As of 1 January 2019, the obligation for taxpayers to submit CIT-TP (PIT-TP) reports was replaced by the obligation to submit transfer pricing information (TPR-C).
TPR-C – for whom?
This information concerns entities obliged to prepare local transfer pricing documentation (so-called Local File).
However, transfer pricing information is also required to be submitted by those entities which carried out controlled transactions not covered by the obligation to prepare transfer pricing documentation, i.e. domestic transactions benefiting from the exemption (Article 11n.1 of the CIT Act/art. 23z.1 of the PIT Act).
Deadline for submission
The TPR-C information is submitted by taxpayers by the end of the ninth month after the end of the tax year. The information is submitted to the Head of the cash register by means of electronic communication.
Scope of information
It should be pointed out that the new scope of the new form is much wider and requires more detail than the CIT/TP declaration submitted so far (in the case of taxpayers whose revenues or costs exceed the equivalent of EUR 10 million).
In the TPR-C information, the taxpayer is obliged to indicate, inter alia, the level of the entity’s overall profitability on the basis of four dedicated profitability ratios, information on the transfer pricing verification methods applied, data sources used in the analyses and the obtained results of comparative analyses, as well as information on transfer pricing adjustments made.
A wide range of information made available by the taxpayer will enable the authorities to compare terms and conditions of transactions executed between related entities and to select entities to be controlled in the area of transfer prices. This results directly from the content of Article 11t.6 of the CIT Act (Article 23zf.6 of the PIT Act), which indicates that “transfer pricing information is used to analyze the risk of underestimating taxable income in the area of transfer pricing and for other economic or statistical analyses”.
The TPR form – advantages and disadvantages
The explanatory memorandum to the regulation introducing TPR-C refers to the 3xP policy, i.e. a simple (proste), transparent (przejrzyste) and friendly (przyjazne) tax system. This principle was intended to be implemented in a ‘simplified and transparent form’ and a limited ‘scope of data and information’. The fulfilment of the indicated 3xP rule is an electronic form of submitting declarations to the Head of the Cash Fund, which will make it easier for taxpayers to fulfil their reporting obligation and improve the analysis of information sent to tax authorities.
The easy access to the information needed to fill in the TPR-C form should also be considered a plus, as the taxpayer will be able to use data from the previously prepared documentation and comparative analyses.
On the other hand, given the amount of information that needs to be included in the new type of form, it will require significantly more administrative work on the part of the taxpayer, especially when it will be required to prepare transfer pricing documentation and benchmarking for a larger number of transactions. At the same time, these activities will provide control authorities with useful information to identify the individual transactions to be controlled. Thanks to the information obtained, they will be able to turn to specific taxpayers who meet the predetermined criteria. Moreover, the scope of information provided in the TPR-C declaration will allow for faster proceedings.
Author – Olga Kamińska – Tax consultant