Poland's government plans financial overhaul, aiming for lower taxes and capital market growth

Poland's government is initiating a significant financial overhaul, aiming to stimulate its capital market and potentially reduce the tax burden for millions. The proposed Citizen Investment Accounts (OKI) legislation, which received overwhelming support in the Sejm with 427 votes in favor, is now headed to the Senate.

The core of the reform involves tax exemptions on certain investment assets. Specifically, investments in Polish currency, such as stocks and investment fund units, would be exempt from the "Belka tax" up to a limit of 100,000 PLN. Similarly, savings assets like bonds and deposits would receive a similar exemption up to 25,000 PLN.

For assets exceeding these thresholds, a new tax will be applied. The government assures this tax will not exceed 1% of the asset's value and will be calculated using a detailed algorithm considering daily valuations, deposit balances, and account holding duration. The government anticipates this initiative could inject approximately 25 billion PLN into the Warsaw Stock Exchange by 2030 and 74 billion PLN by 2040.

The "Belka tax," a capital gains tax, was introduced in Poland in 2002. It currently applies to income from bonds, bank deposits, and profits from selling securities, with a standard rate of 19%. The implementation of OKI signals a strategic move to encourage domestic investment and potentially reduce reliance on foreign capital.