There is a project of changes in transfer prices

– According to the TPF proposal, the changes are to cover the provisions on PIT, CIT, Tax Ordinance and Fiscal Penal Code. Firstly, the amendment would put the definitions in order. As the originators emphasise, it is necessary, i.a. to put in order the relations with regard to companies without legal personality. The proposals are also of a systematic nature, resulting from the different status of SKA shareholders. Secondly, the principles of transfer pricing adjustments are to be changed. The provisions are to be made more precise so that they provide for a possibility to make a downward transfer price adjustment also in a situation where the taxpayer receives accounting evidence from a related entity, which confirms that a transfer price adjustment of a specified amount was made by the related entity. The third area of change is the financial safe harbour mechanism. Currently, the prerequisites for the application of the financial safe harbour provisions relate to the financial year, and the assessment of the fulfilment of interest conditions is related to the moment of concluding the agreement. After the changes, the period in which the conditions for the application of the financial safe harbour are examined is to be the tax year – lists Cyprian Werykowski, tax adviser, director at Thedy & Partners.

What else would be changed? Other novelties are to be introduced with regard to the preparation of local documentation. The MF proposes to extend the time limit for preparing local transfer pricing documentation. The manner of determining the value of a controlled transaction in the case of a deposit agreement is to be more precise. A link is also proposed between the concept of the value of a controlled transaction and the neutrality of the tax on goods and services. The provisions on exemptions from the obligation to prepare local documentation are to be clarified and the list of exemptions for this type of documentation is to be extended. Moreover, the scope of local documentation is to be limited in order to facilitate its preparation.

– Taxpayers will also have more time to submit local transfer pricing documentation at the request of a tax authority. Today it is 7 days. In addition, the statement on preparation of transfer pricing documentation will disappear as a separate document and will be moved to the transfer pricing information in a modified form. There will also be more time to submit the transfer pricing statement. Currently, the time for this is until the end of the ninth month after the end of the tax year. It is to be until the end of the eleventh month after the end of the entity’s tax year, adds Cyprian Werykowski.

On the other hand, the changes in the Polish Penal Code are connected with liquidation of the statement on preparation of transfer pricing documentation. Thus, it will be necessary to modify penal fiscal sanctions with respect to local transfer pricing documentation and transfer pricing information.

In the Tax Ordinance, changes will include reporting on transactions concluded with non-residents. The MF wants to simplify the above-mentioned obligations for taxpayers conducting business.

These are only some of the most important changes from the ministerial document. We will keep you informed about the individual solutions of this project.