Below we will present the most important changes in transfer prices from 1 January 2022 Their entry into force from the beginning 2022 means that the whole year 2021 document and report on “old” rules.
Polish Deal, who entered into force already 1 January 2022, brought significant changes to the transfer pricing rules. Its amendments are mostly beneficial for taxpayers (e.g. extended deadlines for drawing up and submitting documentation, a larger scope of exclusions from the documentation obligation and new cases excluding the need for benchmarking or conformity analysis), but some of the changes may complicate the preparation of documentation or hinder the proper identification of obligations.
Simplifications for micro and small enterprises and transactions with entities in tax havens
In the case of related entities that are micro and small entrepreneurs within the meaning of the Act of 6 March 2018 when drawing up local transfer pricing documentation, they shall be exempted from the obligation to include transfer pricing analysis. The exemption will apply to traders who have fulfilled the conditions laid down in the last tax year under Article 7(1)(1) and 2 business rights.
The Amending Act clarifies that the obligation to document so-called Paradise transactions resulting from Article 11o(1-2) The CIT Act, in the case of a tax group, should be identified independently from the perspective of each member of such group.
This obligation will therefore apply even to companies forming part of a tax group which is a party to a transaction other than a controlled transaction concluded with an entity in a tax paradise or controlled transaction or other than a controlled transaction if the actual owner is a tax paradise entity.
Therefore, even the entities of the tax group should exercise due diligence when verifying whether their counterparties have settled with paradise entities in a given tax year.
At the same time, the local documentation for transactions other than controlled transactions with entities in tax havens does not need to contain a comparative analysis.
Amendments to time limits
Another benefit for taxpayers is the extension of time for drawing up local transfer pricing documentation. According to the regulations Polish Deal This documentation will have to be completed 10 one month after the end of the tax year.
The revised statutory term refers to controlled transactions and transactions other than controlled transactions carried out in the tax year starting after 31 December 2021 Thus, for local documentation produced for 2021 current deadline nine months after the end of the financial year.
On the other hand, the deadline for drawing up group transfer pricing documents, which the taxpayer should submit by the end of the current legal framework 12 months after the end of the tax year (currently operating).
Another change concerning the deadline for the benefit of taxpayers, in the legal state of 1 January 2022 concerns an extension of the deadline to submit local transfer pricing documentation in response to a request from the tax authority from 7 to 14 days.
In view of numerous changes in deadlines and documentation obligations, as amended from 1 January 2022 there will also be a form of drawing up transfer pricing documentation into an electronic format. It is worth noting that the legislator clarified the expectations only with regard to local transfer pricing documentation, while it can be expected that a similar format will be expected with regard to group documentation.
Mandatory electronic form of tax documentation, documentation on request
In the legal state since 1 January 2022 the local tax records of the taxable person shall be drawn up electronically.
The possibility of requiring the taxpayer to draw up a tax documentation on request is maintained - the tax authority may address a taxable person who is not a micro-entrepreneur within the meaning of Article 7(1)(1) the right of traders to produce and submit local transfer pricing documentation for controlled transactions for which the obligation has not been established or for which the statutory exemption has been applied. The grounds for such a request may be circumstances indicating that the value of the controlled transaction is likely to be understated or that the conditions for the Safe Harbour are not met.
Changes in the determination of the value of controlled transactions
From 1 January 2022 The principle of the net value of transactions was clarified by adding a condition on the right to reduce or refund VAT. The value of the controlled transaction shall be reduced by a tax on goods and services, with the exception of a tax on goods and services which, in accordance with VAT rules, does not constitute input tax, and a chargeable tax on goods and services in the part where the taxable person is not entitled to a reduction in the amount or reimbursement of the difference in the tax on goods and services under VAT rules.
In addition, the Act clarifies how to determine the value of controlled transactions for loan/deposit transactions and non-legal personality contracts. Currently this value is to correspond to:
- the value of capital in the case of a loan, loan or deposit,
- the total value of contributions made to a company not having legal personality, in the case of an agreement of such a company.
Amendments to reporting and declarations
Another significant change takes place in the scope of the TPR form. From 1 January 2022, the form to which the head of the KAS was previously addressed became the tax office of the related entity. Also in this case the deadline for deposit with 9 months in force in the old legal state to 11 months after the end of the tax year.
The scope of the transactions needed to be disclosed in the form was also extended to include the newly introduced exemptions for transactions involving a foreign establishment, Safe Harbour transactions, Refactures transactions and transactions covered by a prior price agreement, an investment agreement or a tax agreement.
In addition, a new version of the TPR form requires a declaration that the local transfer pricing documentation has been drawn up in accordance with the real state and that the transfer pricing covered by the TPR is determined on terms that would be determined by unrelated parties (for transactions not benefiting from the exemption from the local transfer pricing documentation). A separate statement will no longer be made.
It is also explicitly indicated in the Act (Article 11t CIT Act/Article 23zb the PIT Act) that in the case of unpaid or partially paid income benefits, they may be declared as transactions carried out on market terms.
The change also included a circle of persons entitled to sign the TPR form:
- In the case of a related natural person, the signature shall be provided by that natural person;
- In the case of a related foreign entrepreneur with a branch operating in Poland, the person authorised by the foreign entrepreneur to represent him in the branch shall sign;
In other cases, the document shall be signed by the head of the entity within the meaning of the Accounting Act (where the entity is managed by a multi-stakeholder body — the designated person of that body).
Amendments to the criminal-carb penalties
As regards the activities covered by the carnoscarb sanctions, changes were made to include sanctions on those activities which were not previously linked to the possibility of imposing sanctions.
And so from 1 January 2022 fines the 720 daily rates are subject to:
- which, contrary to the obligation, does not draw up local transfer pricing documentation,
- which, contrary to the obligation, does not attach to the local transfer pricing documentation group transfer pricing documentation,
- which, although drawing up local transfer pricing documentation or group transfer pricing documentation, does so contrary to the real state,
- which does not provide transfer pricing information to the competent tax authority (i.e. the so-called TPR form, which will include a statement of the compilation of transfer pricing documentation),
- which, although providing transfer pricing information, gives in it data incompatible with the local transfer pricing documentation,
- which submits the aforementioned information on transfer prices, but gives in it data that is not in line with the real state.
However, he fines fines 240 daily rates are subject to:
- which draw up the local transfer pricing documentation or group transfer pricing documentation after the deadline,
- which submits transfer pricing information after the deadline.