Three months to prepare tax documentation for a broken tax year.
According to the private tax ruling of the Head of the National Revenue Information Service issued on November 22, 2019 (case no. 0114-KDIP2-2.4010.421.2019.1.SJ), the taxpayers whose tax year ends between October 1, 2019 and December 31, 2019 and those who apply Corporate Income Tax Act (hereinafter: the CIT Act) in the version applicable until the end of 2018, are obliged to: draw up tax documentation, submit a statement of prepared documentation and draw up the CIT/TP - within three months after the end of a tax year.
The tax year for the taxpayer who has submitted an application for the private tax ruling, began on December 1, and ended November 30 of the following calendar year. For the tax year 2018/2019, the taxpayer intended to apply the provisions of the Act in its wording valid until December 31, 2018. The applicant doubts concerned the deadline for drafting the transfer pricing documentation for transactions with related entities, submitting a statement to the tax office on such documentation being prepared and attaching to the tax return a simplified CIT / TP report.
Pursuant the CIT Act, in its wording in force until the end of 2018, the deadline for the performance of the aforementioned duties fell at the end of the third month after the end of the tax year. However, in a regulation of March 14, 2018 on the extension of deadlines for performing certain obligations in the field of tax documentation (hereinafter: the Regulation), the Minister of Finance extended the deadline to the end of the ninth month after the end of the tax year. At the same time, under § 3 of the Regulation, the extension applies to deadlines expiring in 2018 or 2019.
In the opinion of the applicant, the deadline for completing the documentation will expire at the end of the ninth month after the end of the tax year, which is August 31, 2020. The legislator’s aim was taxpayers should have a 9-month term for their documentation-related duties. This intention was expressed both in the provisions of the Regulation and in the new CIT Act. In the applicant's opinion, leaving out the taxpayers for whom the basic deadline for preparing documentation and performing other obligations in the field of transfer pricing expires in 2020 seemed to be an omission of the legislator.
However, the Head of the National Revenue Information Service did not agree with the standpoint presented by the taxpayer. The applicant’s tax year had ended on November 30, 2019. Therefore, the 3-month period set in the CIT Act is lapses in February 2020. The extension of the date for drawing up the tax documentation, submitting a statement and simplified CIT/TP report will not apply to the applicant as the deadline for those activities did not expire in 2018 or 2019. The authority argued that there were no reasons to believe that the applicant had been entitled to benefit from the provisions of the Regulation on account of the tax year being other than a calendar year, since the provisions in question did not apply to the applicant.
The standpoint presented by the authority is unfavourable for the taxpayers who have a broken tax year ending in the last quarter of 2019 and who have chosen to draw up transfer-pricing documentation on the basis of the regulations effective in 2017-2018. Unfortunately, it has been the only private ruling in this field so far. Therefore, such taxpayers should draw up their tax documentation and perform other duties concerning transfer-pricing within three months after the end of the tax year.
Anna Skórska, Tax Consultant, ATA Tax Sp. z o.o.
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