There are 75 days left before the deadline for preparing transfer pricing documentation for transactions executed in 2018. At the same time taxpayers have doubts as to which regulations should be applied in order to properly fulfil the documentation obligation.

We explain that the requirements concerning transfer pricing documentation introduced from 2019 may also be applied to transactions executed in 2018.

On 1 January 2019, the amended transfer pricing regulations introduced by the Act of 23 October 2018 amending the Personal Income Tax Act, the Corporate Income Tax Act, the Tax Ordinance Act and certain other acts (Journal of Laws of 2018, item 2193) came into force, the so-called “amending act”.

Pursuant to Article 44(1) of the aforementioned Act, the amended provisions apply to income (revenue) earned by taxpayers as of 1 January 2019 (with the exceptions specified in the Act).

In order to determine the transfer pricing obligations for 2018, the provisions in force in 2018 shall apply. At the same time, pursuant to Article 44(2) of the Amending Act, it is possible to select provisions introduced by the Amending Act to all controlled transactions carried out in 2018.

The regulations in force in 2018 cannot be applied simultaneously with the regulations in force from 1 January 2019, thus, if a taxpayer decides to apply the new regulations to the controlled transactions executed in 2018, he does not have to prepare simultaneously the tax documentation on the basis of the regulations in force in 2018.

It should be remembered that the choice of applicable regulations must be related to all controlled transactions in a given period of time.

In connection with the change of regulations, the taxpayer should analyze which legal regulations are more favourable for the company.

Author: Beata Rawa – senior tax consultant

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