Each country is characterised by a different tax system. It comprises both corporate (CIT), personal (PIT) and value-added taxes (VAT). The differences between the various systems mainly concern the tax rate. How does Poland compare to the tax situation in other countries? 
There is no denying that the Polish tax system is far from perfect. Typically, Poles complain not only about high rates, but also about the complicated and non-transparent regulations that govern it. The current situation and how our country compares to other European countries can be constantly monitored, thanks to an annual overview prepared by international institutions.
Taxation in European countries according to Mazars
For the past eight years, an annual report on tax systems in the countries of Central and Eastern Europe has been published by the international audit and advisory firm Mazars. It takes into account the situation of 21 countries, summarising any changes taking place at the tax level and indicating the dominant trends. The study also includes information on: labour costs, indirect taxes, corporate income tax and transfer pricing in the markets covered by the analysis.
The latest report, published in 2020, shows that income taxation in Poland is higher than the EU average. The situation is similar for the VAT rate. The statement also informs that in the current year, the downward trend will continue in the value of taxes and contributions, related to income, as well as taxes on employment.
Another important finding of the Mazars report is that European countries still do not have a consistent approach to income taxation. Depending on the country, taxpayers are subject to either flat income tax or progressive rates.
Differences can also be seen in terms of average wages or labour costs incurred. The regional average of the latter is around 160 per cent of the net salary amount. In this aspect, the differences between the highest and lowest values exceed as much as 30 percentage points. A similar dissonance can also be seen in the case of the CIT rate, with a difference of more than 20 percentage points in the region (ranging from 9 to 33 per cent).
Tax regimes - Tax Company report
The Tax Company is an international foundation that compares the tax systems of the 36 countries that are members of the OECD, the Organisation for Economic Cooperation and Development. The relationship observed by the foundation makes it clear that the first place in the ranking of tax systems is not determined solely by the lowest tax rate.
In order to be on the podium, it is necessary to achieve tax competitiveness not only in the spheres of PIT, CIT or VAT, but also taking into account property tax, the amount of tax reliefs, the complexity of regulations or the amount of time it took the state to adapt to new regulations.
In terms of the overall ranking, the first place among OECD countries is held by Estonia, where both PIT and CIT taxes are 20 per cent, followed closely by New Zealand and Lithuania. In the overall ranking, the last three positions are occupied by: Italy, Poland and France.
This means that our tax system is one of the least favourable in the world.
Nevertheless, Poland's situation looks much better in individual cases: in terms of PIT, it ranks 9th, and in terms of CIT it is 13th, while France ranks last, with a CIT rate of 35 per cent. In addition, it is the country that closes the table of the Tax Company Foundation. This is influenced not only by CIT, but also by high PIT, property tax or financial transaction tax.
Diversity of tax systems
Without doubt, the main difference between the tax system in Poland and abroad is the applicable tax rates. However, the sheer volume of taxes imposed on taxpayers also plays a huge role in the whole procedure. When it comes to companies around the world, the complexity of the tax system is determined by the number of tax payments made by companies and the time it takes to adapt to new regulations.
The average number of tax obligations in all countries included in the OECD report is 8. Currently, the countries with the highest number of required taxes are Israel, Japan and Italy. In contrast, Mexico and Norway have the least. In Poland, we have more than a dozen types of taxes, which places us above the average.
In terms of time to adapt to new regulations, countries such as Estonia, Ireland and Sweden are the fastest. Israel, Mexico and the USA are the least able to adapt to current regulations. Looking only at PIT norms, it can be said that implementation is fastest in Luxembourg. Italy takes the longest. When it comes to adapting to VAT regulations, Poland is in last place, while the Swiss are the fastest.
Sources
https://pol.mazars.pl/Strona-glowna/Aktualnosci/Nasze-publikacje/Raport…
https://www.oecd.org/poland/publicationsdocuments/reports/
https://home.kpmg/pl/pl/home/insights/2020/11/tax-alert-raporty-oecd-do…
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