Poland is planning to implement a new tax break for businesses investing in robots. The relief will allow companies and individuals to deduct an extra 50% of costs incurred for investment in robotics. It will also cover the cost of leasing robots, the purchase of software to operate robots and employee training. It will be available for all entrepreneurs regardless of industry and size as from 1 January 2021.
The tax relief is expected to cost PLN 1.1 billion over the next five years. The government hopes that robots can replace humans in doing the most dangerous and highly routinized tasks. It is estimated that due to the tax relief the number of robots will increase more than two times. A draft bill is expected to be presented in autumn 2020.
Why is there a need for tax relief for robots? The first reason is that Poland has currently one of the lowest rates of robotization in Central and Eastern Europe. According to the estimates of the Ministry of Development, there are only 42 robots per 10,000 employees working in the industry sector. These indicators are much higher for the neighboring countries – Slovakia (165), Czechia (135) and Germany (338). Another reason to stimulate investments in robotics is that the number of workers will decrease by 2 million in Poland by 2030. According to Eurostat, 49% of Polish industrial companies say labour constraints will limit production in the near future. A recent article in the Financial Times explained how Polish manufacturers rely on technology to combat ageing population and emigration fallout. It described a warehouse run by one person that can process 1,600 items for shipment to customers in one hour.
To determine the costs eligible for the tax relief, the Polish legislator will have to provide a precise definition of a robot. It may develop its own definition or use the terminology provided by ISO 8373:2012. According to this standard, a robot is an actuated mechanism programmable in two or more axes with a degree of autonomy, moving within its environment, to perform intended tasks.
The ISO standard distinguishes between industrial and service robots. An industrial robot is an automatically controlled, reprogrammable, multipurpose manipulator, programmable in three or more axes, which can be either fixed in place or mobile, for use in industrial automation applications. A service robot is one that performs useful tasks for humans or equipment, excluding industrial automation applications. For example, a robot cleaning public places or serving food falls into the latter category.
The definitions provided by ISO 8373:2012 are not easy to understand. It is unlikely that those provided by the Polish legislation will be less difficult. This raises the question of who will determine whether a piece of equipment meets the definition of a robot. How is a tax inspector supposed to check whether the conditions for the tax relief are fulfilled? Will a statement from an external party (e.g. scientific institute) be required?
There is a lively discussion in the tax literature of whether robots should be taxed. Supporters of taxing robots claim that if robots replace the human workforce, governments will miss out on revenue from personal income tax. Currently, robots are not on the payroll, so they have a clear advantage over human workers. Opponents of taxing robots point out that employment is not declining in countries with high rates of robotics in the industry. As lower costs of equipment and software are seen as key elements in driving productivity and competitiveness, countries should provide accelerated depreciation and other benefits for investment in new capital equipment (including robots). Poland is definitely following the latter approach.