Poland raises corporate income tax on banks as president approves government bill

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Notes from Poland is run by a small editorial team and is published by an independent, non-profit foundation that is funded through donations from our readers. We cannot do what we do without your support.

President Karol Nawrocki has signed into law a government bill introducing a higher corporate income tax (CIT) rate for banks in Poland.

The measure marks a rare moment of agreement between the conservative, opposition-aligned president and Prime Minister Donald Tusk’s more liberal government. It will also provide billions in revenue at a time when Poland is seeking to tackle rapidly rising public debt.

On Thursday evening, Nawrocki’s office announced that he had signed 11 bills passed by parliament into law while vetoing a further two.

The most significant among those he signed was the hike on CIT for banks, which was approved by the Sejm, the lower house of parliament, last month before minor amendments were added by the upper-house Senate.

As a result, CIT for banks, which currently stands at 19%, will rise to 30% next year. It will then drop to 26% in 2027, then 23% in 2028, remaining at that level subsequently.

Meanwhile, the banking tax, which is levied on banks’ assets, rather than income, will be reduced from its current rate of 0.0366% to 0.0329% in 2027 and 2028 in 0.0293%.

During his campaign for the presidency, Nawrocki promised to oppose any tax increases proposed by the government. However, last month, his chief of staff, Zbigniew Bogucki, told news service Money.pl that the president’s pledge “applies to ordinary Poles”, not “large entities with enormous resources”.

Explaining his decision to sign the bill today, Nawrocki said that “it is unacceptable that the average citizen or small business bears the tax burden while foreign corporations and large financial institutions generate record profits”.

“Therefore, I decided it was justified to direct a larger portion of these profits to the state, especially in light of growing needs, including those related to financing Poland’s security and the expansion of our armed forces,” he added.

The government has offered a similar justification for the tax rise, saying that it is a form of “social justice” given banks’ “excessive profits” in recent times.

The Polish Bank Association (ZBP) has strongly opposed the CIT hike, calling it not only “unfair” but also “unconstitutional” as it “violates the principles of equality, of freedom of economic activity in a social market economy, of rationality, proportionality, and trust in the state and its laws”.

The finance ministry has previously estimated that the reform will bring in an additional 6.6 billion zloty (€472 million) in 2026, 4.7 billion in 2027, and up to 2 billion zloty in subsequent years.

Those funds are much needed as Poland recorded the EU’s second-fastest annual rise in public debt in the second quarter of this year. Last year, the country was also placed under the EU’s excessive deficit procedure, requiring it to take steps to bring public finances under control.

The country has over the last decade ramped up spending on social benefits, as the former and current governments introduced and expanded popular programmes to support families, pensioners and other groups.

Since Russia’s full-scale invasion of Ukraine in 2022, Poland has also dramatically increased its defence spending, which now stands at the highest relative level in NATO.

Notes from Poland is run by a small editorial team and published by an independent, non-profit foundation that is funded through donations from our readers. We cannot do what we do without your support.

Main image credit:  Oleg Zarevennyi/Unsplash

Daniel Tilles

Daniel Tilles is editor-in-chief of Notes from Poland. He has written on Polish affairs for a wide range of publications, including Foreign Policy, POLITICO Europe, EUobserver and Dziennik Gazeta Prawna.