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) introduced, as of
1 January 2019, special provisions concerning the rules of recognition of transfer pricing compensating adjustments. It should be recalled that transfer pricing adjustments are a mechanism applied in international capital groups where the taxpayer adjusts the price (income) in transactions with related parties. Such adjustment is aimed at ensuring market profitability of entities.

The Ministry of Finance has issued an explanation regarding the recording of transfer pricing adjustments issued in 2019 and relating to transactions or other events occurring in 2018, according to which transfer pricing adjustments issued in 2019, relating to transactions or other events occurring in 2018, should be recorded in the tax books according to the rules resulting from regulations in force until the end of 2018.

Provisions introduced by the “amending act” will apply to transfer pricing adjustments concerning controlled transactions executed from 1 January 2019. The above results from Article 26.1 of the “Amending Act”, according to which the amended provisions of the Personal Income Tax Act and the Corporate Income Tax Act apply to transactions or other events, commenced and not completed before 1 January 2019, within the framework of this part of transactions or other events, which are executed in the tax year commencing after 31 December 2018.

Author: Beata Rawa – senior tax consultant