On 28 November 2020, the Parliament adopted a bill introducing changes to the Corporate Income Tax Law, Personal Income Tax Law and certain other acts, including an obligation to prepare and publish information on the execution of tax strategy. The bill has already been signed by the President and published in the Journal of Laws.
The new regulation enters into force on January 1, 2021.
The bill does not indicate which fiscal year is the first to be reported. However on 9th of December the Ministry of Finance explained that taxpayers are required to prepare and publish information already for the year 2020, by 31 December 2021. Therefore we encourage you to start working on the strategy as soon as possible.
The obligation will apply to:
- taxpayers whose revenues exceeded EUR 50 million in a tax year,
- tax capital groups.
What does the information on the execution of tax strategy cover?
Taxpayers shall prepare and disclose information on, inter alia:
- approach to processes and procedures on managing obligations arising from tax regulations and ensuring their proper execution,
- the number of submitted reports on tax schemes (MDR), separately for each tax,
- transactions with related entities, the value of which exceeds 5% of the assets balance sheet total (based on the Statutory Financial Statements),
- tax settlements in countries applying harmful tax competition,
- restructuring activities planned or undertaken by the taxpayer,
- submitted applications for a tax ruling, binding VAT rate information (WIS) and binding excise information (WIA),
- voluntary forms of cooperation with the National Fiscal Administration authorities.
The above catalog is open and the report itself is to be prepared taking into account the nature, type and size of the business.
The regulations do not define what a tax strategy is and what procedures a taxpayer should have. To fulfill the above obligations, it may be necessary to refer to separate acts and regulations (e.g. the Guidelines on Tax Control Framework regarding cooperation with the Head of National Fiscal Administration under the Cooperative Compliance Program) as well as to indicate the manner of making decisions in tax matters and the persons involved (alternatively, organizational units).
How much time is there to prepare and publish the information on the execution of tax strategy?
Taxpayers have 12 months after the end of the tax year to publish the information on the execution of tax strategy on a website and submit relevant information to the tax office.
What are the sanctions for failure to comply with the obligation?
The entrepreneur may be fined up to PLN 250 000.
PwC experts have great experience gained during tax function assessment projects using the Tax Management Maturity Model (T3M) which is based on OECD guidelines. We have also prepared a number of tax strategies and policies, also supporting clients in joining the Cooperative Compliance Program.
We are ready to support you in fulfilling the new obligation in a way that will be aligned with your business strategy and the way your organization operates.