September 19, 2016 / 9:46 AM / a year ago

EU executive opens investigation into Poland's retail tax

BRUSSELS, Sept 19 (Reuters) - The European Commission opened an in-depth investigation on Monday into a new Polish progressive tax on the retail sector and ordered its suspension until the investigation is concluded.

The injunction on the collection of the tax means less revenue to the Polish budget, which is already under strain because of a series of government moves, notably monthly child-support payouts.

"The Commission has concerns that the progressive rates based on turnover give companies with a low turnover a selective advantage over their competitors in breach of EU state aid rules," the EU executive arm said in a statement.

The investigation concerns a tax adopted by Poland in July 2016, which applies to companies that operate in Poland and are active in the retail sale of goods.

The tax entered into force on September 1, 2016, and no payments are due yet. Under the tax, companies in the retail sector would pay a monthly tax based on their turnover.

Companies with a monthly turnover below 17 million zlotys ($4.41 million) would not pay any tax at all, those with turnover between 17 million zlotys and 170 million zlotys a month would pay 0.8 percent and those above 170 million zlotys would pay 1.4 percent.

"The Commission does not question Poland's right to decide on its taxation levels or the purpose of different taxes and levies. However, the tax system should respect EU law, including state aid rules, and should not unduly favour a particular type of company, for example companies with lower turnover," it said.($1 = 3.8523 zlotys) (Reporting by Jan Strupczewski)

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