Polish businesses and individuals employed by the US military presence in the country are to be exempted from income tax under a proposal by the finance ministry.
The measure is intended to give Polish firms serving the US armed forces the same benefits as foreign ones, which are exempted from paying income tax in Poland under the defence cooperation agreement signed by the two countries in August.
Under the new bill submitted by the ministry, individuals and businesses in Poland would be exempt from tax on income earned from the US military, reports Polsat News.
The government says that the proposed exemption – which would last initially until 31 December 2021 – will help boost infrastructural and logistical support for American troops, but also level the playing field for Polish entities hoping to compete for contracts.
The defence cooperation agreement that prompted the proposed legislation was signed by US Secretary of State Mike Pompeo and Poland’s defence ministry, Mariusz Błaszczak, on 15 August. It was then ratified by Poland’s president, Andrzej Duda, on 15 October, following authorisation by both houses of parliament.
The agreement pertains to logistical support for and the use of facilities by US forces deployed in Poland. It follows President Donald Trump’s decision to send an additional 1,000 American troops to the country, adding to the 4,500 deployed there on a rotational basis under Barack Obama.
The agreement also states that Poland will host the forward elements of the US Army’s V Corps Headquarters.
The US Army has formally activated a forward headquarters in Poznań, Poland, to command its missions in the region https://t.co/EvYTIEFi8V
— Notes from Poland 🇵🇱 (@notesfrompoland) November 21, 2020
Under the terms of the agreement, income earned by people or entities employed by a US contractor to provide goods or services to the US forces is exempted from taxation by the Polish authorities. That applies only, however, to those who are neither citizens solely of, nor ordinarily resident in, Poland.
The new legislation would extend that benefit to Polish firms and individuals. As it can only be ratified after the Polish-US military agreement comes into force – as it is expected to around the start of 2021 – the ministry recommends the omission of tax collection from Polish entities until that time, reports Polsat.
US troops and military personnel were also granted a number of other privileges under the agreement, including exemption from paying income tax, Value Added Tax (VAT), excise tax, and successor tax.
Poland also pledged to provide military infrastructure to host the new soldiers, including food and laundry services, support in storing arms and equipment, and servicing of the infrastructure. It will shoulder 75% of the costs of aviation and ground transport fuel.
This brings the expected cost to Poland of hosting US troops to roughly 500 million zloty (€111 million) a year, reports the Defence24 website. The agreement did not, however, extend to granting US troops legal immunity, as had previously been rumoured in the media.
Main image credit: US Army Europe/Capt. Spencer Garrison (under public domain)
Maria Wilczek is deputy editor of Notes from Poland. She is a regular writer for The Times, The Economist and Al Jazeera English, and has also featured in Foreign Policy, Politico Europe, The Spectator and Gazeta Wyborcza.
