On 1 January 2021, an amendment to the CIT Act came into force, which requires some taxpayers to prepare and publish information on their tax strategy for a given tax year.
Entities obliged to prepare and publish information on the implemented tax strategy:
- taxpayers whose revenues in the preceding year exceeded the equivalent of EUR50 million converted into PLN at the average EUR exchange rate announced by the NBP;
- tax capital groups, regardless of the amount of revenues generated by the group.
These entities are required to:
- prepare information on the implemented tax strategy and publish it in Polish on their website or – in the absence thereof – on the website of a related entity. The deadline for publication is the end of the twelfth month after the end of the tax year. The first deadline under the amended CIT Act is 31 December 2021;
- notify the head of the relevant tax office of the address of the website on which the information on the implemented tax strategy will be published. In the event of failure to comply with this obligation, the taxpayer will be fined up to PLN250,000.
Information on the implemented tax strategy should contain data on the characteristics, type and scale of business activity conducted by the taxpayer, and also:
- information on processes and procedures concerning the management of the fulfilment of obligations under tax law and ensuring their proper execution, as well as a review of forms of voluntary cooperation with the National Revenue Administration (KAS);
- information on the taxpayer’s fulfillment of tax obligations in Poland (along with information on the number of tax schemes submitted to the Head of the KAS, broken down by taxes to which they relate);
- information on transactions with related entities (in the meaning of transfer pricing regulations);
- information on restructuring activities planned or undertaken by the taxpayer that may affect the amount of tax liabilities of the taxpayer or related entities;
- information on submitted applications for tax interpretations, binding rate information, and binding excise information;
- information on tax settlements made in territories or countries applying harmful tax competition (indicated on the so-called black or grey list).
Information on the implemented tax strategy should not contain information covered by trade, industrial, professional or production secrets.
Although the regulations, apart from the obligation to prepare and publish information on the implemented tax strategy, do not explicitly specify the requirement to have a written tax strategy, in our opinion, such a document in a centralized form (superior to tax procedures and policies) or dispersed form (within the existing tax procedures and policies), should be drawn up by the taxpayer. Although the tax strategy, unlike the information on the implemented tax strategy, is not required to be published on the web site, yet its content should be consistent with the information in the public domain.
In view of the above, we recommend that you proceed as soon as possible to:
- verify the procedures related to the fulfillment of tax obligations;
- develop and implement the required tax procedures (if not done so already), including the tax strategy itself;
- develop a reporting procedure on the implemented tax strategy in line with the principles set out above.
Please note that the realisation of the new obligation to report the implemented tax strategy is not a tax issue exclusively. It will also require the engagement of legal, compliance and PR departments, and, in respect of global entities, structures at the regional level, headquarters even, in order to ensure the protection of trade, industrial, professional secrecy, or production process, as well as the synchronisation of reporting obligations with internal corporate processes and procedures.