On 26 May, the Ministry of Finance presented a draft of the first tax act of the New Polish Order, which includes, among others, amendments to transfer pricing regulations. The presented solutions are aimed at simplifying regulations and facilitating taxpayers' fulfilment of transfer pricing documentation obligations.
The draft has been referred to public consultation, which will end on 30 August 2021.
Below we present the changes proposed by the Ministry of Finance, to be faced by taxpayers in the coming year.
Key changes in transfer pricing - the Polish New Order:
- controlled transactions satisfying the safe harbour exemption criteria for controlled transactions representing low-value services (current regulation),
- controlled transactions concluded by related entities which are micro or small entrepreneurs within the meaning of the Enterprise Law,
- transactions other than controlled transactions concluded with so-called tax havens (direct transactions) or in which the beneficial owner of the counterparty is resident in the so-called tax havens (indirect transactions), subject to documentation requirements,
the amendment provides that a tax authority will be authorised to require a taxpayer (other than a micro-entrepreneur) to prepare and submit local transfer pricing documentation within 30 days with regard to specified controlled transactions for which the taxpayer was exempt from the documentation obligation due to the use of the financial safe harbour mechanism. At the same time, the tax authority will be obliged to specify the circumstances indicating the probability of an understatement of the value of the controlled transaction or non-fulfilment of the conditions referred to in the provision,
The changes in transfer pricing presented above should be viewed positively, as they will not only reduce the existing difficulties in meeting some of the documentation obligations, but will also significantly reduce their number.
Webinar: The Polish Order - changes concerning PIT