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The response to a parliamentary interpellation on the existence of a documentation obligation


On April 16, 2021, the Ministry of Finance provided an answer to a parliamentary interpellation no. 19562 on the existence of a documentation duty concerning transfer pricing (docket no. DCT2.054.1.2021DCT2.054.1.2021). The questions concerned the conclusion of preliminary agreements between related entities and the rules for calculating the limit of PLN 500,000 for transactions with a contractor making settlements with an entity from a so-called tax haven.

Responding to the question concerning the issue of documenting preliminary agreements, the Ministry points out that those agreements are not subject to documentation obligation under the transfer pricing regulations, in particular where no promised contracts were concluded in the tax year for which the documentation is prepared.

As it was emphasised, a preliminary agreement and its legal implications do not fulfil the definition of a controlled transaction, whose basic characteristic is its economic nature. A preliminary agreement does not have such a nature, merely constituting an obligation to conclude a particular agreement in the future. The Ministry also pointed to the fact that when concluding an agreement, the parties may include in it a provision to rescind the contract. As a result, it would be unreasonable to prepare tax documentation for agreements which can be easily terminated on the basis of a contractual provision specified by the parties.

Consequently, only the conclusion of a promised contract constitutes a basis for a determination of the value of the controlled transaction.

Coming to the second question, it should be mentioned that since January 1, 2021 taxpayers have been obliged to prepare local transfer-pricing documentation for transactions with related or unrelated entities, if their beneficial owner has its domicile, seat or administration in a so-called tax haven and the transaction value exceeds the amount of PLN 500 000. At the same time, the regulations require that documentation thresholds should be determined separately for each transaction of a uniform nature. Against this background, a doubt arises as to how the documentation limit set out in the CIT Act should be understood.

In the opinion of the Ministry of Finance, in the case of transactions other than controlled transactions ( i.e. concluded with an unrelated entity), if the beneficial owner is a resident in a so-called tax haven, the limit of PLN 500 000 forest out in the regulations is to be determined on the basis of a uniform transaction concluded solely with one contractor. Therefore, the value of transactions concluded with different contractors should not be added up.

It is worth noting that although the response to the parliamentary interpellation has no biding power, it should server as important guidance for taxpayers reviewing their documentation duties for 2021.


Anna Skórska, Tax Consultant, ATA Tax Sp. z o.o.

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