The Ministry of Finance presented another set of tax proposals under the “Polish Deal” program. Their guiding idea is the return (repatriation) of capital to Poland. Additionally, it is proposed to simplify the provisions on transfer pricing.
Transfer pricing simplifications
Following the decisions of the Transfer Pricing Forum, the Ministry proposes the following solutions:
- elimination of the declaration on the preparation of transfer pricing documentation and the arm’s length nature of the applied transfer prices as a separate document and inclusion of the declaration in the transfer pricing information (TPR) – the taxpayer will submit only one form;
- introducing the possibility of withdrawing from the preparation of comparative / compliance analysis by entities for controlled transactions concluded by taxpayers who are micro / small entrepreneurs and for transactions other than controlled, concluded by taxpayers and companies that are not legal persons with an entity from a tax haven;
- extension of the deadline to 14 days for the submission of local documentation by the taxpayer at the request of the tax authority;
- extension of the deadline for the preparation of local transfer pricing documentation by the end of the tenth month after the end of the entity’s tax year. On the other hand, the deadline for submitting information on transfer pricing was extended to the end of the eleventh month after the end of the entity’s fiscal year;
- exemption from the obligation to prepare local documentation for safe harbor transactions relating to loans, credits and bonds;
- exemption from the documentation obligation for the so-called clean re-invoicing;
- introduction of a provision relating to data sources for the preparation of information on TPR transfer pricing;
- clarifying the scope of the transfer pricing analysis required for the purposes of local documentation regarding the articles of association of a company that is not a legal person.
Unfortunately, the changes do not yet cover the issue of due diligence when examining a contractor for connections with the so-called “tax havens”.
The changes in capital return include the following.
The relief is intended for people who have lived and worked abroad for at least three years and who decide to return and change their tax residence to Polish. They are to be entitled to PIT relief for 4 years after their return.
The relief is to amount to:
- in the first year, 50% of PIT from the year of return;
- in the next 3 years, 50% of PIT from the first year.
Lump sum for new investors
The Ministry points out that this solution is addressed mainly to Poles who have achieved business success abroad and would like to return to Poland.
The first requirement for its application is to transfer your tax residence to Poland. Then, such a person would have to invest PLN 100,000 annually in projects of special social importance, e.g. in innovation, science, culture or sport.
In such a situation:
- Polish income would be taxed under standard rules, but
- the tax on income earned abroad would not be higher than PLN 200,000. PLN.
Taxpayers would be entitled to an additional deduction of expenses in such a way that the total cost effect for the taxpayer would be 150%.
The presented materials do not specify the catalog of expenses / goals that are supposed to be a relief. Generally, it is indicated that the expenses would be incurred on: “science, education, culture and sport”.
Abolition (Voluntary Disclosure)
This solution will apply to income taxes (PIT and CIT).
The abolition is to apply to the situation of obtaining tax benefits with possible abuse of tax law (i.e. the situation of applying anti-avoidance clauses).
According to preliminary reports, the condition for using the solution will be the payment of an 8% transitional lump sum or a 2% levy on the value of property abroad. The value may be reduced by the amounts invested in Poland.
The income is to be exempt from additional taxation and any interest, and the program can only be used once. Importantly, the program is not to cover the effects of fiscal crimes or crimes.
The possibility of submitting applications is planned until the end of 2022.
The Ministry also emphasizes that the provisions on family foundations are part of this program (currently they are being processed at the ministerial stage).