The development of Polish capital markets, demonstrated by the capitalisation of the Warsaw Stock Exchange in March 2007, for 700 billion PLN, and corporate restructuring, deregulation and further privatisation has made the country an increasingly attractive location for FDI. With the country being the beneficiary of €90bn in EU funds for development, infrastructure and human capital it would seem that the country’s transformation is set to continue. Poland is offering beneficial tax rates to foreign investors and offers an environment with low inflation and an excellent strategic geographical location for both Western and Eastern Europe.
According to Ernst & Young’s attractiveness survey, Poland holds 7th position worldwide among countries with the greatest potential of attracting new FDI. The country’s growth has been driven by export growth, industrial production, and investments. It also has a highly skilled and educated workforce with strong language skills, as well as a large consumer market.
However, with the liberalisation of the economy and rapid growth, have come difficulties, namely a need for the regulatory environment to keep up with economic progress. Essential to Poland’s continued growth will also be the presence of a strong tax advisory market, with the expertise and actionable insights to help potential investors best capitalise on this developing business environment. Jacek Kedzior, Managing Partner at leading tax advisory firm Ernst & Young spoke to World Finance about his company and its capabilities, the innovative training schemes his company offers, and the tax environment in Poland.
Ernst & Young’s roots in Poland go back to 1933-1939 when Whinney Murray & Co, Ernst & Young’s predecessor, provided advisory services in Warsaw. The company has operated in Poland under the name of Ernst & Young since 1990. Thanks to the combination with Andersen, Ernst & Young in Poland has become the biggest auditing and advisory firm in the Polish market. The company’s total workforce now tops 1,000 professional advisors and auditors, and the company has recently launched the Ernst & Young University.
Standing apart from competitors
Ernst & Young is the biggest tax advisory and a market leader in Poland. We provide our clients with comprehensive services, including tax advice supporting international tax planning needs, mergers and acquisitions, transfer pricing support and defense, indirect tax services including both VAT and excise related to supply chain and new investment planning.
Our Corporate tax services are accompanied by a very strong Human Capital advisory practice. In Poland we are leaders in tax litigation and regulatory advice services. We help our clients to receive public support through our grants and incentives service offering.
Despite the wide range of services that we offer, the main strength of our practice is built around client-centricity. Our client’s needs are at the top of our agenda and drive our service offering. Rather than sell and idea or a scheme, we listen to our clients, understand their business imperatives and wrap our planning advice into this process.
This combination of high technical expertise and ability to help compliment our clients in order for them to achieve their business goals makes Ernst & Young the most reputable firm in the Polish market.
Global footprint and strong personnel key drivers to leadership
The firm’s reputation comes on the back of the high esteem in which its tax advisors are held in professional circles in Poland. For me, in order to be the best tax advisory firm, we need to recruit and develop the best people, provide the best quality of services and serve the best clients.
We have and continue to be successful in attracting and retaining the highest caliber of professionals with long-term aspirations to succeed. Our advisors combine sound expertise with the skills and abilities to deliver value to clients aligned with their business objectives. Quality in a developing environment like Poland means for us not only technical knowledge and accumulated experience, but the on-going development of knowledge, as Poland is still a country going through significant changes. What’s more, quality is also access to the world’s thought leadership of the Ernst & Young organisation. We are proud when looking at our client list. We share clients with EY Global and win new business from inbound investors. Thanks to our local reputation we work for the biggest Polish enterprises. Our Clients Satisfaction Surveys prove that in all categories our services are highly regarded by clients.
Ernst & Young University: Developing tax advisors of the future
The wide range of services we offer gives our employees an opportunity to gain experience in all areas of tax advisory services. For many years we have been investing in the training and development of our people, both locally and internationally.
At the same time we are constantly challenging ourselves and asking, ‘What is our value proposition for newcomers?’ The most recent response to employees’ needs is the just launched Ernst & Young University. It is also a response to our clients’ current needs. Nowadays clients expect their advisors to be experts in the given field, but with a broad understanding of other areas. Ernst & Young University is the first such comprehensive program for professional development in Poland. It has already been introduced by Ernst & Young in countries like the USA, Switzerland or the Czech Republic. It is a unique structured approach that was designed to help participants gain diversified technical and non-technical experience. Getting experience is combined with a counseling structure and learning curriculum. Those three pillars: experience, learning and counseling will give young people an opportunity to acquire a set of skills necessary to operate as genuine business advisors.
Our approach to professional development is a response to the expectations of the young generation (generation Y), which is very demanding, has clear and ambitious professional plans, and a variety of opportunities to make their dreams come true. The program will ensure that talented people are not pigeon-holed early in their careers and will provide the opportunity to “find the right home” in the firm. In this context EYU is also important from the perspective of our firm’s values – it promotes an atmosphere of appreciation of achievements of people from different competency groups rather than internal competition.
Tax environment increasingly compatible with the EU
The foundations of the current tax system in Poland were laid in the early 90’s. At that time, tax authority decisions were viewed by many as arbitrary. The regulations were changing constantly. The unpredictability of both the regulations and the tax authorities were a serious problem for most organizations, especially when one looked at the relatively harsh penalties that could be imposed on companies or criminal sanctions on those responsible for the filing of the returns.
In time the Polish tax system began to settle down and the regulatory agencies introduced programs to further stabilize it by providing binding tax rulings and advanced pricing arrangements for related party transactions.
Polish courts also have played an important role in stabilizing the practice of tax law. Prior to Poland’s EU accession Poland introduced a number of changes into its tax system in line with the EU regulations. However, the European regulations and the jurisprudence of the European Court of Justice remain an important point of reference for tax law practitioners in Poland.
Growing tax advisory market
As Polish businesses have grown and new investors have invested in Poland the demand for tax advice has grown. So too have the advisors of such services.
Companies growing and expanding or needing access to larger sources of capital, including from public capital markets have fueled the growth of the larger accounting firms that include Ernst & Young, KPMG, Deloitte & Touche and PricewaterhouseCoopers.
Serving smaller companies are a number of advisory firms, many times consisting of former advisors from the Big 4. These firms provide advice to companies not needing the resource and broader service offering of the larger firms.
We see also law firms that have established in house tax capabilities to support their corporate practices focusing tax matters that might be applicable on transactions they represent their clients on.
Smaller advisors in our marketplace face a similar challenge in making sure that continue to develop and improve our ability to attract the best graduates from Polish universities and offer appealing career opportunities.
As the Polish economy continues to become more global, Polish investors and their businesses will require advisors which offer comprehensive tax advisory services and the support of an international network that is there to greet them where they go.
Evolving tax advisory market
Historically, due to the developing framework around tax policy and rules, there was a lack of a clear understanding of the law, regulations and in some instances the decisions of the Polish Courts.
This combination led to a lack of clarity around the application of the tax rules to actions of companies that tax advice was sought from lawyers to provide opinions that their treatment was correct.
These services have been and will continue to be needed even as the laws, regulations and judicial decisions become clearer. The Polish economy is becoming more integrated with the global economy, this brings an element of constant change which fuels the need for advice.
What we are seeing today is a growing need for tax professionals focused on the operational aspects of tax departments. Tax compliance and reporting has become more complex. This is taking corporate resources away from integrated and timely tax planning in their organisation.
The skills now needed in tax practices today are quickly broadening. Clients need and expect not only tax advice and opinions addressing their risks but also demand value driven solutions having a positive impact on their financial statements.
Tax advisors should be capable of providing services throughout the tax lifecycle including the planning stages, compliance, reporting and defending such positions in front of the regulators.
Regulatory and tax processes improvement advice, including gaining the support from corporate IT departments is increasingly more important. I also believe that reputable tax advisory firms will become more and more important partners working with the tax administration to develop proper tax practices.
For further information:
Tel: +48 (0) 22 557 7263
Email: Jacek.Kedzior@pl.ey.com
Website: www.ey.com.pl
