The Polish Deal introduces a number of changes to the laws on transfer pricing. Such changes seek to simplify and insulate the system. Below is a discussion of selected changes in this area:
Extended list of documentation exemptions
- It will abolish the requirement to prepare certain local transfer pricing documents, such as: re-invoicing and safe harbour transactions concerning finance and low value-added services;
Easing the terms of transfer pricing adjustments
- It will abolish the obligation to declare any transfer pricing adjustment in the annual tax declaration. It also allows negative adjustments to be made if the taxpayer has received an accounting document from a related entity to confirm that a transfer pricing adjustment was made in a specified amount;
No obligation to prepare comparative and compliance analyses
- It will be possible to avoid the need to prepare a comparative analysis (compliance analysis) for transactions which are:
- controlled – i.e. concluded by taxpayers who are micro-/small- entrepreneurs (but such taxpayers are still obliged to confirm the arm’s-length nature of the applicable prices);
- non-controlled transactions entered into with entities from tax havens (or if the beneficial owner of such an entity is from a tax haven).
- The deadline will be extended for:
- preparing transfer pricing documentation: until the end of the 10th month after the end of the tax year;
- submitting transfer pricing information: until the end of the 11th month after the end of the tax year,
- submitting transfer pricing documentation as requested by the tax authority: from 7 to 14 days.
Transferring the market declaration to the TPR form
- As part of the planned reforms, the declaration will constitute a new element of the TPR-C or TPR-P form, and so will not be submitted as a separate document.
- To date, a related entity has been required to submit, as a separate document, a declaration on the preparation of local transfer pricing documentation based on the arm’s-length nature of the prices mentioned therein.
Exemption from the obligation to submit ORD-U
- An exemption from the duty for taxpayers or non-legal entities to submit information (the ORD-U form) regarding agreements concluded with non-residents will apply to taxpayers who are also required to submit TPR information and who do not conclude transactions with contractors from tax havens.
Stricter requirements for signing TPR
- Changes are made to narrow range of people authorized to sign the TPR.
- The new provisions will require the TPR to be signed by a company’s entire management board or by a designated member of the management board; merely appointing a designated member will not release other management board members from any liability arising from a failure to submit the TPR.
- Additionally, it will not be permitted for a proxy to sign the TPR, unless the proxy is an attorney-at-law, legal advisor, tax advisor or statutory auditor.
New KKS sanction regarding transfer pricing documentation
- A completely new KKS sanction is created for failure to prepare local or group transfer pricing documentation. Additionally, this sanction will apply if the documentation was prepared inaccurately.
Clarification of existing provisions
- The wording of certain current provisions is clarified, particularly as regards:
- Verifying the accuracy of interest rate levels in order comply with the conditions for using the safe harbour approach to financial transactions;
- Valuing transactions within the scope of deposit agreements, the articles of association of entitles which lack legal personality or joint venture contracts;
- Abolishing the duty to appoint a partner of the company who, not being a legal person, is obliged to submit information on transfer prices applicable to the company;
- Identifying data sources used to prepare transfer pricing information.