On 25 September this year, the Council of Ministers adopted a draft act amending the Act on personal income tax, the Corporate Income Tax Act and some other acts. The Council of Ministers adopted a bill amending the Personal Income Tax Act, the Corporate Income Tax Act and some other acts.
The draft includes changes announced by Minister of Finance Teresa Czerwińska regarding the obligation to prepare transfer pricing documentation for domestic transactions.
The proposed amendments assume that the obligation to prepare local transfer pricing documentation does not apply to transactions concluded exclusively by affiliated entities having their place of residence, registered office or management on the territory of the Republic of Poland.
In order for a taxpayer not to be obliged to prepare documentation, it must meet two conditions in a tax year:
- not to take advantage of the tax exemptions specified in the Act,
- not incur a tax loss.
The above-mentioned exemptions apply to the taxation of income obtained from business activity conducted on the basis of a permit in a special economic zone and the exemption from taxpayers’ income obtained from economic activity specified in the decision on support, as meant in the Act of 10 May 2018 on supporting new investments.
Moreover, the draft of the Act amending the Corporate Income Tax Act indicates that the taxpayer may not take advantage of the exemption, that the taxpayer may not take advantage of the exemption referred to in Article 6 relating to CIT exemptions.
It should be noted that the group of entities and transactions exempted from the obligation to prepare transfer pricing documentation includes transactions whose total value does not permanently constitute revenue or tax deductible cost, excluding financial transactions, capital transactions and transactions concerning investments, fixed assets or intangible assets and transactions whose price has been determined in an open tender procedure.
Author: Piotr Rzepka – Tax consultant