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Poland: New program for cooperation between taxpayers and tax administration
Poland: Cooperation, taxpayers and tax administration
A draft law, proposed in late July 2019, concerns settlement of disputes regarding double taxation and with respect to advance pricing agreements and would introduce a new mechanism for cooperation between taxpayers and the national tax administration.
The proposed cooperation agreement process is intended to provide that taxpayers comply with provisions of the tax law—under conditions of transparency, mutual trust, and understanding between taxpayers and the tax authority. The cooperation agreement program is expected to be effective 1 July 2020.
Cooperation agreement
A cooperation agreement would be concluded at the taxpayer's request, and would apply for an indefinite period but could be terminated at any time on request by the taxpayer.
- Taxpayers eligible to submit an application for a cooperation agreement would be those having tax revenue in the previous tax year that exceeded the equivalent of €50 million. In addition, to conclude the cooperation agreement, the taxpayer would be required to obtain a “positive opinion” from the initial tax audit.
- The subject tax audit would be conducted by the head of the national tax administration before the conclusion of the cooperation agreement (the initial audit) and throughout duration of the cooperation agreement (the monitoring audit).
- The audit would be aimed at verifying the taxpayer’s compliance with the tax law and the effectiveness of the taxpayer’s tax process management and controls.
- Under a cooperation agreement, the taxpayer would be required to (1) voluntarily and correctly perform its tax obligations; (2) have processes and procedures in place to manage its compliance with its tax obligations; and (3) report to the national tax administration any significant tax issues that could be the subject of a dispute between the taxpayer and the tax authority as well as any information that could affect the taxpayer receiving or obtaining a tax benefit.
The cooperation agreement program is intended to provide certainty in application of the tax law. For instance, a tax agreement could be concluded to resolve certain disputes including those concerning:
- Tax rulings
- Advance pricing agreements (APAs)
- Application of the general anti-abuse rule (GAAR)
- The amount of estimated corporate income tax liability for the next year
- Other issues that would be necessary for proper implementation of the cooperation agreement
Potential benefits for taxpayer under cooperation agreement
In the case of submitting a return (or corrective return resulting from a tax audit), a taxpayer operating under a cooperation agreement would be able to apply a preferential interest rate for tax arrears or could be exempt from application of interest (depending on the type of tax audit performed). Other benefits include a prohibition of the launch of criminal proceedings for a covered tax period; reduced fees with respect to APAs; and the ability for the taxpayer to remit monthly estimated tax payments in a simplified form. Also, application fees with respect to GAAR would be 50% lower compared to the fees that taxpayers not a party to a cooperation agreement would have to pay.
Taxpayer compliance with obligations arising from the cooperation agreement would be recognized as “good faith” when there is a levy of an additional tax liability.
Cooperation agreements will not apply with respect to a requirement to report “tax schemes” (other than cross-border arrangements).
Read an August 2019 report [PDF 231 KB] prepared by the KPMG member firm in Poland
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