The Ministry of Finance has published the positions of entities reported in public consultations on the draft law on the settlement of double taxation disputes and on the conclusion of prior price agreements. The current regulations concerning the rules of obtaining prior price agreements with respect to the procedures of obtaining such agreements should be assessed as costly and time-consuming, which has a direct impact on the small number of concluded agreements. The main benefit of a price agreement is that it reduces the risk of challenging the market price in related party transactions covered by the agreement.
The reason for developing and the need to introduce solutions planned in the draft results from the necessity to implement the Council Directive (EU) 2017/1852 of 10 October 2017 on double taxation dispute resolution mechanisms (OJ L 265 of 14.10.2017, p. 1).
This proposal introduces, among other things, simplifications aimed at introducing:
- Less information required for the application for a simplified price agreement
- Making statements instead of documents
- A flat-rate fee for an application for a simplified price agreement independent of the value of the transaction, generally lower than under current regulations
- The three-month time limit for the completion of the simplified pricing agreement procedure
- Possibility of transferring applications submitted by taxpayers before the entry into force of the draft act under the currently binding procedure to the simplified procedure if the conditions for the application of the simplified procedure are met
- Possibility of changing applications for a simplified price agreement into applications for an APA where circumstances prevent the issue of a simplified price agreement and a reverse change of applications where circumstances allow the issue of a simplified price agreement
- Rules on verifying the accuracy of the information provided in the application for a simplified price agreement – to ensure that the simplifications introduced apply only where justified
Additionally, the project organizes, among others, procedures concerning double taxation, introduces a new mechanism of dispute resolution in the area of avoiding double taxation and adjusts terminology in the area of both previous price agreements and transfer pricing – to the changes introduced by the Act of 23 October 2018 amending the Personal Income Tax Act, the Corporate Income Tax Act, the Tax Ordinance Act and some other acts.
The expected date of entry into force of the draft Act is 1 July 2019.