For over twenty-one years, Poland has enjoyed an established tradition of supporting public benefit organisations (OPPs) through the mechanics of transferring 1.5% of individual income taxation (PIT). This solution, which has become a permanent part of citizens' awareness, enables individual taxpayers to straight support their own foundations and associations.
The Institute of civilian Affairs, recognising the possible of this mechanics and aiming to further strengthen the civilian sector, launched in 2020 a run to introduce a akin solution for businesses – the anticipation to transfer 1.5% of corporate income taxation (CIT) to OPP (formerly 1%, now to align with taxation write-offs in PIT – 1.5%).
A fresh position for civilian society
This initiative is peculiarly crucial in the context of wider efforts to deregulation and simplification of economical rules in Poland. The Institute of civilian Affairs's advice for 1.5% CIT for OPP was late included in report “Faza 1.0. Deregulation in action” initiative We check.
We are looking into this bottom-up initiative of entrepreneurs and citizens, which aims to support Poland's economical improvement by eliminating regulatory barriers.
The inclusion of the Institute's proposal in this prestigious paper is an crucial signal of strategical association with national efforts to improve the legal and economical system.
This not only confirms the legitimacy and maturity of the proposal, but besides places it as part of a wider systemic reform, not only as an manufacture postulate.
Support from the initiative We are checking, which is chaired by Rafał Brzoska, and which involves among others BNI, Confederation of Leviathan, Corporate Connections, Polish Business Council or Employers of Poland. The initiative, which in its study collaborated with reputable advisory companies specified as BCG and PwC, and law firms specified as DZP, GWW Legal& Tax, or Oldman Sage importantly improves the credibility and legitimacy of the proposal 1.5% CIT. This indicates that the proposal has been subject to a thorough expert analysis, going beyond the framework of non-governmental environments, and is seen as a thoughtful solution at the level of public policy.
Slovak model: how others build strong civilian society
The aim of Poland to introduce a 1.5% CIT mechanics for OPP derives crucial inspiration from the long-term and successful model operating in Slovakia. Since its pioneering introduction in 2004, Slovakia stands out from another countries as the only country that enables both individuals (up to 2% PIT) and businesses (up to 2% CIT) to straight transfer part of its taxation to civilian organisations.
This innovative strategy has fundamentally changed relations between NGOs, business and government, creating a unique ecosystem of civilian engagement.
For over 20 years, the corporate taxation mechanics in Slovakia has generated more than EUR 300 million for NGOs. Moreover, revenues from corporate taxation allocation are frequently almost twice as advanced as those from individual taxpayers. These concrete, measurable data are compelling evidence of the tremendous financial possible and transformative power of specified a solution.
They show that this mechanics not only works in practice but can become a crucial and unchangeable origin of backing for the 3rd sector.
Despite its successes, the Slovak model has besides encountered challenges, including accusations of taxation avoidance and alleged usage of the strategy for PR or marketing purposes by companies. However, importantly, the strategy has demonstrated resilience and adaptability, evolving over time to take into account incentives specified as the matching rule and implementing measures to increase transparency.
The Institute of civilian Affairs, drawing up its proposal for Poland, draws from these rich Slovak experiences. Analyzing both successes and traps, the Institute is able to plan a robust and refined mechanics for Poland, which learns from the achievements of Slovakia and actively minimises possible risks.
This forward-looking approach is intended to guarantee that, if implemented, the Polish strategy will be even more effective, transparent and resilient, genuinely strengthening the civic sector and promoting genuine corporate social responsibility.
Invitation to act: together we make better Poland
The way to introducing 1.5% CIT for public benefit organisations, although this "long march" is simply a evidence to strength and a common vision.
The proposed mechanics is simply a truly transformative solution that benefits all parties involved.
For entrepreneurs, the introduction of 1.5% CIT offers a tangible and highly visible way of engaging in genuine corporate social responsibility, with no additional financial costs. As with the 1.5% PIT mechanism, this is simply a redirection of existing taxation measures which would otherwise go to the State Treasury. This means that companies are given the chance to channel any of their taxation liabilities towards the objectives they believe in and are close to them.
This not only improves their image, but, above all, strengthens ties with local communities and promotes more committed staff.
In addition, this becomes an crucial part of reporting under the ESG; acronym from English words environmental (environment), social and Government (with corporate governance).
For public benefit organisations, this mechanics promises a new, unchangeable and crucial origin of funding, crucial for their long-term stableness and independence. The financial injection will enable the OPP to execute its missions more effectively, respond to urgent social needs and support initiatives for the common good, specified as advanced quality education, civilian rights, wellness or the environment.
This besides helps balance the opportunities between organisations and reduce their excessive dependence on direct government subsidies, fostering greater autonomy.
Finally, for the state and citizens, stronger, better funded and more independent civilian society translates straight into a more resilient, dynamic and committed nation. This enables citizens to jointly address local and national challenges, guarantee that public funds are directed towards the objectives they consider to be the most important, and strengthens democratic tissue by supporting active participation in civic life.
The advancement so far is significant, but the way to full implementation of 1.5% CIT for OPP is simply a joint effort that requires further momentum.
We are sending a cordial call to all socially liable entrepreneurs and companies across Poland to actively support this groundbreaking initiative.
Your voice, your commitment and your commitment are absolutely essential to this vision. We encourage you to sign a petition to support #1,5 PercentOperatingCompany, to engage in public discussion and to advance this key legislative change in their networking networks. Let us follow the inspiring example of Slovakia, where companies already actively contribute to the common good through the allocation of their taxes, and together let us build stronger, more liable and more committed Poland.
