July 8, 2015, Today Poland’s government announced plans to cut the standard Polish VAT rate from 23% to 22% from 1 January 2016. The decision to bring forward the cut came about as Poland left the EU’s excessive budget deficit procedure recently. The cut will cost around €1.5 billion per annum.
Polish economy recovering
Poland has had a relatively good financial crisis, and was the only economy not to go into recession. Nevertheless, since it had signed-up to the Euro currency convergence criteria, it was required to keep its budget deficit below 3% of its GDP. As the European markets slowed following the 2007/8 credit crunch, this forced Poland to raise its VAT rate from 22% to 23% in 2010, and raise its reduced VAT rate to 8%. Poland’s deficit hit 10% of its Gross Domestic Product in 2010.
The latest deficit forecasts show that it can reach the Euro entry criteria comfortably.