Reproduced with permission from International Tax Monitor, by The Bureau of National Affairs, Inc. (800-372-1033) <https://www.bna.com>
By Jan Stojaspal
Snapshot
- Detailed information requirements expected to mirror OECD recommendations
- Subsidiaries of multinational companies not headquartered in Poland to disclose ultimate parent entity
- Requirements likely to apply to between 120 and 130 companies in Poland
Poland is finalizing work on country-by-country reporting rules with a government decree detailing the contents of individual reports expected to be published in early June, a finance ministry spokesman said.
Lukasz Swierzewski told Bloomberg BNA in an email May 22 that the final document is expected to be published in two weeks. A draft of the decree was subject to a brief public consultation that ended May 19.
The decree, which is expected to set forth the exact depth and breadth of information that multinational companies will have to report to the government, is unlikely to contain surprises, Sebastian Lebda, a transfer pricing director in the tax department of PwC Poland, told Bloomberg BNA May 19.
He added that he expects it to mirror recommendations for the OECD's project to combat tax base erosion and profit shifting.
Based on European Union Directive 2016/881, which was adopted into Polish law in March, Poland-headquartered multinational companies with consolidated annual revenue of at least 750 million euros ($844 million) will have to provide annual information on revenue and profits for each tax jurisdiction in which they do business.
In addition, subsidiaries of multinational companies not headquartered in Poland will be required to notify local tax authorities of their ultimate parent entity, the jurisdiction in which the entity resides, and who is reporting on its behalf if the reporting has been delegated to a subsidiary.
Country-by-country reporting has been the most widely adopted recommendation from the Organization for Economic Cooperation and Development's BEPS project, a sweeping, two-year effort to rewrite the global tax rules. The reporting requirement is designed to provide a blueprint of companies' operations and to highlight when significant income is earned in a jurisdiction with few operations or employees.
Deadlines for Reporting, Notification
Companies that use the calendar year as their fiscal year have until Dec. 31 to report for the year 2016, Tomasz Beger, a tax partner at RSM Poland, told Bloomberg BNA in a May 19 email. The deadline for first notifications regarding the ultimate parent entity of a multinational group or who is reporting on its behalf is Oct. 31.
Beger said the number of companies exceeding the 750 million euro revenue threshold is "about 120-130," including a number of "national champions" such as state-owned petrochemical group PKN Orlen SA and privately owned technology company Asseco Group.
That doesn't mean, however, that all will have to file full country-by-country reports, "as they still might not be ultimate parent," he wrote.
The draft decree would require reporting entities to provide information on income tax paid and accrued, share capital, accumulated earnings, number of employees, value of tangible assets other than cash and cash equivalents, as well as a broad range of business identifiers, such as tax identification numbers, business addresses and main types of business conducted by subsidiaries, according to Beger.
Filing will be done electronically, and failure to comply will be punishable by steep fines, Beger wrote.
"Our regulations include fines for not fulfilling duties" regarding country-bycountry reporting—both for not providing a country-by-country report and for not providing the notification, he wrote. "Such a fine may be equal up to 1 million Polish zloty ($267,000)."
Additionally, tax authorities may impose a fine on a natural person acting on behalf or in the interest of a taxpayer "for providing untrue information for the purposes of information about entities composing a group of related parties," Beger said. The maximum fine may be as much as 6.4 million Polish zloty.
To contact the reporter on this story: Jan Stojaspal in Prague at correspondents@bna.com
To contact the editor responsible for this story: Penny Sukhraj at psukhraj@bna.com