Changes in Tax Ordinance in an unauthorised manner they enter the matter of professional secrecy

„Proposed changes in Tax Ordinance in an unauthorised manner, they enter into the matter of professional secrecy linked to public trust professions (including the secrecy of tax advisers)," stated the National Board of Tax Advisers in a unanimous position at the last meeting of the CoRDP.

„The National Board of Tax Advisors (KRDP) sees attempts by the project promoter to take into account the environmental voices of tax advisers in the area of professional secrecy in the proposed changes Tax Ordinance intended to introduce the duty of Mandatory Disclosure Rules (MDR) into the Polish legal order" - stated the CoRDP position.

„As we have repeatedly pointed out, the introduction of MDR institutions should respect the nature and scope of professional secrecy of tax advisors, and the planned obligation to report tax schemes can only be accepted if it does not lead to a breach of professional secrecy of tax advisers" - said Andrzej Marczak, Vice-President of the National Tax Advisory Board, President of the Commission for the protection of professional secrecy of the KRDP.

„Resolution V of the National Tax Advisors Meeting dated 13 January 2018 The National Board of Tax Advisors was obliged to take all possible measures to protect and strengthen the obligation of professional secrecy by tax advisers" - added Andrzej Marczak, vice-president of the KRDP.

„In view of the above, we conclude that the proposed changes in Tax Ordinance in an unauthorised manner, they enter into the matter of professional secrecy, which is linked to those engaged in public trust professions (including the secrecy of tax advisers)" - stated the position of the National Tax Advisory Board.

The position points out that, in particular, the proposed provisions concerning, inter alia:

1. The treatment of confidentiality obligations and specific means of determining the remuneration in the relationship of an advisor - a customer as “general exploratory features” of the schemes to be reported - while the conclusion of the confidentiality clause in the contract/concerning is the essence of the profession of public trust, as it is the full confidentiality that enables the client to provide the representative of the profession of public trust with all the information in order to obtain the most appropriate solutions in accordance with applicable law;
2. The definition of the scope of the terms "promoter" and "supporter" as reporting agents - it is worth pointing out that the open catalogue of the above mentioned entities also includes entities (e.g. a bank or financial institution employee), which may not have the necessary knowledge to fulfil this obligation, and which are not related to professional secrecy to the extent that the tax advisor does. This catalogue may therefore, in fact, contribute to circumventing professional confidence institutions (information which, in the case of tax advisers, is covered by secrecy, will be reported by other entities with this secret which is not covered by the act of ‘promoters’ or ‘helpers’);
3. Written information by the promoter covered by professional secrecy, other entities obliged to provide information on the tax scheme that the promoter will not provide information on the tax scheme to the head of the KAS (this action may potentially lead to a breach of professional secrecy of the tax adviser as a result of the need to inform another entity of the classification of the arrangement discussed in the relationship as a tax scheme);
4. Indications that ‘does not constitute a breach of the obligation to maintain legally protected professional secrecy’:

(a) The provision of information on the scheme in the event of an exemption from the obligation of secrecy - without defining in what circumstances and as a result of whose action such exemption would take place (highly vague and indicating a significant risk of breach of professional secrecy appears in this context the position of the MF expressed in the explanatory memorandum to the bill (p. 108: „Whereas, in the light of doubts as to whether it is possible to exempt representatives of certain professions from professional secrecy by their customers to date, the provisions in question should be understood as standards of lex specialis which expressly prejudge such possibility (at least in the specific proposed provisions of cases);

(b) The transmission of information on a standardised scheme, which is information, even without the data directly identifying the user, can be sufficient to identify it (e.g.

where only the industry functions one an entity with specific characteristics relevant to the mechanism of operation of the scheme and, therefore, its transfer by the adviser may lead to a breach of the obligation of professional secrecy; a similar situation of breach of professional secrecy may also arise where the tax authority has (based on previous contacts with advisers/tax collectors) the knowledge which the clients represent/serviced by the counselor concerned.

It is also worth noting that the project promoter seems to understand the concept of “standardised scheme” extremely widely, as some passages of the project's justification indicate (p.

101: ”where a tax scheme can be applied to taxable persons operating in a particular sector, “law-based solutions”), thereby increasing the risk of extending the catalogue of cases that may lead to breaches of professional secrecy;

(c) Provide information to the head of the KAS about the date of access/implementation of the scheme and the number of entities informed by the adviser about the reporting obligation (in the latter case, the proposed regulation appears to further contain the implicit presumption that they will not fulfil their obligations).

The position also points out that, in the current form, the provisions are in a highly worrying way diminishing and, in fact, downplaying the importance of professional secrecy, in particular by:

1. Whereas those rules are intended to constitute an exception to the principle of protection resulting from professional secrecy and should therefore be as precise as possible so that taxpayers have accurate knowledge of what information a professional of public confidence must disclose;
2. The penalties provided for in the absence of information may be regarded as far more severe than those provided for in the breach of professional secrecy (where the highest penalty is the loss of the right to pursue the profession), which, in the absence of precision, may lead to reporting in breach of the protection of professional secrecy for fear of tax liability;
3. The envisaged transitional provisions impose an obligation to report on events prior to the entry into force of the Act, and thus seriously undermine the confidence in the transmission of information to representatives of the professions of public confidence, as the legislator may, under the rigour of criminal sanctions, order the disclosure of information subject to their professional secrecy at any time.

The National Board of Tax Advisors emphasises that “in jurisprudence and law science, the profession of public confidence remains closely linked to the obligation of professional secrecy. It constitutes an important guarantee for the exercise of public trust professions and therefore for the preservation of public order.

The Constitutional Court in its case-law has clearly indicated that the preservation of professional secrecy is part of the proper functioning of the judiciary and, more broadly, of the entire legal protection system in a democratic state.

Therefore, no legislative solution can be allowed, under which only on the basis of the general clauses and the concepts of the under-specified would be waived - and such solutions are proposed in the draft. Such measures cannot be accepted because they are a clear threat to the coherence of the legal system."

„The KRDP hopes that in the course of legislative work, the position of tax advisers on strengthening professional secrecy in the proposed regulations will be taken into account, which is clearly in the public interest combined with the concern for the welfare of customers and the whole tax system in Poland" - the position states.

„As the KRDP, we declare our willingness to engage in the consultation and legislative process in a comprehensive manner and we hope that any decisions will be taken taking into account the voices of the tax advisors' environment, and that is what we stressed in the CoR position" - concluded Andrzej Marczak, Vice-President of the National Tax Advisory Board and President of the Commission for the protection of professional secrecy.

Source: National Tax Advisory Chamber