No more documentation of indirect haven transactions
The President signed an amendment to the Act of 7 October 2022 amending the Corporate Income Tax Act and certain other acts. It provides for, among other things, modifications to transfer pricing.
The purpose of this law was, among other things, to improve the provisions on corporate income taxation. As emphasised by the Ministry of Finance, the amendment serves, for example, to eliminate interpretation doubts and ambiguities that have arisen and to improve the legibility of the provisions.
The most important changes proposed in the draft with regard to transfer pricing provisions include:
– repeal of the provisions on the appropriate application of the arm’s length principle and documentation obligations for so-called indirect haven transactions – i.e. transactions in which the beneficial owner of the receivable is a resident of a tax haven; the amendment is proposed to come into force on the date of announcement of the Act, with retroactive effect from 1 January 2021,
– raising the documentation thresholds to PLN 2.5 million for financial transactions and PLN 500,000 for other transactions for the documentation of haven direct transactions; it is proposed that the thresholds will apply to both controlled transactions and transactions other than controlled transactions.