Comparison of personal (PIT) and corporate income (CIT) and value added tax (VAT) rates in different countries
Table compares rates of personal (PIT) and corporate (CIT) income and value added (VAT) tax rates in different countries.

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Taxes over the world: PIT, CIT, VAT

CountryPersonal Income Tax rate (PIT)Corporate Income Tax rate (CIT)Basic Value Added Tax rate (VAT)Review date
Belarus20%, 35%25%17.5%2018
Montenegro9%, 15%9%19%2018
Czech Republic22%19%21%2018
Hong Kong2-17%16.5%0%2018
Lithuania15%, 20%15%21%2018
Moldova7%, 18%12%20%2018
New Zealand0-39%28%15%2018
Poland17%, 32%9%, 19%23%2020
South Africa0-40%28%14%2018
Saudi Arabia20%20%0%2018
Singapour3.5%, 20%17%7%2018
Slovakia19%, 25%21%20%2018
Ukraine15%, 17%18%17%2018
United Kingdom0-45%19%20%2018

Facts about VAT

  • Name VAT stands for "Value Added Tax". It's a kind of tax, which is added at all production stages.
  • VAT is intended to apply to consumption. The more goods you buy, the more VAT you pay.
  • VAT is payed by a person who is at the end of the consumption chain, buying the product for consumption. For example, a customer buying crisps in the supermarket or the driver using the car wash.
  • Formally, the same amount of VAT is also added at the each stage of the chain (supermarket, car wash, a manufacturer of chips, etc.), but in fact they only pay back tax received from the previous stage. Finally, the VAT paid by the consumer goes "from hands to hands" - through supermarket, the manufacturer of chips, potato farmer etc. - until it goes to the tax office.
  • Trader, who simultaneously buys (pays VAT) and sells goods (receives VAT), doesn't really pay VAT. The amount of tax charged while buying is canceled by tax charged while selling.
  • The disadvantage of VAT is that it increases social stratification - it's applied to the final consumer, so it is most noticeable to the least wealthy people. This issue is partially solved by varying tax rates for example by setting lower VAT levels to the most basic goods like bread. It's also considered that procedures for charging and collecting VAT are too complex and they allow for many forms of abuse, for example fake invoices fraud to claim back VAT which was never really paid.

CIT in Poland

  • Corporate Income Tax (CIT) is a income tax paid by legal persons.
  • CIT in Poland is paid by joint-stock companies (polish: S.A.) or limited liability companies (polish: sp. z o.o.).
  • The legal basis regulating the CIT in Poland is the Act of February 5, 1992 (Journal of Laws of 2019, item 865) with later changes.
  • The basic CIT rate in Poland is currently 19% (as of 2019).
  • In addition, from January 1, 2019, companies whose gross turnover did not exceed the equivalent of 1,2 million EUR (the so-called small taxpayers) can switch to preferential CIT rate in the amount of 9%.
  • If you're looking for Polish PIT rates (personal income tax) you can check out our other calculator: PIT rates in Poland (archive).
  • If you're interested in comparison of tax rates (PIT and CIT) in different countries check out our other calculator: Taxes over the world: PIT, CIT, VAT.

PIT in Poland

  • Currently (as of 2020), taxpayers who settle on general rules are subject to the so-called tax thresholds. This means that the tax rate (percentage) depends on achieved incomes. Until September 2019, income below 85 528 PLN was taxed with 18% rate. Starting from October 2019 the rate for the first threshold was reduced to 17%. Income above this amount is taxed with 32% rate.
  • Because the tax rates changed during the tax year, the annual settlement for income earned during 2019 should use effective 17.75% tax rate:
    812×18%+312×17%=17.75%\frac{8}{12} \times 18\% + \frac{3}{12} \times 17\% = 17.75\%
  • Details of tax changes introduced in 2019 can be found in Act of August 30, 2019 on the amendment the Act on personal income tax and the Act amending the act on personal income tax and some other acts.
  • The tax base (ie the amount from which the tax is calculated) is the sum of revenues obtained in a given year decreased by social insurance contributions (polish: ZUS) and costs of getting incomes.
    tax base = gross earnings - social insurance - cost of getting income
  • There is a tax-free amount in the Poland, from which we will not pay any tax. In this case, the final tax would be slightly lower than it would appear from the tax thresholds alone.
  • Before 2017 year the tax-free amount was fixed (in 2009-2016 it amounted to 3091.00 PLN) and was entitled to all taxpayers using general rules.
  • Starting from 2017, the tax-free amount depends on income, in such a way that the taxpayers with very small income are fully covered, then the tax-free amount is gradually reduced as revenue increases.
  • In practice, the so-called tax reduction amount is more common, when calculating income tax (PIT). This is the effective amount that should be deducted from the tax already calculated, to apply the allowance associated with the tax-free amount.
  • To calculate the tax for 2018 year (and also 2017), use the below formula:
    • in the case of income below 85 528 PLN:
      tax = 17% × tax base - tax reduction amount
    • in the case of an income of 85 528 PLN or more :
      tax = 15181.22 PLN + 32% × (tax base - 85528 zł) - tax reduction amount
  • To calculate the tax reduction amount for income earned in 2018 year, use the following formula:
    • in case of income in the amount of 6600 PLN or less:
      tax reduction amount = 1420 PLN,
    • in case of income from 8001 PLN to 13000 PLN:
      tax reduction amount = 1420 PLN - 871.70 PLN × (tax base - 8000 zł) / 5000 zł,
    • in case of income from 13001 PLN to 85528 PLN:
      tax reduction amount = 548.30 PLN,
    • in case of income from 85529 PLN to 127000 PLN:
      tax reduction amount = 548.30 PLN - 548.30 PLN × (tax base - 85528 zł) / 41472 zł,
    • in case of income above 127000 PLN there is no tax-free amount, so tax reduction amount is 0.
  • The legal basis defining how to calculate the amount that reduces tax for the purposes of annual settlement is Art. 27 sec. 1a of the Act of July 26, 1991 on personal income tax (Journal of Laws 1991 No. 80, item 350, consolidated text).

  • In addition, tax should be decreased by health insurance (polish: NFZ), but not more than 7,75% of the basis.
    ⚠ WARNING! Health insurance contributions (polish: NFZ) are deducted from already calculated tax, instead of tax base like in case of other expenses.
  • Starting from August 2019, people under 26 y.o. in Poland do not need to pay income tax (PIT).
    In 2019, the tax-relief covers annual revenues up to 35636.67 PLN, and from 2020, this limit will be increased to 85528 ​​PLN. Revenues exceeding the annual limit remain taxed using tax-scale.
    The legal basis for the new regulations can be found at the official government website.
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