Business groups promised on July 7 to fight Poland's retail tax which was finally passed by parliament late the previous day. They hope the EU will block the move, as it did a similar levy in Hungary.

The tax has been in the works since Law and Justice (PiS) took office in November, having been a flagship proposal during the election campaign. Initially presented as a means of levelling the playing field for small, local retailers, Warsaw now admits the levy will help balance a budget strained by spending plans.

Retailers will be taxed progressively, depending on monthly turnover. Revenue ranging from PLN17mn-PLN170mn will be subject to a tax rate of 0.8%; that above PLN170mn will face a charge of 1.4%. Poland hopes to reap PLN1.53bn for the state budget per year, the finance ministry said in late May.

Commodities such as natural gas or coal, fuels used for heating, as well as water, and medicines will be exempt, the finance ministry said. Sales over the internet will not be taxed. Companies paying the tax will also be entitled to deduct payments from their corporate income tax base.

A similar tax was introduced in Hungary last year, only for the European Union to strike it down due to its progressive nature. Warsaw has been working carefully to avoid a similar fate for its new levy. 

That is obviously the first point of attack for opponents. Polish business lobby POHiD said on July 7 that it hopes Brussels will force Poland to scrap the tax with the help of Brussels-based umbrella group EuroCommerce, Puls Biznesu reports. EuroCommerce took part in preparing the legal case against the Hungarian levy.

“We have spoken to EuroCommerce ... it is an organisation that has cooperated with law firms specialising in similar cases,” POHiD Director General Maria Andrzej Falinski said. 

Analysts at Erste predict that the largest retailers will be able to pass much of the cost of the new tax onto suppliers. That will not go down well with Poland's farmers and food processors, who are already under pressure due to the Russian embargo on EU food imports.