On 16 July 2018, the Government Legislative Centre published a draft of the following Act amending the Personal Income Tax Act, the Corporate Income Tax Act and certain other acts.
The whole chapter on transfer pricing has been introduced into the project, which defines the terms, which is a novelty in the Polish regulations in this respect.
The project assumes, among others, an increase of documentation thresholds above which the obligation to prepare transfer pricing documentation arises, extension of deadlines for submission of the declaration to prepare local transfer pricing documentation, submission of information with transfer prices from 3 to 9 months after the end of the tax year and extension of the deadline for preparing the group transfer pricing documentation from 9 to 12 months after the end of the tax year.
The project also provides for the possibility of using group transfer pricing documentation prepared by another entity of the group, including English. In accordance with the proposed provisions, the entity receiving such documentation from the group will not be obliged to prepare it on its own.
Elements of the local and group transfer pricing documentation are also to be modified and aligned with the OECD guidelines. Solutions are to be introduced to enable the use, in justified cases, other than those specified in the Act, of methods, including valuation techniques, to determine the taxpayer’s income or costs from controlled transactions, which will enable the tax authorities to more effectively verify the consistency of conditions between entities related to market conditions.
Another important planned change is the replacement of the obligation for taxpayers to submit CIT/TP or PIT/TP reports with electronic transfer pricing reporting (TP-R).
Nevertheless, an important novelty is the planned introduction of simplified solutions (safe harbours) which, if applied by the taxpayer, will result in the recognition of the price or the price element as the market one. This is the case for two types of transactions, loans and services emissions with low added value. An example of a catalogue of services with low added value is provided in Annexes 1 and 2 to the proposed amendment.
The proposed amendments are expected to enter into force on 1 January 2019.
A public consultation on the draft is conducted until 30 July 2018.
Author: Beata Rawa