It is 10 May 2021. We invite you to the next episode of the “Weekly Tax Review” prepared in cooperation with tax experts in KPMG in Poland.
In today's episode:
New packaging fee announced
A note on launching works on a draft bill amending the Act on Packaging and Packaging Waste and certain other acts, the purpose of which is to impose a new packaging fee on entities marketing packaged household goods, was added to the list of legislative work and policies of the Council of Ministers. The new fee is likely to become effective on 1 January 2023. Furthermore, entities marketing packaged goods (including non-household products) will be required to finance waste management and recycling as part of their Extended Producer Responsibility. The new fees will be imposed irrespectively of the already existing product charge and other fees to be levied as part of the Single Use Plastics Directive framework, starting from July 2021. As for now, details of the draft bill remain unknown. The bill is expected to be passed by the Council of Ministers at the turn of the third and fourth quarter of 2021, while the applicable regulations are expected to enter into force on 1 January 2023.
General ruling on tax-deductible costs of disposal of government securities against payment
The Minister of Finance issued a general ruling (case file SP4.8203.2.2020) on tax-deductible costs of disposal of government securities against payment in CIT. The general ruling was issued due to divergent opinions on this matter expressed in individual rulings. In fact, one of the individual rulings provided for the possibility of deducting the total costs of purchasing government securities, while another one limited the deduction to the revenue from security disposal. Now, under the general ruling, in the case of sale of government securities (bills or bonds issued by the State Treasury), the costs of their purchase may be deducted in full. In other words, exclusion of losses arising from the disposal of receivables against payment, stipulated by the CIT Act, does not cover disposal of government securities.
Transfer Pricing Forum’s recommendations on comparative analyses
The recommendations of the Transfer Pricing Forum on selecting a reliable profit level indicator, the method of assessment of comparable data, and statistical aspects of compiling a comparative analysis, were published on the Ministry of Finance’s website. The main purpose thereof is to adjust the most frequently applied profit level indicators to the transfer pricing methods (i.e. cost-plus method, re-sell price method, and transactional net margin method) in comparative analyses, especially in the light of comparative data available. The recommendations include guidelines on selecting a profit level indicator and comparable data that seem the most appropriate from the perspective of the selected transfer pricing method, as well as averaging the results for the comparative sample, the minimum sample size and the method of determining the arm's length price range, the method of calculating the quartile range and referencing the transfer price to the result of the comparative analysis.
Tax explanatory notes concerning tax residence
On 30 April 2021, the Ministry of Finance issued tax explanatory notes concerning tax residence and the scope of tax duties for natural persons staying in Poland. It was stated that the centre of personal interests is the country where the individual develops their personal bonds, which in practice most frequently means the place where the individual's spouse, life partner or minor children live. In turn, the centre of economic interests shall mean the place where the individual develops their closest economic bonds. The economic ties of a person with a given country take into account their place of work, main sources of income, investments, real and movable property, loans taken, bank accounts, place of property management etc.
Splitting a real estate transaction is not tax evasion
The Head of the National Revenue Administration issued a clearance opinion (case file DKP1.8011.19.2020) confirming that splitting a real estate transaction into two separate steps performed in two different tax years, thanks to which the taxable person is able to utilize the total loss from the previous years, does not constitute an attempt at tax evasion. It was obtained by a company which planned to sell complex real estate including buildings, structures, and equipment, along with the right of perpetual usufruct of land. As part of the transaction, in 2020, the purchaser was first to acquire the title to the office building along with the right of perpetual usufruct of the parcel on which the building was located. Next, in 2021, once the company left the premises, the purchaser was to acquire the title to other buildings, structures and equipment, along with the right of perpetual usufruct of outlying parcels. The Head of the National Revenue Administration concluded that the company was motivated by the desire to sell its real estate assets at the highest possible price, and that every rationally acting entity has the right to strive to conclude a contract on the most advantageous terms possible. Thus, in the case at hand there were no grounds to apply the tax avoidance clause, since the prerequisites for classifying an act as an attempt at tax evasion have not been met.