On November 18, a draft act amending the Accounting Act and the Act on Statutory Auditors, Audit Firms and Public Oversight was published, imposing a new obligation on multinational companies to publicly report information on corporate income tax.
The regulations implement the provisions of Directive (EU) 2021/2101 of the European Parliament and of the Council of November 24, 2021 amending Directive 2013/34/EU into our legal system, with regards to the disclosure of information on income tax by certain entities and branches (so-called Public CbCR). Poland is another country, after i.a. Romania, which publishes legislation introducing Public CbCR.
The amendment to the Act obliges large multinational companies to publicly disclose information on income tax and other information related to income tax, broken down by country. The Act also imposes that in a situation where the ultimate parent company is not subject to the regulations of EU Member States, this obligation will be imposed on their medium and large subsidiaries or branches operating on the territory of the Republic of Poland.
Who does the obligation apply to?
Who does the obligation apply to?
The provisions will apply if the consolidated revenues of the ultimate parent company of the capital group or the revenues of an independent entity exceed PLN 3.5 billion in two following years.
The new regulations impose an obligation to publicly disclose an income tax report broken down by country. The data contained in the report will have to be disclosed separately for all EU countries where the company operates, as well as for tax jurisdictions that do not comply with good tax governance practices (so-called "tax havens"). For other tax jurisdictions, information will be presented in an aggregated form.
It is worth underlining that the subsidiary will also be required to publish data on income tax when it does not receive a complete information package from the parent company. In such a case, in accordance with the draft act (Article 63n, section 4), the subsidiary prepares, publishes and makes available a report on information on the parent company's income tax, containing all information it currently has and a statement that the ultimate parent company has not provided the necessary information.
Scope of information covered by reporting
Among other, the following information will be reported:
- the nature of the activities of all entities covered by reporting,
- number of employees broken down by full-time equivalents (40h per week),
- the amount of profit or loss before tax,
- the amount of income tax due in a given country on profits made in the current year in that country,
- revenues, including transactions with related entities,
- the amount of income tax paid in a given country, including withholding tax,
- the amount of undistributed profit from previous years at the end of a given financial year.
Taxpayers will report information in accordance with the template set out by the European Commission. The draft law provides for the obligation to submit an income tax report, prepared in Polish and in Polish currency, to the National Court Register within 12 months from the balance sheet date of the financial year for which the report was prepared and to publish it on the website, where it will have to be made available for at least 5 years. The report will have to be signed with an electronic, "trusted" or personal signature, and the entity's manager within the meaning of the Accounting Act will be obliged to submit it.
Sanction
Failure to comply with the obligation to prepare an income tax report is subject to a fine or imprisonment of up to 2 years, while failure to submit the report in the relevant register is subject to a fine or community sentence.
Reporting deadline
Adoption of the amendment to the Accounting Act is planned for the end of this year. According to the new regulations, the first income tax report will have to be prepared for the financial year starting after June 21, 2024. In practice, in the case of entities with a financial year starting on January 1, 2025, the deadline for submitting the report for this period is 31 December 2026.
Tax transparency
After the implementation of the obligation to publish information on the implemented tax strategy for the tax year on the website, this is another step emphasizing the importance of tax transparency and the progressive change of the legislator's attitude in this regard.
The obligation will apply only to selected taxpayers, but it is part of the efforts of legislators in Poland and the European Union, which have been ongoing for several years, aimed at building tax awareness in the public space - on the part of customers, investors and contractors. Taking into account PwC's experience in implementing projects in the area of tax transparency, e.g. with supporting taxpayers in joining the "Cooperative Compliance Programme" and projects related to the preparation of a tax strategy and information on the tax strategy being implemented, we will be happy to talk about this topic with you, and help in the implementation of the new obligation.
Autorzy:
