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Requirement to prepare and publish tax strategy reports from 2021

Last week, the Sejm adopted a whole range of amendments of tax regulations. Apart from the fact that CIT will be levied from limited partnerships and the Estonian CIT will be introduced, taxpayers should also note the provision that is going to enter into force on 1 January 2021 and require companies to prepare the information about their tax strategy for the fiscal year and publish it to make it available to the public. However, this obligation will only apply to the largest taxpayers and tax capital groups.

Scope of the new obligation

The new Article 27c that has been introduced to the CIT Act is not going to cover all taxpayers, but only those listed in Article 27b par. 2 item 1 and 2, i.e. tax capital groups (regardless of the amount of earned revenue) and other taxpayers, provided that their revenue earned in a given tax year exceeds EUR 50 million.

At the same time, this new obligation shall not apply to entities that are parties to a cooperation agreement concluded with the Head of the National Revenue Administration.

How to publish the report

The report on the implemented tax strategy will have to be prepared in Polish (or translated into Polish), and then published on the taxpayer’s website by the end of the 12th month following the end of the fiscal year. If the taxpayer does not have their own website, the report may be published on the website of a related entity.

Apart from the above, the taxpayer will be obliged to provide the address of the website where they published their tax strategy report to the competent head of a tax office by means of electronic communication within the same deadline.

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What to include in the report

Under the adopted act, the information about the implemented tax strategy should include, in particular, (“in particular” here means that this is not a closed catalogue) the following:

  • information about processes and procedures used by the taxpayer for managing the obligations set forth in tax regulations and ensuring compliance;
  • information on voluntary cooperation with the bodies of the National Revenue Administration;
  • information on the fulfilment of tax obligations on the territory of Poland, along with the information about the number of tax scheme notices handed to the Head of the National Revenue Administration;
  • information about transactions with related entities, the value of which exceeds 5% of the balance sheet total of assets;
  • information about any planned or undertaken restructuring activities that may affect the amount of tax liabilities of either the taxpayer or related entities;
  • information about requests for advance tax rulings submitted by the taxpayer (both general and individual), as well as binding rate information and binding excise tax information;
  • information on any tax settlements in tax havens.

Any information covered by trade, industrial, professional or production process secrets shall be excluded from this scope. When preparing the information, the taxpayer shall take the nature, type and size of their business into account.

From when do you have to publish the report

The discussed regulation will enter into force on 1 January 2021.

What is crucial here is that there are no transitional provisions that would indicate that the first report is supposed to be drafted for the tax year ending after this date.

This means that, according to the literal wording of the act, the report may be required already for the fiscal year ending during the 2020 calendar year. However, the Senat may decide to introduce certain amendments here.

Penalty for non-compliance

If you fail to submit the information about the website where the tax strategy report has been published to the head of the tax office, you will be liable to a fine in the amount of up to PLN 250,000. The penalty is imposed by the head of the tax office by way of a decision that may be appealed against to the director of the chamber of revenue administration.

 

The RSM Poland team has already come up with templates of the required documents; if you are obliged to provide such documents, please feel free to contact us:

e-mail: ekspert@rsmpoland.pl

tel. +48 61 8515 766

fax +48 61 8515 786

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