16 days left to publish tax strategy for 2020

– This year, tax strategies will be published for the first time. This is a result of the amendment to the CIT Act, which has been in force since 1 January 2021. Recall that this obligation does not apply to all entrepreneurs, but only to CIT taxpayers whose revenues are higher than EUR 50 million and all tax capital groups. Failure to comply with this obligation may result in a fine. Fortunately, as the Ministry of Finance assures, possible mistakes will not be punished – points out Piotr Kalemba, tax adviser, senior manager cooperating with Thedy & Partners.

Michał Nielepkowicz, tax advisor, partner in Thedy & Partners, draws attention to what should be included in the strategy and the Ministry’s expectations in this respect.
– The regulations specify that information covered by commercial, industrial, professional or manufacturing secrecy is excluded from the obligation to publish. However, the CIT Act does not contain a closed catalogue of data to be provided as part of the published information. It only indicates examples of data that should be disclosed in the information – adds Michał Nielepkowicz.
As the MF points out, one of the information that has to be included in the strategy is data on transactions with related entities whose value exceeds 5% of the balance sheet total of assets within the meaning of the accounting regulations, determined on the basis of the last approved financial statement of the company.
– As we reported last week, the MF refers to the total value of all transactions made by a taxpayer with related entities in a given tax year. The Ministry suggests that transactions should be summed up first. If their value does not exceed 5% of the balance sheet total of assets, determined on the basis of the last approved financial statement of the taxpayer, the transactions are not subject to inclusion in the information on the executed tax strategy. On the other hand, if the limit is exceeded, the transactions must be disclosed in the information. However, this does not mean that they must be disclosed and described in detail – stipulates the MF – quotes Piotr Kalemba for the MF.
According to the MF’s explanations, it is sufficient to indicate the total value of transactions concluded with a given related entity, a general description of the nature of the transaction (e.g. fees for management, marketing or advisory services) and an indication of the general nature of links between the entities. It is not necessary to specify the nature of each transaction. There is also no need to publish – with respect to transactions with related parties – data that violate the taxpayer’s business secrecy.
– As we have already signalled, it seems that such an interpretation is inconsistent with the wording and purpose of the provision. On the one hand, it is good that the Minister of Finance made it more precise, but on the other hand, it is a pity that this information is provided so late because most taxpayers have already managed to prepare and publish this information. On the positive side, the MF admits that entrepreneurs will not be punished for mistakes. This is important as the strategies are published for the first time this year and, in addition, companies were counting on the announced postponement of the deadline for fulfilling this obligation. Unfortunately, the postponement did not work out, so the taxpayers had very little time to prepare the necessary information. Therefore, the MF’s explanations are good in theory that they have appeared, but in practice they will be applicable only next year – when preparing information for 2021. It would be good if the MF approached the issue exactly in this way – conclude experts from Thedy & Partners.