Poland intends to impose a windfall tax on oil companies to help reduce fuel costs.

Next week, Poland will propose a windfall tax targeting the profits of oil and gas companies that have surged due to rising energy prices from the Iran war, according to the country's state secretary for energy in an interview with Reuters. Wojciech Wrochna mentioned that the legislative initiatives will specifically focus on excess profits from oil and oil products, and possibly natural gas.

The revenue generated from the windfall tax will be allocated to support a reduction in VAT and excise duties that the Polish government has implemented during the Middle East crisis to alleviate energy costs for consumers. Wrochna stated that the cost of these tax cuts is approximately 1.5 billion Polish zloty (around 352.72 million euros) per month, indicating that the proposed windfall tax aims to compensate for the decline in budget income.

Several oil and gas companies have experienced significant profit increases recently, driven by developments related to the Middle East war. For instance, Shell reported its highest first-quarter profit in two years at $6.9 billion, while Norway's Equinor achieved its best profit in three years, and France's TotalEnergies saw a 29% rise in adjusted first-quarter net income to $5.4 billion compared to the previous year.

Countries such as Germany and Spain have called for the European Union to implement a region-wide windfall profit tax, but the European Commission has so far rejected the idea, citing potential legal challenges from companies as a concern. Poland is currently working on the specifics of its national windfall tax, including how to define "windfall profits," which may involve comparing current revenue to that of previous years, according to Wrochna.

He acknowledged that companies are "not extremely happy" about the proposed tax, but emphasized that the urgent circumstances created by the Iran war necessitate such measures. Wrochna stated, "The situation has provoked an unjust profit in the companies that are operating in the markets we're intending to tax. So I believe that if you look at it from this perspective, it's a justified action."