We prepare documents required for transactions between affiliated companies as well as transaction documentation of entities based in countries applying harmful tax competition. We take care to prepare transfer pricing documentation in a way as to ensure optimal performance and safety from a business and tax perspective.
The number of tax audits in which tax officers tend to question the correctness of prices applied in transactions between affiliated companies is increasing every year. Governments of different countries constantly introduce new regulations and issue stricter requirements towards taxpayers in order to minimize income transfer instances, thus limit losses resulting from companies avoiding taxation or documenting much lower income in a tax year.
Since 2003 in Poland taxpayers are obliged to personally inform the heads of tax offices about transactions with related entities by including this information in their tax return. As a result tax authorities are able to easily select those businesses which are subject to undergo a detailed audit performed by teams of inspectors highly specialised in the scope of transfer pricing.
The negative consequences of revealing inaccuracies in the area of transfer pricing can be devastating to the taxpayer. It is worth to remember that tax authorities have the right to independently establish the level of tax revenue (or expenses) provided the pricing applied in transactions with related entities is different to market pricing, which results in a part or the total of the company's income being transferred to other states or entities.
The only way to avoid tax authorities performing their own estimation of your income is to have relevant transfer pricing documentation prepared beforehand. Should a company not be able to present relevant documentation upon request by a tax authority or in case such documentation is deemed fraudulent, the taxpayer's income may be revaluated and may be subject to a punitive tax rate of 50%!
The risks related to not having prepared relevant documentation of transactions with affiliated entities are, as you can see, most grave - our experience shows that such an unfortunate event may even lead to company collapse.
Should you require our assistance in the area of transfer pricing, please contact our expert Tomasz Beger:
tel. +48 61 8515 766
fax +48 61 8515 786