Changes in TPR forms are coming

Some taxpayers may still remember when the transfer pricing regulations were much simpler, did not impose a large number of obligations outside the documentation obligation, and if they changed, once every few years.

Well, from 2017 one can forget the above times, because after a rather profound change introduced in the previous year, another great change was introduced two Years later. Fortunately, it is not a "worldly tradition", but a few that the taxpayer could keep up with radical changes which two years.

However, there are sometimes minor changes to the documentation or information obligation at transfer prices. This Article will present the proposed changes to the TPR forms, i.e. in the so-called transfer pricing information.

Why this amendment? They were caused by the Act amending the Corporate Income Tax Act and some other laws[1]. The amendments made to it apply to the Corporate Income Tax Act[2] from 1 January 2023 and concern, inter alia, the removal of a rather cumbersome issue related to so-called "intermediate Paradise transactions"[3].

The purpose of the draft Regulation of the Minister of Finance amending the Regulation on transfer pricing information in the field of corporation tax is to adapt the provisions of the Regulation to the amendment of the provisions of the Corporate Income Tax Act[4].

What will change affect? There are not many, but they will make it easier for the taxpayer's filling out TPR forms. First of all:

• (a) the provisions relating to the presentation of information on transactions in question shall be repealed under Article 11o(1a) Corporate Income Tax Act according to the earlier wording (i.e. the previously mentioned indirect Paradise transactions),
• (b) there will be a modification in the way in which the status of a micro entrepreneur or small entrepreneur is presented,
• (c) the content of the declaration contained in the TPR form will be clarified,

(d) the Annex to the Regulation will be reworded.

It is worth discussing the individual proposals briefly.

After first, remove provisions on so-called "indirect Paradise transactions".

Earlier in the case of transactions referred to at the time Article 11o(1a) The corporate income tax laws should indicate the country or territory of the place of residence, registered office or management of the beneficial owner and the value of the transaction per country or territory of the beneficial owner, if known to the entity.

The draft Regulation repeals the content related to the above solutions. It is also proposed not to divide into direct and indirect Paradise transactions in question In the Annex to the Regulation on transfer pricing information on corporate income tax.

After second, modification in the way the status of a micro entrepreneur or small entrepreneur is presented. Amendment is related to the provision Article 11q(3a) Corporate Income Tax Act:

For:

• 1) controlled transactions carried out by associated entities that are micro-entrepreneurs or small entrepreneurs as defined, respectively Article 7(1)(1)(2) Act dated 6 March 2018 - Business law,
• 2) transactions other than controlled transactions in question under Article 11o(1)
• - the local transfer pricing documentation may not include a benchmarking or conformity analysis.

According to the explanatory memorandum to the draft regulation, the new proposal for the submission of information by a micro-entrepreneur and a small entrepreneur will be based primarily on the obligation to indicate the relevant data in Section D of the TPR form (‘Additional data of the entity for which the information is submitted’). Therefore, amendments are proposed In the Annex to the Regulation, i.e. a passage describing how the TPR form is completed.

After third, change (precise) the content of the statement contained in the TPR form. The amendment involves the current lack of an obligation to make a separate declaration of drawing up the local transfer pricing tax documentation. According to Article 11t(2)(7) Corporate Income Tax Act, such a statement is an element of transfer pricing information.

In the Transfer Price Information Regulation (section 2 point 7 point (b) are two statements:

1) where related entities have entered into controlled transactions:

Subject to Article 11t(2)(7) Act dated 15 February 1992 on corporate income tax, I declare that the local transfer pricing documentation has been drawn up in accordance with the real state and that the transfer pricing covered by this documentation is determined under conditions which would have been determined by unrelated parties.

2) where related entities have entered into transactions other than controlled:

Subject to Article 11t(2)(7) Act dated 15 February 1992 on corporation tax, I declare that the local transfer pricing documentation has been drawn up in accordance with the real state and that the prices covered by this documentation are determined accordingly under conditions that would have been determined by unrelated parties.

After the proposed change, second The above statements would read as follows:

Subject to Article 11t(2)(7) Act dated 15 February 1992 on corporation tax, I declare that the local transfer pricing documentation has been drawn up in accordance with the real state, and the prices covered by this documentation are determined on terms that would determine among themselves non-resident, resident or head office entities in the territory or country applying harmful tax competition.

As explained in the explanatory memorandum to the draft Regulation, amendment of the statement in question Under section 2 point 7 point (a). the regulation consists in deleting from its content only the reference to the amended section 3 under Article 11t a bill which is related to the repeal of provisions relating to so-called indirect Paradise transactions.

After fourth, the new wording of the Annex to the Regulation. It is not only adapted to all the amendments mentioned above, but also, as explained in the explanatory memorandum to the draft regulation, contains clarification or editorial amendments.

These changes will apply to transfer pricing information submitted for the tax year starting after the date 31 December 2021 According to the proposed draft, the Regulation will enter into force after the expiry of the 14 days from the date of publication. At the date of writing this Article, the draft Regulation shall be at the stage of opinion and public consultation.

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