Tax challenges in the construction sector

The construction industry in Poland is facing many challenges – ranging from labor shortages, increasing material costs, through energy efficiency requirements, to tax implications. Such operational and financial hurdles create an increasingly demanding environment, which companies must navigate.

One of the major issues present in the construction industry are delayed payments and their implications. In 2024, over 700 companies declared insolvency, although it is not the sole consequence. These delays have tax implications for both creditors and debtors under the so-called bad-debt relief mechanism. What is more, thanks to digitalization of reporting tools like JPK VAT, TPR, and MDR, the tax authorities are able to conduct more precise audits. Their top priority remains VAT compliance – errors can therefore lead to severe penalties in form of an additional tax liability. Similarly, the authorities verify eligibility for withholding tax (WHT) exemptions.

Katarzyna Kozakowska, partner, tax adviser, head of construction practice at MDDP, underlines the importance of developing coherent tax strategy:

“Besides having to deal with economic pressure, entities operating in the construction industry are also encountering new tax challenges. They have to navigate through complex and constantly changing tax regulations, and face increasing scrutiny from tax authorities. As digital reporting expands, audits are becoming more targeted and specialised. Businesses need to proactively manage their tax risks in order to mitigate them”.

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#MORE in Contact Magazine Online published by British Polish Chamber of Commerce >> https://bpcc.org.pl/tax-challenges-in-the-construction-sector/.