The solutions proposed by the Act on the settlement of disputes concerning double taxation and conclusion of advance pricing agreements assume:
- implementation of new regulations concerning Advance Pricing Agreements (APAs) and their arrangement, inter alia, in the scope:
- introduction of the possibility of initiating APA proceedings by a foreign entity planning to carry out an investment in Poland, which will result in the establishment of a domestic entity with which the foreign entity will conclude controlled transactions (a decision will be issued for a domestic entity)
- introduce a requirement to make public aggregated information on the decisions on APAs.
- the replacement of the tax audit of prior pricing agreements by a verifying activities procedure. The tax audit of APAs is to apply only to APAs issued to foreign investors and to APAs where there is a reasonable suspicion of non-compliance by related parties.
- adapting the information shown in the APA implementation report to the individual situation of the taxpayer to whom the authority competent for the agreement has issued the APA (individualization of the report)
- introduction of the possibility to cover the period from the beginning of the tax year in which the application was filed with the previous price agreement (the current regulations prevent the period before the date of filing the application from being covered with the previous price agreement)
- introducing the principle that the period of validity of the APA expires at the end of the applicant’s tax year
- postpone the deadline for submitting a request for renewal of the APA to 6 months after the end of the APA period
- introduction a 50 % fee on the amount of the fee for a request for an Advance Pricing Agreement (unilateral, bilateral or multilateral APA) for taxpayers to participate in a Co-operative compliance scheme.
Co-operative compliance assumes the implementation of a settlement based on close cooperation between the largest taxpayers and tax administration. The aim of the co- operative compliance is to ensure compliance with tax law by establishing close and ongoing cooperation between tax authorities and taxpayers. The biggest benefit for the taxpayer is to increase the certainty of tax law and expenditure planning.
- introduction of a new procedure for resolving disputes related to the avoidance of double taxation in the European Union – in accordance with the solutions provided for in Council Directive 2017/1852. The new regulations concern disputes arising from the interpretation and application of agreements and conventions providing for the elimination of double taxation of income or property to which the Republic of Poland and other member states are parties. The proposal includes, among others, the introduction of a time and institutional framework and the principles on which the adoption and consideration of an application initiating the mutual communication procedure will take place.
- streamlining double taxation procedures by taking into account the existing legal regulations in their form:
- proceedings conducted on the basis of the Convention on the elimination of double taxation in connection with the adjustment of profits of associated enterprises
- proceedings conducted on the basis of double taxation conventions
The new regulations also provide for the transfer to the draft act of the regulations contained so far in Section IIA of the Act of 29 August 1997. – Tax ordinance concerning advance pricing agreements.
Currently, the draft is awaiting further legislative process in the Sejm. The aforementioned regulations will come into force 14 days after the announcement.