Poland May Regulate Fuel Prices, Considers VAT Cut and Windfall Tax

Poland's government has not ruled out reintroducing regulated fuel prices, with Finance Minister Andrzej Domański stating that a temporary VAT reduction is possible if the oil market situation deteriorates. He indicated that such a measure might be implemented for the final weeks of the summer holidays.

Domański explained that there is no single specific market threshold that would automatically trigger protective measures. However, Prime Minister Donald Tusk had previously discussed with Domański the potential for partially restoring measures from the "Lower Fuel Prices" package, which ended on June 30. These measures included a reduced VAT rate on certain fuels and maximum price caps at gas stations. Excise duty reductions had already expired mid-June.

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If the situation on the oil market were to worsen again, then of course, it is still possible to partially lower the VAT for a certain period, even for the last weeks of the holidays.

The Ministry of Finance reported that the "Lower Fuel Prices" program cost approximately 4.7 billion Polish zloty. Prime Minister Tusk had earlier announced that the government would propose regulated fuel prices for at least the last two weeks of August if global oil prices rose again due to instability in the Middle East.

Separately, the government is considering reintroducing a tax on the extraordinary profits of fuel companies. Domański confirmed that another attempt to tax these companies is likely but stated that a decision depends on ongoing analysis. This potential tax, known as a windfall tax, was intended to cover producers and importers who profited from destabilized energy markets. The revenue was meant to offset budget shortfalls caused by the VAT reduction and excise duty cuts implemented under the previous relief package. A law introducing this tax was sent to the Constitutional Tribunal by President Karol Nawrocki.

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I think we will make another attempt to tax the fuel concerns.