Since 1 January 2019, new transfer pricing regulations have been in force in Poland. The purpose of the changes was primarily to align Polish regulations to the OECD guidelines and BEPS 2015 project outcome, as well as to reduce the transfer pricing documentation burden by raising documentation thresholds and limiting the documentation requirements for domestic transactions.
Despite many beneficial changes for taxpayers resulting from the amended regulations, additional reporting obligations were introduced. Failure to meet these obligations may result in the taxpayers’ management boards or individuals responsible for financial matters being fiscally responsible.
Taxpayers (related parties) obliged to prepare the local file are required to submit electronically a statement on the transfer pricing documentation. The deadline is the end of the ninth month after the end of the financial year. In the statement, all members of the taxpayer’s management board declare that the local file for a given year is ready and the transfer prices are arm’s length. A lack of statement, its delayed submission or inaccurate data could result in the management board members becoming fiscally responsible.
In order to mitigate such risk, related parties should ensure proper evidence is in place to prove that the transfer prices are arm’s length, such as up-to-date comparable studies and other economic justification. The Polish transfer pricing regulations require the comparable study to be updated at least every three years.
The new rules also introduced an obligation to report transfer pricing information electronically by the end of the ninth month after the end of the financial year. Related parties are required to provide both general information on their operations such as the economic activity codes, financial ratios and detailed data on specific transactions with related parties. In particular, the TP-R report should provide information on the transfer pricing method, comparable range as well as transfer pricing adjustments. Failure to submit the information, late submission or providing inaccurate data can result in fiscal responsibility.The aim of introducing such a reporting requirement is to increase the effectiveness of the transfer pricing controls by targeting specific companies.
As part of the public consultation on the draft TP-R e-form, many comments were made on its technical and logical correctness. The objections were mainly due to the significant simplification of the form, which made it difficult for most of the taxpayers to complete it correctly. Due to numerous doubts and technical issues, taxpayers appealed to the Ministry of Finance to postpone the deadline for first TPR submission. However, at this point in time only the deadline for taxpayers that have a tax year starting after 31 December 2018 shorter than 12 consecutive months is postponed to 30 September 2020 due to the current COVID-19 situation.
At present, taxpayers are waiting for a new TP-R e-form to be published. The Ministry of Finance announced that it will issue the explanations on TP-R (most probably in FAQ form). However, due to the current COVID-19 situation, concerns have arisen regarding a possible timing of such works.
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