This article is a part of Poland Unpacked. Weekly intelligence for decision-makers
The government announced tax changes last week. As part of the package, personal income tax (PIT) would be cut for some taxpayers, with the resulting revenue shortfall offset by an increase in the solidarity levy, a lower revenue threshold for the flat-rate tax regime, and a higher corporate income tax (CIT) rate for companies with annual revenue above EUR 50 million (about PLN 217 million). Such companies would pay 22% tax, up from the current 19%.
Interactive chart Three problems
This is the proposal that has raised the most questions among economists. There are three main reasons.
First, the criterion for the higher CIT rate would be revenue, rather than income. This means that, for example, a food-processing company operating on a net margin of just a few percent would pay the same rate as an IT company with margins in the tens of percent.
The second issue is that large companies would be “punished” with a higher tax. This can be seen as a penalty for success. Once a company reaches a certain scale, it would pay more. This is particularly relevant for Polish-owned businesses that pay their taxes in Poland.
The third problem with the proposal is that the 22% rate would apply to the entire taxable income. If a taxpayer exceeded EUR 50 million (about PLN 217 million) in revenue in the previous year, the higher rate would apply. Unlike, for example, the PIT system, the higher rate would not apply only to the excess over the threshold.
CIT in Europe
Poland currently ranks among the EU countries with lower CIT rates. Its standard rate of 19% puts it eighth from the bottom in the EU. It is also below the EU median of 22%.
In Central and Eastern Europe, however, corporate tax rates are clearly lower than in Western Europe. The median rate across 11 economies in the region is 19%, putting Poland roughly in the middle of the pack. The lowest rates are in Hungary (9%) and Bulgaria (10%), while the highest are in Slovakia (24%, following a recent increase from 21%) and Estonia (22%).
Some countries have lower tax rates for smaller companies. Poland has a similar system: companies with revenue below EUR 2 million (about PLN 8.7 million) pay a 9% CIT rate.
It is much less common, however, to impose higher rates on larger companies. France has such a mechanism, with companies generating EUR 1.5 billion (about PLN 6.5 billion) in revenue subject to an additional tax. Romania has a somewhat different arrangement: large companies are subject to a minimum turnover tax, which they pay if it exceeds their CIT liability.
CIT and economic growth
From the perspective of economic growth, two questions matter most: how changes to CIT will affect Polish companies’ ability to accumulate capital and the country’s ability to attract foreign investment.
In recent years, much of the economic debate has focused on the fact that Poland still has very few large companies with private Polish capital. Yet in developed economies, it is precisely large privately owned companies that invest the most in research and development and innovation more broadly. Raising the CIT rate for companies with revenue above EUR 50 million (about PLN 217 million) – which are still small by global standards – could make it harder for them to grow.
At the same time, attracting foreign capital remains important for economic development. Research shows that the effective CIT rate does have some bearing on decisions about where to locate foreign investment, although it is not a decisive factor. Studies by R. B. Davies, for example, show that this is particularly true for investment in the services sector and for investors from outside the EU. For manufacturing investment, the CIT rate is not significant. It is also worth noting that these studies looked at the effective tax rate – that is, the rate companies actually pay. According to OECD data, this stood at around 15% in Poland in 2025.
Thus, raising the CIT rate could make Poland slightly less attractive as an investment destination, but probably only to a limited extent.
What should be changed?
So what should the government do? A better approach would be a progressive tax on income, operating on the same principle as progressive PIT. This would avoid penalizing low-margin businesses with high revenues.
Introducing a digital tax would also make sense, since technology giants are precisely the companies that pay very little tax in Poland.