New regulations in the field of transfer pricing documentation came into force in Poland on January 1 2018. The new regulations introduced important changes for taxpayers.
Transfer pricing documentation now consists of three parts: the local file, the master file and the country-by-country reporting. Additionally, the new rules introduced a CIT-TP (corporate income tax – transfer pricing) form which must be attached to the annual tax return and which includes information concerning the taxpayer.
The new regulations determine a statutory deadline for transfer pricing documentation preparation which coincides with the date of filing a tax return (CIT-8 return).
Therefore, in addition to their obligation to file a tax return, taxpayers should also be ready with the transfer pricing documentation by the same date. The deadline concerns taxpayers whose tax year coincides with the calendar year. For other taxpayers, the deadline will be in line with the end of the tax year selected by them. Failure to prepare the documentation involves the risk of severe penal tax sanctions.
Although the taxpayer is not obliged to submit the documentation by this deadline, the tax authorities can check almost immediately after this date whether taxpayers have met their statutory obligations. In such a situation, the seven-day deadline for the submission of the documentation to the authority may be impossible to keep if work on it has not even begun.
Furthermore, the annual tax return form has also been changed. Taxpayers now have to report on additional issues regarding their cooperation with related entities. In the new version of the CIT-8 returns, the taxpayer will also have to declare whether it is obliged to prepare:
- Local documentation,
- Group documentation – a master file; or
- A comparative data analysis.
Additionally, where the taxpayer is obliged to prepare certain documentation, it should also declare that preparation of the documentation has been completed. The declaration concerns the taxpayer's preparation of the local documentation only – a local file (including benchmarks), and does not include the information provided as part of the group documentation (master file).
The declaration should be submitted by the relevant deadline set for submitting the annual tax return for the given year. In other words, in the case of taxpayers whose tax year coincides with the calendar year, it should be submitted by March 31. For other taxpayers, the deadline is within three months of the end of the tax year.
The Ministry of Finance has yet to publish an official model declaration, but this does not exempt taxpayers from the obligation of submitting their declarations.
The Ministry of Finance is working on the regulation on the extension of the deadline for preparing the transfer pricing documentation, submitting the declaration as well as the CIT-TP form. The ministry plans to extend this deadline for obligations occurring in 2018 and 2019 to September 30. It is therefore intended to cover documentation obligations for FY 2017 and FY 2018.
It should be borne in mind that failure to prepare the transfer pricing documentation by the statutory deadline means that the taxpayer would have to submit a false declaration as regards the preparation of the documentation, or fail to submit such a declaration altogether. Each of these situations exposes the taxpayer to severe penal fiscal sanctions.
It is therefore necessary to take due care in fulfilling the statutory deadline for the preparation of transfer pricing documentation in Poland.
We are waiting for the publication of the Minister of Finance's regulation regarding the extension of the deadline for fulfilling the transfer pricing obligations. The regulation is planned to be issued on February.
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