Next year's budget missing PLN 1.8 billion? A costly mistake in the new law

• The 2026 budget bill must be submitted to the Sejm by the end of August. Next week, Minister of Finance and Economy Andrzej Domański begins talks with individual ministries about planned spending for next year.
• Minister Domański assured on Thursday (July 31) during a press briefing that despite the historically high public finance deficit, the government will not cut any social spending.
• This means the government will have to increase its revenues. Among the planned measures is tightening the tax system and introducing a mandatory e-invoicing system.
• This is expected to generate PLN 1.8 billion in revenue for the budget in 2026. However, tax experts believe this is highly unlikely.
• We asked the Minister of Finance and Economy whether the above-mentioned amount will be included in the budget act for 2026?

Next week, individual ministries are expected to reach agreements with the Ministry of Finance and Economy regarding next year's state budget. The draft bill is expected to be submitted to the Sejm by the end of August.

As Minister of Finance and Economy Andrzej Domański admitted on Thursday (July 31) during a press briefing, although we have a very high budget deficit, exceeding 6% of GDP, and the sixth-highest social spending in relation to GDP in Europe , no cuts in benefits are planned.

There will be no spending cuts, so the government must increase revenues

This means the state must increase its revenues. " An increase in VAT revenues will probably be necessary," says Professor Stanisław Gomułka, BBC Chief Economist and former Deputy Minister of Finance.

The Ministry of Finance and Economy, at least for now, has not announced any intention to raise taxes or introduce new levies. Rather, it is focusing on tightening the tax system and squeezing out every ounce of it that it can.

This was discussed during the May Tax Council Congress in Warsaw by, among others, Deputy Minister of Finance Jarosław Neneman.

He then emphasized the need to tighten both the PIT and CIT tax systems . "Such statutory solutions will soon be made public," Neneman announced.

And what about the mythical VAT gap? Will it be closed? In the case of this tax, as Minister Domański states, everything that could be done has already been done. This gap was reduced from 13.5% in 2023 to 6.9% in 2024, and there are many indications that this is where the possibilities end.

The CIT gap is a different story. However, as Deputy Finance Minister Marcin Łoboda commented, the government doesn't fully understand what it's up against. Łoboda, who was present at a meeting with journalists on Thursday, admitted that "this gap has never been calculated in Poland."

Did the Sejm pass a law that included unattainable income?

But this isn't accurate information. In 2023, the government think-tank Polish Economic Institute issued a comprehensive report on the corporate income tax gap, which showed that in 2019-2020, the corporate income tax gap in Poland was approximately 30% of projected revenues, or approximately PLN 26 billion.

The government hopes that the amended Act on the Goods and Services Tax and Certain Other Acts, adopted by the Sejm on July 25 this year and introducing the mandatory National e-Invoice System (KSeF), will tighten the tax system.

This system is intended, among other things, to help tax analysts at the National Revenue Administration accurately identify companies that avoid paying corporate income tax through aggressive optimization using transfer pricing.

The National Securities and Exchange Commission (KSeF) is also expected to generate PLN 1.8 billion in additional revenue for the budget in 2026. This amount was included in the regulatory impact assessment (RIA) in the aforementioned act.

And what will it be like in reality?

- The budget revenue from the mandatory National Tax and Customs Securities Fund assumed in the OSR at the level of PLN 1.8 billion in 2026 seems ambitious, but burdened with a high implementation risk - says Piotr Juszczyk, chief tax advisor at InFaktu.

He adds that the effectiveness of the system in detecting fraud will depend on the scale of actual implementation by taxpayers – that is, on how quickly and widely they actually start issuing invoices in the KSeF.

"The law stipulates a phased approach. Some taxpayers will only begin using the system in 2027. Secondly, the projected improvement in VAT collection assumes that the system will effectively detect irregularities in its first year of operation. Meanwhile, for data analysis to be effective, the National Tax Administration (KSeF) needs time to build a comparative database and implement appropriate algorithms," Juszczyk explains.

According to the tax expert, in practice this means that full analytical functionality may not be revealed until 2027 or later.

- The amount of PLN 1.8 billion is not a "certain income", but rather an optimistic assumption - assesses the tax advisor.

Will the minister add nearly PLN 2 billion to next year's budget?

Juszczyk’s opinion is also shared by Dr. Aleksander Łożykowski, tax advisor and legal counsel at the LTCA law firm, academic lecturer at the Warsaw School of Economics, and previously director of the Tax Department at the Ministry of Finance.

In his opinion, the system will only begin to detect anomalies in CIT and VAT in a few years, when it has sufficient data for comparative analysis. Until then, the PLN 1.8 billion entry will remain a technical entry, referring more to state revenues "in progress."

On Thursday, we asked both Minister Andrzej Domański and Deputy Minister Marcin Łoboda whether they still maintain their calculations regarding revenues from the National Securities and Exchange Commission (KSeF) and whether the amount of PLN 1.8 billion has been included in the 2026 budget act as revenue?

Minister Domański did not respond to our questions, and Deputy Minister Łoboda replied that work on next year's budget was still ongoing.