March 2006 saw the entering into force of a law which both regulates professional lobbying and encourages public participation in the lawmaking process in Poland. While lobbying is highly regulated in the US, it has previously not been regulated or treated in a uniform manner in the EU.
The Act of July 7, 2005 "On Lobbying Activity in the Lawmaking Process" (the "Lobbying Law") i) defines professional lobbying, ii) regulates who may engage in professional lobbying and how, and iii) requires the government to make public not only officers' contact with lobbyists, but also upcoming legislation.
Professional lobbing is defined as lobbying conducted for the benefit of third parties in order to have their interests taken into consideration by public authorities in the lawmaking process.
In order to engage in lobbying activity, a lobbyist must register in the professional lobbyists' register, which is maintained by the Minister of Internal Affairs and Administration in accordance holding company over its subsidiaries. The Holding Companies Law also fails to provide any regulation of the rights of subsidiary enterprises, so that subsidiaries could fully realize their rights as independent economic entities. Furthermore, the Holding Companies Law does not include any provisions for preferential tax treatment of holding companies, which will not provide any incentive to investors to use Ukrainian holding companies in their tax planning, a practice common in more developed countries. For example, if a Ukrainian holding company carries out no operations but owns shares in two or more subsidiaries, each of the subsidiaries will be required to pay an advance corporate tax (the "ACT") of 25% on any dividends it pays to its holding company. Each subsidiary is then permitted to deduct the ACT from its future profit tax obligations. However, when the holding company pays out dividends to its own shareholders, it also must pay a 25% ACT - but since the holding company has no taxable earnings of its own (dividends do not qualify as taxable income), it is unable to set off the ACT against future profit tax payments. So, while the holding company keeps building up its 25% ACT credit, it is unable to utilize that credit. The result is that an additional 25% is effectively lost to tax in such a structure unless the holding company engages in other activities that generate taxable income, against which the 25% ACT on dividends can later be offset. /A. Putinsteva. with the Lobbying Law. Data contained in the register is publicly available and published in the official Public Information Bulletin (the "PIB") on the Internet. In the two months since the Lobbying Law become effective, almost 50 entries have been made in the register.
Registered lobbyists are entitled to engage in lobbying on the premises of the public authorities and the Parliament and to contact government officials. The officials must register such contacts, and information on the lobbyists' activities is also published in the PIB.
In order to make the lawmaking process more transparent and to allow interested parties to take part in the process, the Lobbying Law requires that the Council of Ministers prepare, at least every six-months, a legislative schedule concerning the acts directed to the Parliament. The schedule must contain information explaining the reasons for the new draft legislation, outline the essence of projected solutions to be implemented, as well as indicate the authority in charge of preparatory works on the act. Similarly, the Council of Ministers and the ministers prepare an executive act (ordinance) schedule.
All of this information, along with drafts and other documents relating to the legislation, is published in the PIB. A party interested in participating in review of a proposed regulation (not limited to professional lobbyists) may file a notice to the relevant authority indicating the interests such party will support, and the suggested solutions.
The Lobbying Law also introduces the institution of public hearings on proposed regulations, in which those notified interested parties are entitled to participate. Protocols from public hearings are published in the PIB.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
