Evolution and Fiscal Consequences of the Taxation of Corporate Groups in Poland

Abstract

This paper discusses the issue of the taxation of corporate groups on the basis of an economic unit. In Poland this type of taxation was introduced into Corporate Income Tax law in 1996. Since that time, the related regulations have changed significantly. The main aim of this paper is to present the evolution in these regulations and to examine the fiscal impact of the introduced changes. The study begins with an introduction to the theory of corporate group taxation. This is followed by a description of the current regulations in Poland. Next, the conditions under which corporate groups can be established and operate are presented, along with an extended analysis of the advantages and disadvantages related to the application of corporate income tax to such groups of companies. The second part of the paper contains a list and a quantitative analysis of corporate groups in Poland, including such factors as their income, tax paid, effective tax rate and balance related to corporate tax. The paper ends with some recommendations relating to regulations concerning the taxation of corporate groups in Poland and conclusions about the fiscal impact of the income tax applied to them.