An investor wishing to purchase a Polish company, if not careful, may end up on the hook for the seller's unpaid tax obligations at the time of sale. To guard against such calamity, a purchaser usually obtains a "certificate" from the tax authorities confirming what, if any, tax obligations the target company may have outstanding. With this information in hand a purchaser can ensure that any tax obligations are satisfied by the seller at the time of sale.

Tax obligations include not only corporate income and real property taxes, but also any social security tax obligations payable by the company with respect to its employees. Unfortunately, Poland's social security administration, otherwise referred to as ZUS, does not always agree to issue a similar "certificate" regarding the social security obligations of a target company. In fact, in many cases ZUS refuses to provide any information to the prospective purchaser of a company, leaving the purchaser with no choice but to walk away from the deal or simply take the word of the seller and hope that all required social security payments have in fact been paid. In many cases, the purchaser only learns after the fact that he or she is now on the hook for unpaid social security contributions owed by the previous owner of the company.

It is time for ZUS to step up to the plate and provide the requested certificates of payment when so requested. Recently, ZUS has been ordered to provide such information in several court rulings, but despite such rulings ZUS continues to refuse to issue the requested certificates. Enough is enough.

-- Paul B. Fogo

More Disclosure is Required

The withholding of information by ZUS to a potential buyer of a Polish business is only the tip of the iceberg when it comes to the issue of inadequate disclosure and accountability in several segments of Polish society. It seems that even some levels of the governmental sector in Poland lack an independent audit for the sake of providing valid information to the public. For example, in the USA my parents own a property in a small village in the New England area. Every year, an annual audited statement of financial condition is published and made available to all residents. The statement lists the village's revenues, expenses, budget, and a detailed property tax list which includes annual payments made by each property owner. Such a detailed financial statement even in a small town in Poland is unheard of, let alone an audited one. The internet makes such a financial statement cost effective as anyone can view it. I'm not familiar at how this is handled by other countries within the European Union. Full disclosure by both the private and public sector in Poland is a vital step to be taken in order to promote a more efficient and smooth functioning business environment. It is also necessary to enhance trust between the government and the citizens who live and work here.

Re: not friendly to business

This is just another example of the huge almost cultural shift that needs to occur within government and business and business systems within Poland. Lack of transparency = lack of trust = business stagnation & missed opportunities.