This is to let you know that the Finance Ministry has published transfer pricing guidance on the technicalities of comparability analysis and so-called 'conformity descriptions'.

The document was developed in reliance on proceedings of the Transfer Pricing Forum in which WTS&SAJA took an active part (in Working Group 2 set up to address conformity descriptions).

Note in particular how the guidance addresses the question of local data used for comparability analysis. On a literal reading, Article 9a(2c) of the CIT Act (and its counterpart: Article 25a(2c) of the PIT Act) may be taken to mean that comparability analysis should be based solely on data about entities based in Poland. But the guidance explicitly says such an interpretation is wrong and there is no statutory preference for Polish comparables (the law does not consider them to be more appropriate), which should be included as benchmarks only if they meet comparability requirements.

The guidance also explains how to prepare conformity descriptions, i.e. studies that must be issued in place of full a comparability analysis where the latter cannot be had. A conformity description is any economic study which renders it plausible that the terms of the controlled related-party transactions are in conformity with terms which would be agreed between independent parties.

While the guidance addresses the law in force until the end of 2018, it does have plenty of relevance for taxpayers currently preparing their 2018 documentations. In addition, the document will serve as a guide for inspectors auditing transfer pricing documentation compliance for 2017 and 2018.

For the full text of the Finance Ministry's transfer pricing guidance (in Polish), see here:

If this issue pertains to your business and you are interested in our assistance, please contact your WTS&SAJA consultant or our office.

Doradztwo Podatkowe WTS&SAJA Sp. z o.o.

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This Newsletter is provided for general information purposes to keep you up-to-date with changes in tax law, tax rulings by authorities, case law of courts and interesting commentaries. Doradztwo Podatkowe WTS&SAJA shall not be held legally liable for any acts or omissions resulting from reliance on such information.

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