The Chancellery of the President of Poland announced on Monday that President Andrzej Duda signed a law extending the Anti-Inflation Shield. The act means that lower VAT rates on food, fuel, as well as the exemption from excise duty on electricity will remain in force until 31 December this year.
Thus, the 0% VAT rate provided for in the shield will continue to cover basic food products previously taxed at 5 %. The zero VAT rate will also apply to fertilisers, plant protection products and other agricultural inputs (instead of 8%), as well as natural gas (instead of 23 % and 8% from 1 February 2022).
A 5 % VAT rate will apply to electricity and heat (instead of 23 % and from 1 February 2022 8 %) and 8 % VAT to motor fuels (instead of 23 %).
The Anti-inflation Shield reduces excise duty rates to the EU minimum for electricity and diesel, biocomponents that are self-contained fuels, motor petrol, LPG; exempts electricity used by households; and reduces excise duty to the EU minimum for light fuel oil. In addition, the shield exempts the sale of motor fuels from retail sales tax.
The amendment, signed by the President, provides for VAT rates to remain at their current increased levels of 8% and 23% next year, which is related to the planned surge in defence spending. From 2024, the increased 1% VAT rate will be applied based on a new mechanism linked to the level of defence spending. The rates will be maintained as long as total defence spending remains above 3% of GDP.
The amendment also modifies the provisions on the minimum income tax – increasing the viability rate at which the minimum tax is applied from 1 to 2% and exempting the payment of this tax between 2022 and 2023.
Arkadiusz Słomczyński