The amendment to the acts on PIT, CIT, Taxation Rules and certain other statutes, recently signed by the President, sets out, among other things, to restrict the possibilities of obtaining private tax rulings in respect of regulations concerning tax evasion.

From the beginning of next year taxpayers will not be in a position to seek private rulings concerning interpretation of regulations on counteracting tax evasion, regarding tax law abuse, carrying out actual business or undertaking artificial or economically unreasonable activities.

The scope of the new regulation is broad and some of the provisions covered by the above prohibition include the anti-evasion clause set out in the Act on Taxation Rules and the minor anti-evasion clauses under the specific tax statutes. It will also not be allowed to seek interpretation of the regulations on measures restricting contractual benefits.  This newly introduced concept refers to provisions of the double taxation agreements as well as other tax-related international agreements to which Poland is party.  Hence, this concerns primarily situations where such agreements have been abused.

Expiry of issued rulings

The new regulations on private tax rulings will come into force on 1 January 2019. However, one exception – although a very important one – involves the regulations concerning the expiry of rulings that have already been issued.

Such private tax rulings as concern tax-law provisions that can no longer be subject of a tax ruling will expire within 3 months of the date of promulgation of the act.

The legislator has found it justified that the tax ruling hitherto issued which meet the conditions under the new regulations (i.e. those extending the scope of cases where a private tax ruling cannot be obtained) should disappear from circulation. In support of this bold statement it has been pointed out that it is inadmissible, in view of the principle of equality, that those who obtained such rulings earlier should continue to enjoy protection afforded by them.

In order to sort of make up for that, the amendment sets out a legal fiction whereby such rulings will be deemed expired upon the lapse of the three-month vacatio legis period. This means, among other things, that they will not be deemed invalid from the date they were issued, and acting in accordance with such rulings prior to their expiry cannot be detrimental to the applicant. Thus the interim provision respects the principle of protection under an already obtained private ruling; however, it will anyway expire by operation of law. The taxpayers who have obtained such rulings will be in a position to enjoy, if to a limited degree, the protection under such rulings. According to the authors of the amendment, this will bring about the desired result of fair competition, yet without an optimisation advantage. However, the construction poses doubts from the points of view of both the principle of non-retroactivity and the acquired rights doctrine.

The act was promulgated in the Journal of Laws on 23 November 2018, and thus following 24 February 2019 taxpayers will no longer enjoy the protection under the hitherto issued private tax rulings in the matters in question.

The Head of KAS also to acquire new powers

The Head of the National Revenue Administration will have the powers to set aside ex officio an already granted private tax ruling where conditions have arisen which allow the Director of the KIS (National Revenue Chamber) to deny such a ruling. The legislator intends in this manner to tighten the tax-ruling issuing system as well as securing itself in case a ruling-granting authority fails to notice at an early stage a new tax evasion scheme or to aggregate several applications constituting a single state of affairs leading to a breach of the law. This solution will contribute to further erosion of an already largely compromised, from the taxpayer's security point of view, system of granting private rulings. A question also arises whether the key principle of the institution – i.e. protection of the petitioners who follow their respective private rulings – will not become distorted as a result of the amendment.

Wojciech Jasiński, Tax Consultant, ATA Tax Sp. z o.o.

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