Deadlines for preparing transfer pricing analyses are getting closer

This is the final call to make sure you meet the obligations related to preparing transfer pricing analyses. Due to the Covid-19 pandemic, in 2021, the deadlines for meeting the documentation obligations for 2021 (including TP analysis) have been extended until the end of 2022 for most taxpayers.

Update of TP analysis

One of the items required in the local file are transfer pricing analysis that can take the form of a benchmarking or a compliance analysis. These analysis are to be updated at least every 3 years, unless a change in the economic environment significantly influences the prepared analysis so that it justifies updating it in the year of the change. In the case of no earlier updates, this year the benchmarking analysis for 2018 should be updated.

When assessing changes in the economic environment in 2021, you should review, for example, the increase in the price level and the beginning of the monetary policy tightening cycle in our country. It is necessary to consider whether, in these circumstances, taxpayers should compile new financial benchmarks due to changes in interest rates in the second half of 2021. The analysis may already include data for 2020 and partially for 2021, i.e. the years significantly affected by the Covid pandemic. So, we do have the tools to study the impact of the pandemic on individual industries.

Moreover, please note that updating the analysis is not a common obligation in OECD countries. Polish entities using benchmarks from the group are often unaware that their analysis do not protect them due to an up-to-date research missing. It also happens that the analysis prepared by the group do not contain all the items required by Polish regulations or that the search criteria for comparable entities in databases could be easily challenged by Polish tax authorities.

Reporting transactions exempt from analysis

Due to the exemptions from the obligation to prepare analysis, the method of reporting the part concerning the price verification methods in the TPR forms raised doubts. The TPR Guidebook of October 2022 mentioned an option to select the ‘MW00 code – not applicable’ in the Price verification method box. It was emphasized that the MW00 code can be used when reporting these transactions in the TPR form:

  • covered by the safe harbour mechanism,
  • made by micro or small entrepreneurs,
  • exempt from the obligation to include a benchmarking or compliance analysis with their local file, or
  • tax haven transactions other than controlled transactions (from 2021 we verify both the cost and the revenue side).

Exemptions are available only in strictly defined cases. Therefore, a thorough analysis of the transactions in this respect should be performed.

Tax audits in transfer pricing

The authorities are gaining expertise in the field of transfer pricing and collect an increasing amount of data about taxpayers (including the TPR forms). Our experience shows that the correctness of a benchmarking analysis is most often questioned as part of transfer pricing audits. The authorities tend to disagree with the selection of the sample, i.e. the selection of comparable entities. In many cases, they do not accept the full range or exclude contracts selected for review due to differences in geographic markets (e.g. excluding contracts between American entities when the examined transaction was made on the Polish market). Therefore, your analysis should introduce a consistent logical reasoning and feature appropriate justification for each of the steps made.

The quality of the analysis is of key importance to be on the safe side tax-wise. A correct benchmark requires access to specialized databases which is limited for some taxpayers due to high costs. Publicly available data is often insufficient in the light of legally defined comparability criteria. The best example of such  situations are, for example, loan transactions: transfer pricing analysis are prepared using data on average interest rates for given types of contracts published by the NBP (the National Bank of Poland). It should be emphasized that these data are general and averaged – they cannot be verified in terms of all comparability criteria (e.g. credit risk of the borrower).


Feel free to contact us if you have not yet fulfilled the obligations related to the preparation of transfer pricing analysis, or if you have doubts as to the quality of the ones you have prepared. We are ready to support you in this respect.