Tax-optimising corporates ‘play game’ with authorities: Economist

Tax-optimizing corporates play a game with the tax office, chasing an estimated EUR 5 bn corporate tax gap, Marek Lachowicz of the Polish Economic Institute tells PolandIN.

Describing the difference in approach to tax optimization of small companies and large corporations and how the tax authorities deal with them, Dr Lachowicz said “It’s like a game.

“Suppose I engage in tax optimization, which costs me something. Nothing is free, so I have to hire experts. If I want a foreign subsidiary I have to open this foreign subsidiary. This costs something, and a bigger company can afford a department, which can deal with this problem and I expect some saving in return and these savings exceed the cost of the money I spend on tax optimisation.

The Polish Economic Institute report estimated the corporate tax gap, which Marek Lachowicz defines as the difference between what is due in corporate tax and what has been collected, as having been as high as PLN 21.4 bn (EUR 5 bn) in 2017 and PLN 17 bn (EUR 4 bn) in 2016, having fallen from PLN 50 bn (EUR 10 bn) in 2015.

The economist said that they will need several more years of data to be able to draw conclusions from their research, but they expect to see a fall in the size of the gap in 2018.

Click here to watch the full interview with Marek Lachowicz.