will cease to apply to other taxpayers from 1 January 2002. The VAT exemption does not apply in the case where the value of goods sold exceeds the amount of EUR 10,000. In this case , a tax liability arises and VAT has to be paid on the surplus amount exceeding EUR 10,000. The taxpayers exempted from VAT are required to keep records of sales on a daily basis. Sales must be recorded before the first sales transaction is made on the following day. If a taxpayer is not diligent in maintaining records, or does not, maintain them at all, tax authorities will estimate the unrecorded amount of sales and levy tax at a rate of 22 percent, without the possibility of setting off input tax against output tax.

Cash register

When cash registers are used , the taxpayers selling goods or providing services, also in case of trade and catering, for the benefit of natural persons not carrying out a business activity or natural persons carrying out a business activity in the form of individual agricultural farms, are obliged to maintain a turnover register and to register the amounts of tax due.