Given the increasing number of intra-group transactions, the need to amend transfer pricing issues is increasingly important. The changes presented by the Chancellery of the President of the Council of Ministers, which are to be included in the draft amendment of the PIT and CIT Act, focus on simplifying documentation and reporting obligations in the area of transfer prices, while strengthening the quality of supervision.
Key assumptions for change
- New rules for signing TPR information – it is planned to move away from the narrow catalogue of authorised persons indicated in the CIT Act. The existing legislation will be replaced by a reference to Tax Ordinance, which allows a wider range of entities, including attorneys of the taxpayer. The changes will result, among others, in simplifying the reporting process, especially in companies with foreign management and reducing the risk of formal errors related to representation.
- Transfer of the statement to the local transfer pricing documentation - now the local documentation statement is part of the TPR form. The presented amendment implies its transfer directly to the local documentation, which aims at both increasing the level of substantive documentation produced and better reflecting the documentation obligation.
- Simplification for micro- and small entrepreneurs - it is planned to abolish the obligation to present financial indicators in TPR information by micro- and small companies. This will result in a reduction of administrative burdens, simplification of the process and a reduction of the costs of preparing TPR.
- Clarification of transfer price adjustments – the aim of the project is to remove diverging interpretations of carrying out transfer price adjustments that may have led to disputes. The project is intended to organise the application of tools to adjust the accounts of related parties to market conditions.
- Parallel strengthening of analytics and control - National Tax Administration develops analytical tools and changes the approach to control – more emphasis is placed on efficiency and selection of entities based on risk analysis. The creation of specialised analytical structures and data integration (including JPK CIT, KSeF and TPR) are intended to allow faster detection of irregularities and more precise control activities.
The proposed changes can be defined as formal deregulation while strengthening substantive control. For taxpayers, this means less rigid formal requirements, an increase in the level of substantive documentation to be produced and the need to ensure that transactions between related parties are in a realistic position. In practice, despite procedural simplifications, the burden of responsibility shifts to the quality of economic analyses and consistency of the adopted transfer pricing policy.