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Planned vital changes in the Polish Tax Ordinance stay in spotlight


Also published in Global Tax Weekly, February 2015

Newly proposed draft amendments to the existing Polish Tax Code are currently being discussed in order to pass them through within the year. Taxand Poland provides an insight into the predicted tax updates to the existing Tax Code, which although not implemented yet, once in force will have a substantial impact on taxpayers.

The draft amendments to the Polish Tax Code (still at a legislative level) assume vital changes concerning (among others):

  • Anti-avoidance clause and protective opinions
  • Applications for tax rulings
  • Advance pricing agreements (APAs)
  • Unification of electronic forms for accounting books and accounting evidence

 Anti-avoidance clause and protective opinions
The anti-avoidance clause seems to be the most controversial amendment planned for implementation into the Tax Code. The clause is aimed at preventing taxpayers from creating artificial structures dedicated mainly to obtain tax benefits. The clause in the proposed wording raises doubts as to the meaning of particular legal constructions, such as “artificial structures”. Therefore, new protective opinions are laid out to protect multinationals. These opinions:

  • Are aimed at protecting taxpayers against applying the application of the anti-avoidance clause
  • Will be issued by the Ministry of Finance after analysis of tax and economic aspects of the transaction in question
  • Shall be issued without undue delay and no later than within 6 months
  • Subject to fee in the amount of PLN 15k – 30k (about EUR 3.6k – 7.3k)
  • Provide protection similar to those given by the individual tax interpretations (with respect to anti-avoidance clause)

Tax rulings
Pursuant to the planned changes, a joint application for individual tax rulings is going to be introduced in Poland. This is great news for taxpayers who act in capital groups conducting their business activity in Poland and who are subject to different tax authorities. Currently, the same business transaction may have different tax consequences for the transactional parties just because it is analysed by different tax authorities.

 Advance pricing agreements (APAs)
The proposed changes will cover:

  • Extension of an APA’s scope by cost sharing (cost contribution) agreements that were not allowed before
  • Implementation of an APA rollbacks (ie currently an APA is in force only from the day when the APA decision is delivered to the taxpayer. After amendments, an APA could be in force from the day when the application for APA was filed by the taxpayer)
  • A taxpayer’s right to renew an APA for new 5-year period each (previously, the APA was prolonged for the 5-year period)
  • More than one transaction can be described in one APA application
  • The taxpayer will be obligated to propose an alternative transfer pricing method for the transaction if the tax authorities do not agree with the initial method proposed. The taxpayer will also have to present in the APA application more detailed information on how the transfer pricing method is applied, including the critical conditions (boundary conditions) when the transfer pricing method is applicable for the transaction

Unification of electronic form of accounting books and accounting evidence
Documentation used as evidence for tax reports is to be prepared electronically and kept in a standard XML format. It is preferred for the accounting books and accounting evidence prepared in an electronic format, that they are kept in a unified and widely used standard XML. This update is compliant with OECD’s concept of Unified Control File.

Your Taxand contacts for further queries are:
Andrzej Puncewicz
T. +48 22 324 59 49

Amelia Gorniak
T. +48 22 324 59 98

Taxand's Take

All of these tax updates (when implemented) will have a great impact on the scope of protection and a taxpayer’s position in Poland. In particular:

  • When conducting business restructurings, multinationals should consider filing motion(s) for protective opinions which may prevent the application of the anti-avoidance clause
  • When compiling APAs, multinationals will need to prepare more complex data and more detailed information solely to be able to begin the APA process
  • Unification of the electronic form of accounting books and accounting evidence may require some adjustments of the taxpayer’s electronic accounting systems. Furthermore, as the editable form gives tax authorities deeper insight into taxpayer’s accounting books, the tax controls might be more detailed

Taking into consideration the broad scope of proposed tax updates, multinationals should  follow this topic closely as many details might change through legislative works.  

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