According to the work schedule of the Prime Minister’s Office we should expect certain amendments to income tax legislation (PIT Act and CIT Act), focusing mainly on the streamlining of transfer pricing reporting regulations. The new solutions come in response to the deregulation initiative called “SprawdzaMY”, which is indented to simplify administrative procedures for businesses.
What are the expected changes in transfer pricing reporting framework?
1. Form TPR to be easier to sign
Form TPR will be signed in accordance with the rules in the Tax Code, which means scrapping the requirement of board members’ personal e-signatures.
The practical impact:
• TPR could be signed by any agent, not just a professional attorney (e.g. by chief accountant).
• There will be fewer formal requirements for board members (no need for form UPL-1 or for PESEL personal code for foreigners).
2. Representation in local file
Simpler TPR-C signing procedures do not mean waiver of the required representation that the local file has been prepared and the prices are at arm’s length. With respect to 2022 – 2024 the representation was part of form TPR. Now it is supposed to be “included” in the local file.
Impact:
• Local file will gain the status of a board-executed document.
• An electronic signature (with signature date) in the file will be proof of issuance within the statutory time (10 months from end of tax year) or will reveal a default of timely execution.
• Late execution of a local file is a fiscal offence under Article 56c(3) of the Fiscal Penal Code, punishable by a monetary penalty of up to 240 day fines. The penalty grows up to three times in the event of a failure to prepare the file at all or preparing one that is not true to facts (Article 56e(1) and 56e(2)).
3. Simplified TPR for microenterprises and small enterprises
There are plans to make life easier to microenterprises and small enterprises by exempting them from the requirement to make sure form TPR includes financial ratios (section C).
4. Domestic TP adjustments
We should expect some fine-tuning of transfer pricing adjustment regulations, including changes clarifying that such adjustments may be made between domestic entities.
Other statutory changes
There is a penalty mechanism whereby if payment for a transaction with a VAT-able person is not credited to a listed bank account (see Article 96b(1) VATA) or is made without adhering to the split payment rules, the amount may not be deducted for income tax purposes. The penalty is expected to be lifted.
By analogy, a parallel penalty is proposed to be lifted for taxpayers who under the existing law (Article 14(2h) and 14(2i) PITA or Article 12(4i) and 12(4j) CITA) are deemed to earn income if payment was made into a wrong bank account.
Overall impact
• Simpler TPR execution and filing process, with no need for the form to be personally signed by a board member, which was particularly burdensome for foreign executives (had to apply for PESEL).
• The local file will have to be issued on time so as to avoid criminal liability (so far tax authorities could only verify the filing date, in future they will be able to verify also the issue date).
• Micro- and small enterprises will have less data to report in form TPR.
• No more doubt as to the admissibility of transfer pricing adjustments between domestic entities.
• The new law will abandon the burdensome administrative penalties that apply if the supplier is paid into a bank account that is not officially listed for VAT purposes.
Please do not hesitate to contact WTS&SAJA consultant if you wish to discuss any transfer pricing issues, including those related to 2025 reporting or TP adjustments.
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