– Illegal work – understood both as not registering the employment relationship, as well as paying at least part of the salary “under the table” – is a phenomenon that affects approximately 1.5 million employees in Poland. Microenterprises are particularly exposed to this type of problem. This is due to, inter alia, from the fact that it is there that the costs related to employing employees constitute one of the most important expenses. Therefore, there is a temptation not to register this employment and to compete with other entities operating on the market not so much with the quality of their products or the effectiveness of running a business, but with lower employment costs or savings on tax – explains Jan Sarnowski, deputy minister in an interview with Newseria Biznes agency. finances.
The data of the Polish Economic Institute show that in 2018 in Poland approx. 6 percent. wages and salaries were paid under undeclared work, i.e. without taxes, contributions and registration of employees. The state budget losses on this account are calculated in billions of zlotys. According to PIE estimates, paying part of the salary “under the table” may apply to a total of every third micro-company and even 12 percent of people employed under a contract of employment, i.e. almost 1.5 million Polish employees.
– The tax package of the Polish Order is aimed at reducing the scale of illegal employment and reducing the size of the shadow economy. This will be done through several tools, the most important of which is to reduce the profitability of this type of practice, says Jan Sarnowski. – As a result of tax changes that will come into force from January next year, personal income tax will not be paid on the minimum wage at all, and up to the monthly salary in the amount of the national average, the burden of tax and contribution will be lower than before.
The Ministry of Finance admits that at the moment the regulations do not adequately protect employees who do not have a strong negotiating position towards their employers. As a result, they have to agree to work without a contract or for part of the wages received “under the table”. This does not guarantee them benefits in the event of sickness or retirement.
– The vast majority of people working illegally, without registration, are less paid people who are just entering the labor market or returning to it. They are also people who earn a minimum wage or a little more. However, such people are also the most important beneficiaries of the Polish Deal, assures the Deputy Minister of Finance.
The Polish Order is to provide employees – as the weaker side of the employment relationship – with protection against the tax consequences of illegal employment, i.e. penal fiscal liability for generating untaxed income and the need to pay outstanding contributions.
– So far, the tax system has not supported leaving the shadow economy. The employee was practically entirely responsible for the tax consequences of illegal employment. If illegal employment was found, it meant that he had to pay the outstanding tax with interest. However, from January next year, all this responsibility will be transferred to the employer. This means that employees will not be endangered in any way and the change resulting from the transition to legal employment will not burden them in any way – says Jan Sarnowski.
From January 1, 2022, employers will pay tax on the remuneration for illegal work or part of the remuneration paid “under the table”. They will also be assigned additional income in the amount of the minimum wage for each month of illegal employment – regardless of whether they actually paid wages and in what amount.
Moreover, dishonest employers will also be required to pay in full social security and health insurance contributions on the wages of people working illegally or the amounts paid “under the table”. Additionally, both the salaries paid and the contributions will not be recognized by employers as tax deductible costs.
– On the other hand, we also want to encourage employers to decide to employ workers in accordance with the law – emphasizes the deputy minister. – Hence our proposal, which allows the tax due on illegal employment and remuneration paid “under the table” until the end of 2021 to be paid neither by the employee nor the employer, provided that the employment is legalized. If this option is used before the end of this year, the employer will have the advantageous possibility of returning to the path of legal employment, practically unheard of in the existing regulations.