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

• 4,500 largest corporate taxpayers by revenue to have data disclosed
• Bill independent of EU proposal requiring multinationals to publicly report their tax bills

Poland's largest companies can expect public relations challenges but little in terms of actual tax consequences from a draft bill that would require annual publication of individual tax data, local tax practitioners said.

The bill, which is designed to add an element of public scrutiny to the country's ongoing fight against aggressive tax planning, cleared a public comment period earlier this month and will soon be headed for consideration by the Polish parliament.

If approved, which is widely expected, it will take effect Jan. 1,2018, with first tax data for the years 2012-17 being published by Sept. 30, 2018, the practitioners said.

According to the bill, the individual tax data will come from the country's 4,500 largest corporate taxpayers—by revenue—and all so-called tax capital groups, which are formally recognized groups of wholly or majority-owned companies consolidating their taxes under a single Polish entity.

The data will include each taxpayer's name, tax identification number, revenue, tax-deductible costs, income earned or loss incurred, tax base, and tax due. In addition, the Polish finance ministry has reserved the right to also disclose the effective tax rate for companies of its own choosing.

The draft bill is independent of a European Union proposal requiring multinationals to publicly report their tax bills on a country-by-country basis, the tax practitioners said.

And unlike the EU proposal, which cleared the European Parliament in early July and is now headed for a three-way negotiation—a so-called trilogue—among the European Parliament, the Council of the European Union, and the European Commission, the Polish bill contains no exemptions for commercially sensitive information.

“This is a way of putting pressure on the multinationals and other big firms in Poland, so that everyone can see whether they pay their taxes or not,” Piotr Liss, a tax partner at RSM Poland in Poznan, told Bloomberg BNA July 19.

Public Relations Issue

But it is unlikely to add up to more than a PR issue for the companies involved, he added.

“I think it will be a PR issue,” he said. “We have plenty of new laws in terms of tax avoidance, so I think many companies have already closed their aggressive tax schemes or are in the process of closing them.”

According to Liss, Polish subsidiaries of foreign multinationals will find themselves having to explain the intricacies of their global tax structures to the general public— as well as why those structures don't amount to aggressive tax planning.

“This would rather be important for multinational firms rather than the Polish ones because they are not really using aggressive tax schemes from the Polish perspective,“ he said. ”But they are, of course, using some tax schemes like royalties in safe havens or low-tax jurisdictions.“

Marcin Jaworski, a senior tax manager at PwC Poland, agreed.

“I don't view it in a very negative light because the data is already out there” in some shape or form, he told Bloomberg BNA July 18. “The issue is how it will be handled and how it will be displayed by the ministry. This is what worries various business organizations who fear that the data may be used to stigmatize taxpayers who may record low profits or low effective tax rates—due to, for example operating in a tax-free zone or recording some perfectly allowable tax deductions, such as for research and development.”

No Call for Restructuring: Jaworski

“It's definitely not something based on which we would advise to restructure in order to present more tax being paid,” Jaworski continued. “This is one of really, really very numerous measures of the new government aiming for tax transparency, and the other changes are much more significant, much more time-consuming, much more burdensome for the taxpayers.”

“This is basically something that will need to be looked at from a public perception perspective,” he said. “But it's not something you can really deal with structurally or by taking any action. I think, initially, there could be a backlash until everybody understands that not everyone is equal and there are very many different tax positions or situations of taxpayers.”

According to Jaworski, more significant government transparency measures include last year's introduction of the standard audit file for tax and recently expanded country-by-country reporting rules.

The Polish finance ministry was not available for a comment, but a report defending the draft bill said its goal was to promote corporate responsibility on the belief that disclosure of the data had the capacity to build “social trust and control social behavior of enterprises.”

To contact the reporter on this story: Jan Stojaspal in Prague at correspondents@bna.com
To contact the editor responsible for this story: Molly Moses at mmoses@bna.com

For More Information

The draft bill is available, in Polish, at https://src.bna.com/qW8.