PAIH | PAIiIZ's newsletter

The conference will be dedicated to the first Indonesian Fairs in Central and Eastern Europe, which is due to take place in Warsaw in May. The Fairs are intended to tighten the cooperation between Poland and Indonesia in the spheres of trade, bi-lateral investments and in tourism.

We warmly welcome you and would also ask you to confirm your attendance, at: biuro@abkgrupa.pl.

The top ten largest Polish universities, together with almost 100 businesses on Friday brought to life the PIGZT, at a Foundation Meeting. Among the higher education institutes there appeared: the Warsaw, Wrocław and Śląsk Universities of Technology, the Mining and Foundry Academy and the Warminsko-Mazurski University.

Among the Chamber’s tasks also lies the popularisation of business within the academies.
- The time for competing with cheap labour has ended - said the deputy premier and minister for the economy Mr Waldemar Pawlak. His opinion was that today competition should be by the application of knowledge.

Mr Pawlak believes that the more people participate in the exchange of information, the greater the results will be. - We’re bringing into being an institution that’ll link business to the universities - the former Prime Minister Mr Jerzy Buzek, who was also present, said at the conference.

The Chairman of the Conference of Rectors of Academic Schools in Poland, Mr Tadeusz Luty, said that the new Chamber would enable barriers dividing the worlds of science and education from that of business to be crossed. - I believe that the universities are a condition for economic competitiveness and the unification of each country - he added.

Prof. Jerzy Buzek, who was at the meeting, also stressed that the emerging Chamber would provide a link between the academic and business worlds.

Among the founders there were advanced technology companies, such as: Wasko SA (IT), Vigo System SA, Centre for Laser Technology, Adamed and Biocentrum, Celon Pharma, Biochefa (pharmaceutical technology), Echo-Son SA, the Centre for the Healing of Burns and the Institute for Medical Apparatus, ATM SA, DGT Sp. z o.o. (telecommunications technology) and the Dr. Irena Eris Cosmetics Laboratory SA.

- We’re proud that we are the only cosmetics firm in Poland to be invited to create the Polish Business Chamber for Advanced Technology - said Dr Irena Eris. - Participation in this project, together with recognised Polish research institutes is an honour for us. Scientific research is one of the most important spheres of operations at the Dr Irena Eris Cosmetics Laboratories. Our scientists present their research findings both at national and foreign congresses.

The PIGZT will be the first Chamber in Poland in which the members will be scientific institutions, banks and funds specialising in the finance of high risk enterprises. In accord with the statute, the founding group of Chamber members will be entrepreneurs linked by equity, organisationally, individually or under civil law in the fields of research and development work, with educational establishments, that are running manufacturing, or service businesses. The Chamber will operate on the basis of the regulations for business chambers.

The task will be to prepare a new communication strategy for Śląsk, which will embrace four types of tourism chosen by the agency - active, religious, industrial and cultural. The goal is that Silesia becomes associated with such aspects as: dynamism, the focus on development and human potential. The campaign slogan which is intended to attract people to visit the area is: “Join up”.

The firm that has taken up this challenge is the Agency is Bakalie Branding Studio. It’s also concerned with changing the logo “Śląsk-positive energy”. The Agency has designed a new logo and an image-information folder for the town of Pruszków. These activities are carried out by the Agency with the intention of creating a new image and breaking through the stereotyped thinking regarding the town.

Pruszków intends to present itself as a good place to settle, invest and study in. Due to Pruszków’s new visual identity and the town’s related message - its intention is to attract new investors and to distinguish itself among the other small towns in the Warsaw agglomeration.

- Though there is turbulence on the markets the growth in Poland won’t slow down and the MF will support the economic conditions e.g. by limiting the structural deficit to 1% of GDP in 2011 - the Minister said.

The Minister added that macro-economic policies directed towards stability and high growth is the best foundation for the development of the stock market. The government wants to ensure stability i.e. by maintaining a low deficit; it will proceed in this direction in the coming years in order to reduce the structural deficit to 1% of GDP by 2011.

- It’s probable that the economic growth in I Q will be 5.5%. We certainly don’t anticipate a rate lower than 5% - Ms Katarzyna Zajdel-Kurowska the Deputy Minister for Finances told journalists. The Centre for Social and Economic Research anticipates economic growth for the IV quarter of 2007b at a level of 5.9% and through 2008 at a rate of 5%.

Under the framework of the RPO there is a sum of 16.5 billion EUR for allocation. Preparation work for the texts of the contracts has been in progress since 2006. - These are billions of EUR. It’s unlikely that the EU will be as generous to Poland in the future, which is why you must demonstrate how you will carry out these important regional projects - said the Minister for Regional Development Ms Elzbieta Bienkowska at the contract signing ceremony.

Ms Bienkowska encouraged the Marshalls to quickly announce competitions for the projects under the RPO framework. Whereas work is in progress under which confirmation audits will verify the readiness of the regional institutions to smoothly control the EU funds.

The voivodship contracts are agreements for the provision of grants for operational programmes for capital from the national budget, national targeted funds, or from foreign sources. The contract is signed between the Minister for Regional Development with the voivodship’s authorities.

INVESTMENTS IN POLAND

- The firm intends to begin production in the spring and initially work at the plant will be found for 100 people. The sought after trades, are those that are connected to metal working. The plant will initially cooperate with other companies from Lubaczów, e.g. the Machine Factory - Mr Krzysztof Szpyt, deputy leader of the Lubaczów Powiat (local authority) said on Wednesday.

Dam-Rob is a manufacturer of various specialist containers and metal pallets for the transportation and storage of car parts, e.g. chassis parts, doors and lights.

- We’ve signed an agreement to lease the hall for 6 years, with an option to lengthen the contract for a further 10. At the moment the firm is trying gain permission for its modernisation. This should be achieved in a month’s time - Mr Szpyt added.

The new investor works in cooperation with the Conteyor company, which has been operating in Lubaczow since last year. The Lubaczow sub-zone belongs to the Euro-Park Mielec SEZ, which was the first SEZ to be established in Poland in 1995.

Poland will be another country following America and Singapore in which the company’s branches will be established. The Polish office will begin operations in mid February. It will be concerned with IT technology in the field of business management and also with the testing and programming of computers. As Mr Adam Szejnfeld, the Deputy Minister for the Economy stressed during his recent visit to India, Poland takes great interest in the inflow of Indian investments to the country.

On 31^st January 2008 the company signed an agreement with the Agricultural Academy in Lublin, due to which it will become the owner of 12.5 ha of land within the Lublin sub-zone of the SEZ. The Americans have already received permission for trading within the Zone. In two months at Felina construction work for two manufacturing halls will begin. The enterprise is to become operational in mid 2009. This will be the first investment in the Lublin sub-zone. Ball Packaging Europe is a producer of aluminium drinks cans; it currently employs 2,700 people and runs plants in Gt. Britain, Germany and Austria.

Inflation: The Ministry of Finance estimates that inflation for January in Poland was 4% on an annual scale and 0.4% on a monthly basis. Over the period inflation in the Euro Zone was 3.2%.

- Inflation is for us an unsettling factor, but this doesn’t mean that we’re going beyond the Maastricht criteria - Mr Jacek Rostowski the Minister of Finance said on Wednesday. - It’s not as if our inflation is dramatically different to that of the Euro Zone - he added.

According to the Maastricht criteria the rate of inflation cannot be more than 1.5% higher than the average rate of inflation of the three EU countries with the lowest inflation. The long term percentage rates cannot exceed by more than 2% the average rate of inflation of the three EU countries with the lowest inflation. Furthermore the national deficit cannot exceed 60% of GDP and the budgetary deficit - 3% of GDP.
Exchange rates (as of 07.02.2008):

	Buy	Sell
USD	2.4365	2.4857
EUR	3.5661	3.6381

Source: www.nbp.pl

THE LEGAL PERSPECTIVE

Taxing dividends

The freeing from taxation of dividends paid out by Polish companies, the abolition of tax credit, together with new regulations for the taxation of dividends paid out to Polish companies by dependant entities abroad are the main that were introduced last year.

Since 2007 tax exemptions were introduced on dividends paid by Polish companies on the condition that the incorporated company paying the dividends has its headquarters in Poland and that the recipient company is in Poland, another EU country or in the European Trading Area, subjecting its physical members to income tax.

Furthermore, the recipient company must have the necessary level of direct shares of equity in the paying company. From 1^st January 2007 to 31^st December 2008 the direct capital share of the company paying the dividends has been set at a level not lower than 15%. From 1^st January 2009 this will be 10%.

The possession by the recipient company of a specific equity share in the company paying the dividends must have been in force for an uninterrupted period of not less than 2 years. This condition is fulfilled even if the 2 year period expires after the date of receiving dividend payments. In a case where the condition of an uninterrupted period of share ownership is not fulfilled - and the exemption has been utilised - it must in a period up to the 20^th of the following month in which it lost its exemption right, pay a 19% compensation rate, together with interest payments paid from the day following the day on which the exemption was claimed for the first time.

Since 2007 dividends received by Polish companies from abroad can also be exempted from income tax in Poland if they fulfil the above conditions, relating to which the minimum equity in the foreign firm is 10%.

The modernisation of income tax for legal persons has provided firms whose tax year began before 1^st January 2007 and which finished after this date the possibility of receiving the exemptions which were in force until the end of 2006. A company which prior to 2007 received the right to tax credits on the basis of the binding law before 2007 may offset income tax paid from dividends paid out by a Polish company before 1^st January 2007, on the basis of the binding law in force to the end of 2006 for an unlimited period. On the same basis will be down payments for dividends.

The law relating to dividends is one of the basic rules relating to shareholders in terms of the equity owned by a person or shares in an incorporated company. It’s the right to a share in a company’s profits which can be received exclusively with the participation or share of a shareholder, the shareholder may not be prevented of his right to the dividend.

Payment of a dividend may however not occur, if a company doesn’t receive a profit or a shareholders meeting decides to allocate the profit - for example to increase the share capital.

All shareholders are not entitled to dividends, but only those whose shares entitled them to a dividend on the day the agreement was passed. A company’s contract may entitle the shareholder’s meeting to specify a day on which a list of shareholders entitled to dividends for a given business year is agreed. This day is specified as the dividends day and is specified within two months of the day on which the agreement to award dividends is passed.

The payment of dividends or the allocation of profits for an increase in the share capital is tied to the responsibility to pay income tax on the dividends awarded. The basic dividend issued by a Polish company is subject to 19% income tax payable by the firm making the payment. When taxing this type of income, the costs related to the receipt of income are not taken into account.

Renata Dłuska
Tax adviser and legal adviser at MDDP Michalik Dłuska Dziedzic and Partners

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