The amendment of the Commercial Companies Code is to enter into force 13 October. b.r. (Journal of Laws of 2022, item 807). The new rules conflict with transfer pricing law.
As of October, the subsidiary will be able to receive the so-called binding order. Article 212 . KSH states that the parent company may issue a binding order to the subsidiary participating in the group of companies to conduct the business of the company (binding instruction), if this is justified by the interest of the group of companies and the special provisions do not provide otherwise. Unfortunately, it can be noted that the provisions provide otherwise, namely, tax law is not included.
According to the market price principle, transactions between related parties should take place under conditions similar to those established by unrelated parties.
Once binding orders are in place, this rule can be easily broken and companies will be faced with a dilemma: to break the tax rules on the market price or to refuse to execute a binding order, which involves a complex procedure (although it requires a prior resolution of the board of directors of a subsidiary participating in a group of companies).
Refusal to execute a binding order may be made if its execution threatens to result in insolvency. This involves assessing whether the company will become insolvent.