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PMR Insight: Retail tax – who will be most affected?

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In May, the Court of Justice of the European Union decided that the retail tax could not be treated as illegal state aid (as the European Commission wanted). This allows for a return to the Polish legal system of the tax first introduced in September 2016. According to the latest press reports, this could happen as early as September 2019.

Who will be most affected by the tax?

It is certain that the retail tax will have an impact on the profits of food chains. But who will be most affected? Estimates made by PMR based on sales forecasts for 2019 show that nine chains will pay a higher tax rate (1.4% for revenues above PLN 170m per month). It should be noted that the estimates were based on the forecast annual sales value, while the tax will be collected monthly, so the calculations below are indicative:

  • Biedronka (if the tax had been in force for the whole 2019, it would pay PLN 749m)
  • Lidl (PLN 262m)
  • Carrefour (PLN 169m)
  • Auchan (PLN 136m)
  • Kaufland (PLN 131m)
  • Tesco (PLN 120m)
  • Dino (PLN 83m)
  • Netto (PLN 37m)
  • Stokrotka (PLN 33m)

Who will pay for the new tax?

The question arises as to whether the retailers will transfer the costs of the new tax to consumers and suppliers. The above mentioned chains have a total grocery market share of 45%. If we add other players who qualify for the lower rate (0.8% for revenues between PLN 17m and 170m per month), this share will be much higher than 50%. In this situation, chains may raise prices in stores or force suppliers to reduce prices, as most players on the market will do the same.

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