More than two years have passed since the Ministry of Finance (MF) started the pilot program of the Cooperative Tax Compliance Program (CTCP). What regulations have been introduced, what is the status of the Program and what are the future plans of the MF in this regard? You will find out by reading this article.
What is the “Cooperative Tax Compliance Program”
The CTCP was created based on the guidelines for the organization of the tax system proposed by the OECD, the so-called Horizontal Monitoring Compliance.
The main assumption of the project is close and consistent cooperation between the National Revenue Administration (NRA) and the largest corporate income tax taxpayers, carried out by taking steps to ensure compliance with tax law based on transparency, understanding and mutual trust of both parties. The CTCP is addressed to business entities with revenues exceeding EUR 50 million in a tax year.
By participating in the programme, the involved entities gain the opportunity to take actions tailored to individual needs to ensure compliance with tax law - in close cooperation with the tax authority. The authority will consult and supervise the correctness of decisions made on an ongoing basis, as well as the correctness of internal processes and mechanisms functioning in the tax area. The described solution is to replace the tax audit carried out in a standard form.
Joining the program is also associated with a number of additional benefits for taxpayers, which include the possibility of concluding agreements on the interpretation of tax law or the application of interest relief for late payment on tax arrears. The catalog of benefits related to joining is available on the program website.
The condition for joining the program is successful completion of a tax audit and an independent audit of the tax function. Detailed information about the application process and joining the program can be found in the documentation prepared by the MF, which is available on the program website. Documents related to participation in the CTCP include, among others: Manual for the Participant of the CTCP, Guidelines on the Internal Tax Supervision Framework, as well as the Open Catalog of Tax Risk Types developed for the purposes of an independent audit of the tax function.
The published documents are addressed primarily to entities interested in participating in the Program, but they are also of considerable importance to all taxpayers. They are a valuable indication of how, in the opinion of the Ministry of Finance, the processes and mechanisms operating in the tax area should be shaped, and to what extent the tax function should be structured and formalized. In addition, the documents indicate the tax authorities' perception of the role, tasks or scope of responsibility of management and supervisory authorities, or persons involved in tax settlements, especially CFOs and tax directors.
What is the Program’s status?
PwC actively participates in the subsequent stages of the development of the pilot programme, e.g. through the expert support of SIG Sp. z o. o., which was the first to conclude the cooperation agreement with the NRA. Our experts comprehensively supported the Company in the process of preparing to submit an application to CTCP with the Head of the NRA, as well as in the very process of joining the Program. Proper preparation of the Company contributed to the signing in March 2022 of a historic cooperation agreement between the Company and the Head of the National Revenue Administration. In July 2022, another agreement was signed under the CTCP with Basell Orlen Polyolefins sp. z o. o. The audits conducted by the MF are at an advanced level, therefore, further agreements on joining the CTCP can be expected in the near future.
Currently, a dedicated training program is also being implemented, conducted by PwC experts at the request of the Directorate-General for Structural Reform Support (DG REFORM), which is part of the European Commission, in which representatives of the NRA and the MF were involved. As part of this initiative, experts from PwC Poland and PwC Netherlands conduct workshops aimed at providing the employees of the MF and NRA with substantive support and the necessary skills in the field of communication and tax supervision required when working with taxpayers under the CTCP. The topics of the training include issues related to the change in the concept of relations between NRA and customers of NRA, with an emphasis on mutual cooperation and effective communication, through which it will be possible to conduct negotiations and constructively resolve disputes arising in the course of the project. PwC experts also provide auditors with information on the best practices related to Horizontal Monitoring programs operating around the world. In addition, auditors also gain knowledge on how to create, evaluate and improve the internal tax supervision framework.
Additionally, the evaluation of the CTCP is being carried out, aimed at evaluating the pilot project and ensuring that the concept of the program is adapted to the Polish legal order and socio-economic conditions. One of the main assumptions of the evaluation is the verification of the actual effects of the Program in the pilot period by indicating the effectiveness of the objectives pursued as well as the related benefits resulting from the implementation of the Programme.
In September 2021, representatives of the MF and NRA participated in workshops devoted to the exchange of experience and current practices under the existing Horizontal Monitoring Compliance programs. The workshop was attended by representatives of tax authorities from Austria, Belgium, Finland, the Netherlands and Italy.
What's next?
In the near future, it is planned to continue the pilot program - the MF informs about its intention to sign further cooperation agreements with entities interested in joining the program.
Given that the pilot program is at an advanced stage, it can be expected that the rules of its operation and published documents will be corrected based on the experience gained by the MF during audits and close cooperation with taxpayers in terms of joining the program. The MF will certainly also make efforts to promote the program and build awareness among taxpayers about the benefits of joining the program.
We monitor the steps related to the functioning of the CTCP. We will inform you about further steps towards a wider implementation of the program. If you are interested in discussing this topic, please contact us.
Autorzy:
