Poland and EU near deal on competition policy

Poland and the European Union are close to agreement on how to reduce the tax breaks Warsaw offers certain investors once the country joins the organization, the daily Rzeczpospolita reported on May 20.

The mooted deal would allow the continuation of Poland's special economic zones after the country joins the EU, which could come as soon as 2004.

But it would also cut back the level of tax benefits for companies that export to the EU and might disrupt competition. Such companies would write off up to 65 percent of their investment.

But an EU official said an agreement had yet to be reached.

"Discussions are continuing, and for the moment there is no definitive agreement on this issue. The Polish side has recently presented some new proposals, which will be discussed soon in Brussels," the official said.

Fourteen special economic zones remain in Poland, mostly in areas of high unemployment, which gave businesses that in-vested before 2001 a 10-year tax holiday followed by five years of taxation at reduced rates.

But the benefits are incompatible with EU competition policy, and EU and Polish negotiators have been working for months on a deal that would protect the market but not force Warsaw to pay too much in compensation to investors.

Poland wanted a long transition period or help from Brussels in paying compensation to inves-tors, but the EU refused such requests.