Ciech S.A.

Legal Proceedings Report • Jan 10, 2020

Subject:Decision to pay the tax liability

Text of the Report:

The Management Board of CIECH S.A. (hereinafterreferred to as the "Issuer" or "CIECH")herewith informs that today a subsidiary of the Issuer - CIECH SodaPolska S.A. (hereinafter referred to as the "Subsidiary" or"CSP"), i.e. the legal successor of Cerium Finance Sp. zo.o. (hereinafter referred to as "Cerium Finance"), inconnection with the decision of the Head of the Małopolskie ProvinceCustoms and Tax Office in Krakow(hereinafter referred toas the "Decision of the 2ndInstance" and the "2ndInstance Authority" respectively), in which following an appealsubmitted by the Subsidiary, the 2ndInstance Authorityupheld the decision of the Headof theMałopolskie Province Customs and Tax Office in Krakow(hereinafterreferred to as the "1stInstance Decision") of30 August 2019, defining the amount of the tax liability with respect totax on goods and services for December 2014 in the amount of PLN25,731,601, of which the amount of the disputed liability arising fromthe 1stInstance Decision is PLN 25,277,408 (the "Liability"),decided to pay the disputed Liability together with interest, which asat the date of publication of this report amounts to approx. PLN10,011,000.

The Issuer informed about the Decision of the 2ndInstance in its Current Report No, 3/2020 of 7 January 2020.

The decision to pay the same amount of the disputedLiability once again was made as a result of an analysis of theSubsidiary's procedural situation and in order to avoid obligatoryenforcement in connection with the negative position of the enforcementunit of the Kujawsko-Pomorskie Tax Office in Bydgoszcz obtained by theattorney for the Subsidiary, pertaining to the possibility of creditingthe amount of paid VAT, paid as a result of correction/adjustment of VATsettlement for July 2018, submitted by the Subsidiary, towards theLiability arising from the Decision of the 2ndInstance andthe interest due on such Liability.

As notified by the Issuer in the aforementionedcurrent report, such VAT amount to be paid again should be recovered bythe Subsidiary, at the latest, after the end of administrative and courtproceedings, if any (for December 2014), or after the end of overpaymentproceedings, if any, for July 2018.

The Subsidiary and its advisers disagree with theDecision of the 2ndInstance and the negative position of theenforcement unit of the Kujawsko-Pomorskie Tax Office in Bydgoszcz. TheSubsidiary and Cerium Finance obtained tax interpretations issued by theDirector of the National Tax Information Office, which they havecomplied with, i.e. have already paid the amount of the Liability. TheSubsidiary intends to lodge a complaint against the Decision of the 2ndInstance with the Provincial Administrative Court in Krakow.