How to reduce growing costs and find financing for further development?
Industrial processing is one of the driving forces of the Polish economy. It includes a diversified range of companies which generate a significant share of the Polish GDP. Their position on the global markets is constantly growing and Polish products are valued for their high quality and affordable price. The condition of the whole processing industry is strictly related to the situation on external markets. Foreign competition, led by China and the United States, force technological changes that have impact upon reduction of the costs of production.
The main challenges of the Polish processing industry include growing innovations, which translate into bigger efficiency. An obstacle to the development of Polish companies could be lack of access to cheap resources and energy. What is also equally important are environmental requirements which force investments in modern and safe technologies. In order to operate in such a competitive and demanding business environment companies need to focus on R&D activities and on looking for financing for new projects.
Our projects for the processing industry
We advise our clients on how to optimise operations and we offer comprehensive consulting services in the following areas:
- innovation financing: R&D tax relief, IP Box, subsidies
- tax on real property, real property tax settlement on new investments and cost segregation
- labour costs: accident insurance premium, PFRON (State Fund for Rehabilitation of Disabled Persons) contributions
Ayming’s experience – real property tax in the processing industry
Due to the nature of their operations, processing companies often own large storage areas. Some of the warehouse facilities do not need to be strictly isolated from external conditions. They are only to protect the goods from the weather. These are often storage tents or sheds that are not separated from the surrounding space by any fixed structures. Therefore we should always consider whether they meet all the four criteria of a building. The amount of tax payable to the municipality depends on whether such a facility is classified as a “building” or a “structure”.
Processing companies sometimes own land which is not used for business activities and has been bought for future investments. In this case it is important to verify the documents, e.g. extracts from the land and building register as well as the actual state, in order to apply the correct local tax rate on real property.
In processing companies it also happens that in spite of introduced changes (such as overhauls or reconstruction) the usable area of buildings is not verified for years and historical construction information is copied to structure log books without prior verification.
Companies often do not identify in the tax basis the usable area of a building of clear height between 1.4 m and 2.2 m which should be included at the rate of 50% in the category of “buildings related to business operations”. For instance, if a room/building is 2 metres high and the floor area is 100 sq. m, then the taxable area is 50 sq. m.
Another challenge for the processing industry is also correct taxation of technical and technological installations without which the buildings could not function according to their intended use. Those installations are often located outside the building outline. Should they be classified as structures then? Judicial decisions in this respect are not uniform. In this case we should take into account both the technical and usage criterion as well as the definitions of a structure and a building included in the Construction Law.
Ayming’s experience – accident insurance premium for the processing industry
The processing industry covers the broadest range of business activities. They involve such sectors as production of tobacco and leather products, clothing, paper, chemicals or e.g. production of goods from other non-metallic resources.
It is often a challenge for industrial processing companies to reduce the number of people exposed to harmful factors whose intensity or concentration exceed admissible norms. Due to the fact that work is performed in enclosed areas such as production floors or warehouses, the sources of hazards get mutually intensified in the work environment. Reduction or elimination of hazards is often extremely costly and difficult as it requires interference with machine or building structures.
Most of the processing industry companies have a high accident rate which is reflected in higher accident insurance premiums. Depending on the specificity of a given enterprise, usually the biggest difficulty is to define and classify accidents due to their large number.