The Sejm passed and passed to the Senate on 12 May 2016 Act on Changes in Tax Ordinance concerning the anti-avoidance clause (hereinafter: changes in Tax Ordinance). The Act provides for the introduction of a Division IIIA on the prevention of tax avoidance.
Project changes are also foreseen Tax Ordinance a tax avoidance clause in individual cases - the Council on Tax Avoidance.
In the justification for the change in Tax Ordinance It is stressed that the experience of Poland and other countries so far shows that double taxation agreements alone are not enough to effectively prevent tax avoidance.
In other economically developed countries, the standard is a general anti-tax avoidance clause or a developed line of judicial case law to combat tax fraud. Therefore, the Polish authorities want to introduce anti-tax avoidance clauses as a counter to tax fraud.
The clause is intended to cover all taxes other than the tax on goods and services in respect of which there is broad jurisprudence of courts on abuse of rights in respect of the underselling of the tax obligation.
Current situation in tax avoidance exhaustive and is extensively diagnosed by the European Parliament resolution dated 25 November 2015 on the interpretation of tax law and other measures of a similar nature or effect (hereinafter: European Parliament Resolution).
Under point 18 The European Parliament resolution stresses that tax avoidance by some multinational corporations may result in close zero effective tax rates for profits generated in European jurisdictions, which is highlighted by the fact that such corporations, although using various public goods and services at their place of business, do not pay due taxes, thus contributing to the erosion of the national tax base and to increasing inequalities; it also stresses that only cross-border companies have the possibility of transferring profits, which puts competitors operating only in a worse position.
Moreover, the European Parliament resolution points out that. Moreover, the European Parliament resolution points out that national preferential schemes and a low level of coordination between Member States' tax systems result in a number of discrepancies which result in aggressive tax planning, double deductions and double non-taxation.
Examples of such abuse are the setting of transfer prices, , risk transfer, hybrid financial products, the use of divergences, tax arbitration, licensing agreements, the acquisition of contractual advantages and the sale of assets in low tax jurisdictions.
Information dated 17 April 2015 on the results of the audit "surveillance of tax authorities and tax authorities over the regularity of accounts with the state budget of entities with foreign capital participation" The Supreme Chamber of Control (hereinafter: the NIK control document) stressed that the absence of a clause against tax avoidance under applicable law constitutes an obstacle to ensuring the integrity of the Polish tax system.
In addition, the NIK audit document states that the introduction of a tax avoidance clause in the legal system may, to some extent, enhance the sense of legal certainty, since there is no tolerance for this phenomenon in any legal system. Consequently, the taxpayer expects the legislator to regulate it.
This standard sets the limit between permissible tax optimization and tax avoidance.
The introduction of a tax avoidance clause, according to the legislator, will fill a gap in the tax system, which makes constitutional values such as equality and universality of taxation not fully implemented. The introduction of a clause should result in taxpayers not applying tax avoidance practices.
Especially in the context of Article 84 Constitution dated 2 April 1997 (Journal of Laws of 1997, item 483), which indicates that everyone is obliged to bear public burdens and benefits, including taxes, as defined in the Act.
In the justification for the change in Tax Ordinance It is stressed that the special protection of constitutional principles of tax justice and universality of taxation and the protection of budgetary balance and the sustainability of public finances are in favour of introducing a clause against tax avoidance in the Polish legal order.
Project changes are also foreseen Tax Ordinance a tax avoidance clause in individual cases - the Council on Tax Avoidance.
Mechanism of action Article 119a changes in Tax Ordinance, i.e. The anti-tax avoidance clause will consist of the fact that the contested act or set of acts will remain valid and effective in the field of civil law, but their tax-related effects will be determined differently from the formal form of the acts. The tax implications can be determined on two planes: either by denying the activities of the taxpayer any effect on the tax level, or by reclassifying activities.
In the justification for the change in Tax Ordinance it is stressed that if the operation had no other purpose and economic sense other than to result in an unauthorised tax advantage for the taxpayer, then such activity will be considered as non-existent in determining the tax consequences (Article 119a(3)).
However, if the actions taken had economic content and were lawful, then there would be no simple cancellation of the tax consequences of the action, but an attempt to restore the course of events in such a way that the taxpayer did not act with the intention of achieving a tax advantage contrary to tax laws.
It is also stressed in the explanatory memorandum that the proposed anti-tax avoidance clause will apply when transactions have actually been carried out and legal acts are intended to circumvent tax law. It should be stressed that circumvention of tax law cannot be regarded as a specific form of circumvention of civil law.
This is a phenomenon based on tax law, and the analysis of the activities of the taxpayer can only be based on an assessment of the entire factual and legal circumstances which have certain effects in tax law rather than civil law.
The provision of the avoidance clause shall not apply in accordance with Article 119b changes in Tax Ordinance: 1) if the tax advantage or the sum of the benefits achieved by the entity for the activity does not exceed during the accounting period 100,000 PLN or 2) to an entity which has received a hedging opinion concerning an activity - within the scope of the opinion, until the date on which the hedging opinion is repealed or amended, or 3) to an entity whose application for a safety opinion has not been met within the period referred to under Article 119zb -to the extent requested, until the date of amendment of the safety opinion, or 4) to tax on goods and services and to fees and non-tax budgetary charges, or 5) if the application of other provisions of tax law prevents tax avoidance.
In the draft amendments to Tax Ordinance the definition of the tax advantage is also indicated as: non-deductible tax liability, remission or reduction of the tax liability, overpayment, loss or right to refund or an increase in the amount of the tax liability.
The anti-tax avoidance clause will apply if the result of actions having the characteristics of aggressive tax optimisation is a tax advantage exceeding 100,000 PLN.
In the justification for the change in Tax Ordinance it is also pointed out that, in order to minimise the effects of the entry into force of the anti-tax avoidance clause, the draft proposes to introduce protective opinions enabling taxpayers to know the position of the tax administration in relation to the planned or already undertaken transactions to which the clause may potentially apply.
Opinions will assess whether the legal structure envisaged by the taxpayer constitutes an abuse of the freedom to form legal relations justifying the application of the general anti-tax avoidance clause. The Minister for Public Finance will be responsible for issuing the safety opinion.
Subject to Article 119y The Minister responsible for Public Finance shall, at the request of the person concerned, issue, in his individual case, a safeguard opinion against the application of the anti-tax avoidance clause to him.
Such an opinion, at the request of the Minister concerned, shall, if it is established that the activities envisaged or carried out by the person concerned in the application do not constitute avoidance of taxation within the meaning of Article 119a.
The new procedure for issuing safeguard opinions in individual cases will not be limited to the interpretation of tax legislation only, but will broadly cover the possibility of applying the anti-tax avoidance clause, taking into account the economic aspects of the planned activities and the relationship between economic, economic and tax benefits
Amendments made by the legislator to the introduction of Tax Ordinance The anti-tax avoidance clause aims to set limits on permissible tax optimisation. It will also introduce greater autonomy of tax law towards civil law.
In the course of legislative work, it was decided to introduce a provision that the provisions of the clause would apply "to the tax advantage obtained after the date of entry into force of this Act".
Changes in Tax Ordinance The Sejm and the Senate will now be discussed. The bill, once approved by both Chambers of Parliament and signed by the President, is to enter into force 30 days after the announcement.
The planned changes will give the fiscal authorities more possibilities to control taxpayers, which may result in tax authorities questioning transactions carried out by traders. Unfortunately, the reasons for this under Article 119a leave a lot of discretion which, as the experience so far suggests, is not beneficial for taxpayers.