The Ministry of Finance has published a proposal of tax solutions related to the “Polish Order” program, including planned changes in the tax law on transfer pricing. The assumptions of the “Polish Order” in transfer pricing have so far the character of tax pre-consultations.
Purpose of the proposed changes
The purpose of new solutions is to simplify the regulations and to extend the deadlines for fulfillment of documentation obligations, to reduce reporting obligations, to reduce bureaucracy and to resolve some of the existing interpretation doubts.
What kind of changes will we face?
The planned changes are numerous and comprehensive. They apply to, among others, determination of the transaction value, transfer pricing adjustments, statutory deadlines, exemptions from the obligation of preparing transfer pricing documentation and benchmarking studies, penal fiscal fines or filing the TPR form. Below we highlight some of the most important changes.
- Extension of deadlines
As part of pre-consultations, it was proposed to extend the deadlines for preparation of transfer pricing documentation and comparative analyses to the end of the 10th and 11th month after the end of the tax year, respectively. Additionally, it is planned to extend the deadline for submitting the documentation at the request of the controlling authority to 14 days.
- More exemptions
Another positive change is the extension of the scope of exemptions from documentation obligations. The Ministry of Finance responded to the feedback from taxpayers and specialists and developed a catalog of conditions which, when fulfilled, exempt from preparation of documentation for re-invoicing transactions. Moreover, the draft provides for exemption from the documentation obligation for certain transactions performed by foreign establishments located in Poland as well as for financial transactions under the safe harbor regulation. Additionally, taxpayers which are micro or small businesses will not be obliged to prepare benchmarking analyses.
- The TPR tax form and TP statement as one document
One of the simplifications is also the inclusion of the statement on preparation of transfer pricing documentation and the arm’s length nature of transfer pricing in the TPR form. This will eliminate the requirement to file two separate documents.
- Modification of penal fiscal fines
Under the planned changes for:
- preparing transfer pricing documentation or transfer pricing information inconsistently with the actual state, or failing to prepare such documentation or information, a fine of up to 720 daily rates (up to PLN 26.9 million) will be imposed,
- preparing transfer pricing documentation or information after the deadline will be subject to a fine of up to 240 daily rates (up to PLN 8.9 million).
We will inform you about the results of the work in progress and ongoing consultations in future alerts.
If you are interested in the above information and its impact on your business, please contact:
Magdalena Marciniak Magdalena.Marciniak@mddp.pl tel. +48 22 322 68 88
or your MDDP contact person.