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The Warsaw Voice » Business » March 27, 2013
Business & Economy
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Innovation Now
March 27, 2013   
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Poland lags behind most other EU countries in terms of funds for research and development, yet sectors where innovation is crucial are developing faster in Poland than elsewhere. Without a cash injection for R&D, Polish companies may lose their competitive edge. Poland came in 23rd out of 27 EU member states in an innovation league table published by the European Commission last year. The country was outclassed by the Czech Republic and Hungary. One of the reasons behind its poor performance is that Poland lacks a clear system of encouraging enterprises to invest in research and development. As a result, two-thirds of spending on R&D comes from government coffers and just one-third is provided by private enterprises, which is the exact opposite of what the proportions should be.

It is nothing short of a paradox that hi-tech Polish companies are thriving even though there is a lack of incentives to stimulate investment in research and development. For example, the information and communications technology (ICT) sector has been growing 10 percent annually for several years, while companies of this type in Western Europe have reported very low growth rates. Experts point out that despite the financial crisis, Poland’s ICT sector has been enjoying double-digit growth and gaining recognition abroad— because rather than copying what others have produced, Polish ICT companies are coming up with inventive products of their own.

Some of those were exhibited in March at the CeBIT trade fair in Hanover, Germany, which is one of the world’s largest conventions of the ICT and digital economy sectors. Poland was the strategic partner of the event, with over 200 Polish exhibitors.

Poland’s Economy Ministry has recently taken notice of the importance of innovation, announcing plans to introduce a new tax allowance for the most innovative companies.

So far, spending on research designed to enhance the quality of a company’s products has been tax deductible but no tax allowances are available for innovative products.

The proposed new tax allowance will give income tax (PIT) and corporate income tax (CIT) incentives to businesses investing in research and development. If the ministry’s proposal is approved, spending on R&D will be tax-deductible starting from next year.

Innovative companies urgently need incentives, because in the long term Poland will not be able to rely on advantages such as low labor costs, low energy prices and low taxes and local fees. It is also vital to encourage young Polish IT specialists and other university graduates to stay in Poland rather than seeking better career opportunities abroad.
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