Poland: Changes relating to transfer pricing in pending legislation
Poland: Changes relating to transfer pricing
A draft bill to amend various tax laws was submitted on 29 September 2020 to the lower house of the Polish parliament.
The draft bill generally reflects proposals that were announced in September 2020—read TaxNewsFlash—but with certain amendments. The amendments include proposals that would concern the transfer pricing rules in Poland.
- Under the transfer pricing-related amendments, application of the arm's length principle would be extended and in particular when the beneficial owner is located in a tax haven jurisdiction (defined as a country or territory employing harmful tax competition).
- The obligation to prepared a Local file would be imposed on taxpayers and “companies without legal personality” for non-controlled transactions with entities having their place or residence, seat or place of management in a tax haven jurisdiction, provided that the transaction value for the tax year exceeds PLN 100,000 (approximately U.S. $26,000). This provision would apply for taxpayers and “companies without legal personality” for controlled and/or non-controlled transactions if the beneficial owner has its place or residence, seat or place of management in a country or territory employing harmful tax competition. For transactions involving tax haven jurisdictions, the Local file would need to include an economic justification for making the transaction, and a description of the expected economic and tax benefits.
The draft bill further introduces a range of temporary transfer pricing-related measures, all of which would be intended to alleviate the economic impact of the coronavirus (COVID-19) pandemic for certain taxpayers, including:
- An exemption from the requirement to prepare transfer pricing documentation when there has been a 50% revenue reduction (when compared against the total revenue earned in the corresponding period of the previous tax year)
- An exemption from the requirement for a declaration from a related entity stating that the entity made transfer price adjustments in the same amount for the tax year when the COVID-19 state of emergency was in force
- Declarations for recordkeeping and maintaining the Local file
Read an October 2020 report [PDF 250 KB] prepared by the KPMG member firm in Poland
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