Poland - Hydrocarbon tax from 2020

Poland

Hydrocarbon tax from 2020

25 June 2013

Report from Magdalena van Doorn-Olejnicka, IBFD Senior Research Associate

After the completion of the public consultation procedure, in June 2013, the Council of Ministers adopted the final version of the draft Law on Hydrocarbon Tax (Ustawa o podatku węglowodorowym), and the amendments to the Law on Mineral Extraction Tax (Ustawa o podatku od wydobycia niektórych kopalin) and some other laws.

The main features of the hydrocarbon tax are as follows:

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the taxpayers will be companies incorporated as a limited liability company (spółka z ograniczoną odpowiedzialnoscią) or a joint-stock company (spółka akcyjna) since only those companies will be eligible to get the concession for the extraction of oil and gas;

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the tax will be levied on the profits derived by a taxpayer from the exploration of shale gas and oil; and

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the tax rates will vary from 0% to 25% (in the initial proposal from 12.5% to 25%), depending on the ratio ("R") of income to qualified expenses, as follows:

–	if the ratio is lower than 1.5, the rate of 0% will apply;
–	if the ratio is between 1.5 and 2.0, the rate will be computed based on the formula (25 x R – 25)/100; and
–	if the ratio is 2 and higher, the rate of 25% will apply.

The Law on Mineral Extraction Tax imposes a mineral tax, in addition to silver and copper, the extraction of shale gas and crude oil. The tax is computed by reference to the value of the extracted gas or oil. The tax rates depend on the type of the deposit and are:

–	for conventional deposits, i.e. easily accessible: 3% for gas and 6% for oil; and
–	for other deposits (sea deposits): 1.5% for gas and 3% for oil.

It is envisaged that the Law on Hydrocarbon Tax will come into force in 2015 and will apply to profits derived as from the year 2020. Similarly, the mineral tax on the extraction of natural gas and crude oil will apply from 2020.

Note. Besides hydrocarbon tax and mineral tax, entrepreneurs engaged in the extraction of oil or gas will be subject to corporate income tax, certain exploitation fees and real estate tax. For the purpose of computation of hydrocarbon tax, corporate income tax, mineral tax, exploitation fees and real estate tax will qualify as deductible expenses. It is expected that on average the total mineral charge on the extraction of gas and oil will be approximately 40%.