A long-awaited bill on the rules of supporting new investments has already been published. According to this law, from 2018 the current system of Special Economic Zones is to be replaced by an option to obtain a decision granting support for a new investment located at any place in Poland, entitling its beneficiary to benefit from a tax exemption.
The basic rules of support indicated in the bill coincide, with some modifications, with the rules described in our earlier alert. However, the bill introduces a number of additional mechanisms and rules, which we wish to draw your attention to:
- most of the detailed conditions of support, including the system of awarding points as part of the qualitative criteria for the assessment of investment, is to be regulated under the secondary legislation to the law (the draft of which, however, is yet unknown),
- it will still be possible to receive a permit to operate in a special economic zone on the presently binding rules until the above secondary legislation (not the law) enters into force, which may mean (depending on the speed of work on the said regulation) that there will be more time for the investors to receive the permit on the currently binding rules, especially that in accordance with the law it seems to be sufficient to commence negotiations or tender procedures on the presently binding rules before the said secondary legislation enters into force,
- the investor may lose the received state aid with retroactive effect, if it is found that the investor circumvented the law (i.e. a special anti-abuse clause with respect to the state aid for a new investment),
- the Council of Ministers may suspend, at the request of the Minister of Development and Finance, the issuance – during a given year - of the support decision in view of a budgetary situation,
- the maximum validity period of a permit is to be 15 years (in some cases the said period was previously announced to be as long as 20 years),
- “an investment development plan” (IDP) is to be introduced for each zone, being an equivalent of the current SEZ development plan (all zones will be required to prepare the IDP within 2 months from the date of the law entering into force); an IDP will specify the detailed objectives which the zone managers intend to achieve as well as the rules of determining remuneration for the paid services which the zone manager provides to the investors,
- the support decision will specify in detail the identification data of a real property on which the investment is to be carried out (currently issued permits to operate in SEZs do not have to contain such restrictions – the only restriction was that the investment had to be located within the area of a particular zone),
- the bill does not provide for joint tenders to be organized by managers for the sale of real properties and issue decisions entitling would-be investors to state aid; the law provides the option for a relevant authority to instruct a zone manager, against payment, to prepare the real property for sale and organize and conduct a tender for the sale of the real property,
- the question of determining the amount of state aid, in case several support decisions are issued, is to be expressly regulated (in the aforementioned secondary legislation); it may be presumed that a solution which will be chosen will be disadvantageous to taxpayers not allowing the amounts resulting from different support decisions to be combined (currently this issue is not explicitly regulated by the law and there are ongoing disputes between tax authorities and investors whose position is often supported by the courts),
- the question of services provided by the zone manager to the investor will be standardized for the first time. The said services will be divided into paid and free of charge services, with only training and advisory services being allowed to be provided free of charge,
- an option will be provided to determine a one-off (rather than periodic) fee for the paid services rendered by a zone manager to a given investor (currently only periodic fees exist in practice),
- an amendment of the support decision could not include the extension of its validity period; it is important in the context of the ongoing disputes where public authorities refuse to extend the period of application of a SEZ permit deemed as a form of an unacceptable increase in state aid, contrary to the position of taxpayers and some courts,
- it is not currently indicated whether and to what extent the provisions of the Code of Administrative Procedure will apply (especially in terms of granting, revoking and amending the support decisions); this may mean that in the new legal situation it will only be possible to act on the basis of the law itself, which may significantly reduce the rights and procedural guarantees granted to the investors or give rise to disputes as to their scope,
- clear rules are to be introduced governing the allocation of common costs between the activities covered by the support decision and other activities of a given taxpayer, as well as between the activities covered by various support decisions and between support decisions and SEZ permits issued on the basis of the hitherto existing rules (these principles will be consistent with the current tax regulations concerning allocation of costs to the activities subject to the corporate income tax and activities exempted/free from the said tax),
- the participation of companies benefiting from the said aid, whether on the basis of the existing or new rules, as part of tax capital groups will be explicitly excluded (currently there are disputes as to whether such companies may be members of a tax capital group).
The bill mentioned above is currently at the stage of public consultations and subsequently, following adoption by the Council of Ministers, will be debated by the parliament. Consequently, the rules of support provided for in the bill may be subject to change, notwithstanding the expected detailed regulations to be found in the secondary legislation. We will obviously monitor closely that process and update you on any developments.