Tax strategy 2021 

Agata Nieżychowska
The introduction of an obligation to publish a report on the implementation of the tax strategy by selected entities constitutes one of the amendments to the income tax laws scheduled for 2021. Which taxpayers will have to follow this obligation?

According to the draft provisions, the obligation to develop and publish the report on the implementation of the tax strategy is to cover:

  • tax groups - regardless of the volume of revenue (the tax strategy should apply to both the group and each of its member companies);
  • taxpayers whose revenue in the tax year exceeded EUR 50 million;
  • real estate companies - regardless of the volume of revenue;
  • limited partnerships and selected general partnerships, both of which will become CIT taxpayers and at the same time meet the conditions for publication obligations (exceeding the EUR 50 million revenue threshold or enjoying the status of a real estate company).

The obligation to publish reports will not apply to entities which are parties to a cooperation agreement under the Cooperation Programme.

Report on the implementation of the tax strategy

The draft legislation specifies a number of elements to be included in the report on the implementation of the tax strategy, in particular:

  • description of a taxpayer's approach to processes and procedures for managing and ensuring the proper performance of obligations arising from tax law, including voluntary forms of cooperation with the National Revenue Administration (NRA) authorities;
  • a description of a taxpayer's approach to fulfilling tax obligations within the territory of Poland together with information on the number of MDR reports submitted, divided into taxes to which they relate;
  • information on restructuring measures planned or undertaken by taxpayers with a potential impact on their obligations or the obligations of their related entities;
  • information on transactions with related parties the value of which exceeds 5% of the balance sheet assets within the meaning of the accounting regulations, calculated on the basis of the most recent approved financial statements of a company, also including those which are not Polish tax residents,
  • information on the tax settlements of a taxpayer made in countries with harmful tax competition.

What should a tax strategy contain?

An important thing is that the company's tax strategy should not only indicate the company's efforts to settle taxes in a timely and reliable manner, but, above all, it should confirm that the way in which the tax processes are arranged within the company truly supports the implementation of these assumptions. Therefore, entities covered by the obligation to develop a tax strategy and publish a report on its implementation will have to thoroughly analyse the processes implemented in their organisation, and perhaps even develop them once again.

Furthermore, it is worth adding that if these procedures are to really ensure reliable and timely implementation of tax obligations, they should also include the specific nature of the operations of a given company. An analysis of the draft regulations suggests that the development of a tax strategy will be a process similar to the development of the MDR procedure or the VAT due diligence procedure. 

The reports on the implementation of the tax strategy in accordance with the draft provisions should be published on the company's website no later than by the end of the ninth month following the deadline for submitting the annual tax return.

The new provisions are expected to come into force from 1 January 2021, so it is worth looking more closely at the company's processes towards fulfilling tax obligations. The penalties to be imposed for failure to develop and publish a report can be as high as PLN 1 million.

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Agata Nieżychowska
Agata Nieżychowska
Tax Director

Tax strategy

Tax advisory