The Ministry of Finance published a communication on the submission of a declaration of drawing up the local transfer pricing tax documentation

one of the many changes introduced in the rules (and therefore also in the obligations resulting from them) concerning transfer prices, there was a declaration of drawing up the local transfer pricing tax documentation.

In this document, the taxable person was obliged to confirm that: 1. prepared local tax documentation for transfer prices, 2. the transfer prices of the controlled transactions covered by the local transfer pricing documentation were established under conditions that would be determined by unrelated parties.

To 1 January 2022 valid Article 11m Corporate Income Tax Act (similarly Article 23y Personal Income Tax Act), requiring a statement to be made as a separate document. From 1 January 2022 it is intended to be an integral part of transfer pricing information, i.e.

the TPR-C form (which consists of legal persons) or TPR-P (which consists of natural persons).

This amendment, despite facilitating the absence of the need for a separate document, raises doubts as to how the declaration in question is included in the forms. Especially since the TPR forms published at the end of September last year in the variant fourth did not include an additional section on the declaration itself.

It is therefore worth seeing what the rules say on this subject, the same ones as the Ministry of Finance refers to in the Communication. According to Article 11t(1) Corporate Income Tax Act[1] connected entities required to draw up local transfer pricing documentation for transactions covered by this obligation or carrying out controlled transactions specified under Article 11n(1-2) or 10-12[2] Corporate Income Tax Act

• submit to the head of the tax office competent for the taxable person, by the end of the period eleventh one month after the end of the tax year, information on transfer prices for the tax year, drawn up in accordance with the model of the electronic document in the Public Information Bulletin on the website of the body of the office serving the minister responsible for public finances.

According to Article 11t(2) Corporate Income Tax Act[3] information on transfer prices shall include:

• an indication of the authority to which it is submitted, the purpose of the information and the period for which it is submitted,
• identity of the entity,
• general financial information of the entity,
• information on related entities and controlled transactions,
• information on the transfer prices used and the methods of verification thereof,
• additional information or explanations on the data or information referred to above,

a statement by the entity that the local transfer pricing documentation has been drawn up in accordance with the real state and the transfer pricing covered by that documentation is determined under conditions that would have been determined by unrelated parties.

The detailed content of the statement referred to above can be found in the Regulation of the Minister of Finance dated 29 August 2022 on corporate tax transfer pricing (Journal of Laws of 2022, item 1934). Agree with section 2 point 7 The above Regulation reads as follows:

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.

However, a similar statement, according to section 2 point 7 Regulations of the Minister of Finance dated 29 August 2022 on transfer pricing information on personal income tax (Journal of Laws of 2022, item 1923), read as follows:

Subject to Article 23zf(2)(7) Act dated 26 July 1991 on personal 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 that would have been determined by unrelated parties.

Returning to the Ministry of Finance itself, it can be read that until the publication of the new versions of the TPR-C and TPR-P forms in force, the TPR Information Model submitted for 2022 is the formula published in the variant 4 that Information which does not include in the structure of the document a separate part concerning the statement of drawing up the local transfer pricing documentation.

How, then, can we include information on the preparation of the tax documentation?

Further, it can be read that for entities obliged to submit TPR information for a year 2022, in view of the expiry of the time limit for the submission of this Information, to make a declaration using the TPR-C (TPR-P) form in the variant 4, entities may include the relevant content in Section F Additional information.

This solution can only be used until a new model of the TPR-C and TPR-P electronic information document is published (option 5).

At the same time, the Communication states that 25 April 2023 The Ministry of Finance has made available working versions of TPR-C and TPR-P forms in the variant 5. If, therefore, the work on the regulations amending the Transfer Price Information Regulations is seamless, taxpayers may not have to apply in November the way in which the transfer pricing tax documentation referred to in the published statement is made out.

1) concluded exclusively by affiliated entities domiciled, established or managed in the territory of the Republic of Poland in the tax year in which each of these affiliated entities meets the following cumulative conditions:

• (a) does not benefit from the exemption in question under Article 6 (This condition applies only to the Corporate Income Tax Act),
• (b) does not benefit from the exemption in question under Article 17(1)(34) and 34a of the Corporate Income Tax Act (Article 21(1)(63a)(63b) Personal Income Tax Act),
• (c) has not suffered a tax loss;

1a) containing only:

(a) between foreign establishments of related entities established in the territory of the Republic of Poland, located in a territory other than the Republic of Poland of a Member State of the European Union or another State belonging to the European Economic Area,

(b) by a foreign establishment in the territory of the Republic of Poland of an entity domiciled, established or managed in a territory other than the Republic of Poland of a Member State of the European Union or of another State belonging to the European Economic Area with a related entity resident, established or managed in the territory of the Republic of Poland

• in a tax year in which revenue or costs resulting from such controlled transactions are assigned to a foreign establishment, provided that none of the related parties in respect of those revenues or costs attributable to the foreign establishment benefits from the exemptions in question under Article 6 and Article 17(1)(34)(34a) Corporate Income Tax Act (Article 21(1)(63a)(63b) Personal Income Tax Act) and has not suffered a tax loss;

1. subject to the prior price agreement, the investment agreement in question under Article 20zs(1) Tax Ordinance, or the tax agreement in question under Article 20zb(2) Tax Ordinance, for the period covered by such an agreement; (...)
2. consisting solely in the settlement between related entities of expenses incurred for the benefit of an unrelated entity, provided that all of the following conditions are met:

(a) the added value is not generated and the settlement is made without account being taken of the profit margin or charge,

(b) the settlement is not directly linked to another controlled transaction,

(c) the settlement took place immediately after payment to an unrelated party,

(d) a related entity is not a resident, established or managed entity in the territory or country applying harmful tax competition

• Where the allocation key is applied, the provision Article 11f(1)(3) Corporate Income Tax Act Article 23r(1)(3) the Personal Income Tax Act) shall apply mutatis mutandis;

1. low value added services - if the conditions are met under Article 11f Corporate Income Tax Act (Article 23r Personal Income Tax Act;
2. on loan, credit or bond issuance - if the conditions specified are met under Article 11g Corporate Income Tax Act (Article 23s Personal Income Tax Act).