The European Commission today announced the opening of an investigation into a Polish tax incentive for shipyards. The incentive allows shipyards operating in Poland an option to pay a 1% flat-rate tax on sales from the building and conversion of ships, instead of paying the generally applicable corporate income tax rate of 19% or the applicable individual (personal) income tax rate of 18%, 19% or 32%.
According to an EC release, there are concerns that the flat-rate sales tax constitutes “operating aid” and uses public funds to relieve shipyards from costs they would otherwise incur in their day-to-day activities. Operating aid generally is not allowed under EU state aid rules. The EC has concerns that the aid would harm shipyards in the EU that would not be eligible under the Polish tax incentive. Thus, the EC will investigate to determine whether its initial concerns are confirmed.
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