In the government draft amendment of tax laws prepared on 2019 a new solution for the regulation of transfer prices can be found. The drafter in this amendment provides for the introduction of a simplified solution (the so-called Safe Harbour) into the Polish tax system, which will ensure that the taxpayer is confident that the tax authorities accept and recognise the applicable price or price element. Let us take a closer look at this idea.
The bill amending the Personal Income Tax Act, the Corporate Income Tax Act and some other laws provides for the introduction of the CIT Act Article 11f, a to the PIT Act Article 23r. They will aim to mitigate the documentation requirements for entities that include related entities transactions involving services of a low value added nature. The existing rules did not define the concept of such services. The introduction of a safe ribour solution required precise explanation of what these services are. The Annex to the CIT and PIT Act provides for an example list of services that may constitute services of a low value added nature. This annex will be created on the basis of the experience and achievements of the OECD and the U.S. Community Transfer Pricing Forum. It will be complemented by clear conditions for the recognition of such services. In addition, the following requirements will be required:
- • two percent of the value of such services to unrelated parties (the value of these services to unrelated parties must not exceed two percentage of the value of these services provided to unrelated and related entities) and
- • the criterion of non-disposal of such services by the recipient, except in cases of reimbursement of the costs of such services by the recipient to another entity in the group.
What is the purpose of this regulation?
The Safe Harbour regulation of services that meet certain conditions, as stated in the explanatory memorandum of the bill, ‘is intended to ensure that the tax authority deviates from determining the amount of income or tax loss in transactions that meet the conditions laid down in the provision’. At the same time, taxpayers will be exempted from the obligation to include in the transfer pricing documentation the analyses in which they have so far demonstrated that the conditions laid down by the related parties do not deviate from those laid down between unrelated parties.
This adjustment will mean that taxpayers will be relieved of their documentary obligations, and the tax authorities will not examine the market nature of the levy applied by the taxpayer.
The project's justification further states that taxpayers will be "obliged to have a calculation, indicating the type (by precise indication, for example, of the place where the costs arise and their nature) and the amount of the costs included in the cost base and the way in which the allocation keys are used and justified for all associated service providers".
It should be stressed that these calculations will have to be drawn up in detail.
The bill in question has already been discussed by the Sejm, 2 October 2018 took place his I read. The work of Parliament remains to be followed by all interested, as the project may change at this stage. However, everything indicates that from 2019 further OECD recommendations will enter into force.
Author:
Mikołaj Stanisławski
From 2017 Associated with Russell Bedford Poland. In 2007 graduated from the Faculty of Law and Administration of the University of Warsaw. In years 2008-2011 he made an attorney's application. From 2011 entered on the list of lawyers at the District Bar Council in Warsaw. In 2016 He graduated from the Postgraduate Tax Studies and Tax Law of the University of Warsaw. Specializes in tax and tax matters.