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Malgorzata Sobonska |
The amendments to the Polish tax code (Tax Ordinance) which came into force from July 1 2007 caused quite important changes in the process of obtaining advance tax rulings. Until June 30 2007 rulings were issued by the local tax offices and if the taxpayer was not satisfied with the rulings, they were able to appeal the rulings to the tax chamber.
As from July 1 2007 the advance rulings are issued by the minister of finance.
According to these new regulations, the tax ruling issued by the minister may be applied both to past and future transaction, which is quite an important development as until June 30, due to unclear law, tax offices used to reject to issue the advance rulings which relates to the planned future transactions. It must be emphasised that the scope of protection granted by obtaining a ruling differs, depends on whether it applies to a past, present or future transaction.
In case the ruling refers to a planned, future transaction (in other words the tax implications of the transaction will take place after the ruling is delivered) and the taxpayer benefits from full protection, that is, in a case where the ruling was found as wrong (for example as a result of the final tax office decision or tax court verdict) then the taxpayer will not be obliged to pay tax arrears or penal interest. Also no fiscal penal proceedings might be commenced against individuals responsible for tax matters at the taxpayers' enterprise.
The difference with advance tax rulings concerning transactions already preformed is that in the latter case the taxpayer shall be obliged to pay outstanding taxes (however without penal interest).
Should the ruling be changed, the protection continues in the accounting period (month, quarter, year) in which the information about the change was delivered and the following one. The unfavorable ruling might be challenged against by appealing to the regional tax (administrative) court.
Another important development is the possibility to apply for the advance ruling also for potential investors, (without a legal presence in Poland or still not registered taxpayers) including also foreign entities. In such a case the protection will apply to the companies that will be created by the investors (that do not yet exist but will when the ruling is issued), branches or rep offices, depends on who will conduct the operations described in the application for the ruling. Finally it needs to be mentioned that the rulings are now payable, the application for tax binding ruling is subject to 75 PLN ($27.23) fee. This amount is to be multiplied by the number of questions asked.
Malgorzata Sobonska (malgorzata.sobonska@mddp.pl), Warsaw
