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Income tax exemption as a regional state aid in special economic zones and its impact upon development of Polish districts

Author

Listed:
  • Adam A. Ambroziak

    (Warsaw School of Economics)

Abstract
Special Economic Zones (SEZs) were established to attract entrepreneurs to invest in Polish regions in order to increase their social and economic development. One of the most important incentives offered in SEZs is state aid in the form of an income tax exemption. The objective of this paper is to verify if the intensity of regional state aid granted to entrepreneurs in SEZs has had a positive impact on the social and economic development of Polish poviats (a poviat is an administrative district). The public aid was received by beneficiaries when they made some profits and, instead of investing, used a tax allowance to decrease their tax base. However, part of the positive outcome of economic activities envisioned in SEZs should be the development of existing businesses and the emergence of start-ups, as well as the improved attractiveness of the region and the inflow of new investors (which should be manifested by an increase in the gross value of fixed assets per entrepreneur and a decrease in the unemployment rate at poviat level). The conducted research allowed for the conclusion that regional state aid in SEZs in the form of an income tax exemption was of a relative higher importance to the poorest regions (higher share in the amount of regional state aid), while its significance was much lower in better developed areas in Poland (lower share in the amount of regional state aid). The year-to-year study showed no relation between state aid granted in SEZs and an increase in GVFA per company or a decrease in the unemployment rate. However on the basis of analysis of the cumulated value of state aid in SEZs for the whole period from 2005 to 2013, we can say that regional state aid in the form of an income tax exemption in SEZs had a positive influence mainly in poviats located in the poorest voivodeships.

Suggested Citation

  • Adam A. Ambroziak, 2015. "Income tax exemption as a regional state aid in special economic zones and its impact upon development of Polish districts," Working Papers 38/2015, Institute of Economic Research, revised Apr 2015.
    • Handle: RePEc:pes:wpaper:2015:no38
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    Cited by:

    1. Kopczewska Katarzyna, 2019. "Can public intervention improve local public sector economic performance? The analysis of Special Economic Zones in Poland," Central European Economic Journal, Sciendo, vol. 6(53), pages 221-245, January.
    2. Jarosław M. Nazarczuk & Marlena Cicha-Nazarczuk, 2024. "Sustainable Employment Creation through the Polish Investment Zone in Lagging Regions," Sustainability, MDPI, vol. 16(12), pages 1-14, June.
    3. Shuang Gao & Shaojian Wang & Dongqi Sun, 2021. "Development Zones and Their Surrounding Host Cities in China: Isolation and Mutually Beneficial Interactions," Land, MDPI, vol. 11(1), pages 1-14, December.
    4. Olena Chygryn & Yuriy Petrushenko & Alina Vysochyna & Anna Vorontsova, 2018. "Assessment of Fiscal Decentralization Influence on Social and Economic Development," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 14(4), pages 69-84.
    5. Beata Ślusarczyk & Katarzyna Grondys, 2018. "The Concept of Sustainable Development in the Functioning of Municipalities Belonging to Special Economic Zones in Poland," Sustainability, MDPI, vol. 10(7), pages 1-20, June.
    6. Jaroslaw M. Nazarczuk & Marlena Cicha-Nazarczuk, 2021. "What are the Key Location Factors for Firms in Special Economic Zones? Evidence from Poland," European Research Studies Journal, European Research Studies Journal, vol. 0(1), pages 147-160.

    More about this item

    Keywords

    regional state aid; special economic zones; regional development; poviats in Poland; public support;
    All these keywords.

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

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