Polish taxpayers will have until the end of September 2020 to file a new declaration – the TP-R form - related to FY 2019, with the tax authorities. Taxpayers may expect the new obligation to bring more radical changes than expected in some areas.
TP-R is a tax information form to be filed electronically with the Head of National Revenue Administration. Given the extent of the detailed data and information to be reported, it will be an ideal tool to identify transactions to be later verified during a tax audit.
The TP-R form must disclose:
general financial information (including values of financial ratios measuring a taxpayer’s financial position);
information about related entities and controlled transactions;
information about transfer pricing method used to verify the arm’s length character of the controlled transactions;
the result of the comparability analysis.
Given that the comparability analysis is a mandatory element of a local file since 2019, the presentation of the result of analysis and reference to the actual transfer price (e.g. profitability ratio) should be also reported in TP-R. Also, TP-R must present profitability ratio when the filing taxpayer is a service recipient. In practice, calculation of profitability ratio could be challenging and time-consuming for each organisation, particularly in cases featuring a foreign service provider. Therefore, it is necessary that entities acquiring services from related parties cooperate with the service provider to possess all information required under the new rules.
Additionally, taxpayers will be obliged to provide very specialised and detailed information related to benchmarking studies such as the tested party and the region analysed. Also information regarding the adjustments applied in the benchmarking process will be required. Therefore, completing the form may be demanding and it will require delving into the benchmarking process or using support of external advisors.
In the light of the above, reporting obligations in TP-R will impose on Polish taxpayers more administrative effort compared to the CIT-TP / PIT-TP form, which taxpayers submitted in 2017 and 2018.
It should be noted that failure to prepare the TP-R form, submitting a false declaration or submitting it after the deadline exposes the taxpayer to severe penal fiscal sanctions: potentially up to PLN 20 million. It is therefore necessary to take due care in correctly fulfilling all TP-R reporting obligations.
The new reporting obligation deadline will coincide with that for filing the statements on preparing local transfer pricing documentation: by the end of the ninth month after the end of the financial year. There is not much time until the end of September 2020 to collect all information required in TP-R. That is why it is advised to prepare a draft TP-R form at the beginning of 2020 in order to analyse if (i) a taxpayer knows how to fill it in, (ii) its systems support collecting required data and (iii) the remuneration applied in the intragroup transactions enables the parties to achieve the actual profitability ratio within the arm’s length range.
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