44%
of businesses with sales of over EUR 50 million have undergone at least one inspection in recent years
26%
admitted that during the inspection the tax office asked to be provided with comparative studies despite the fact that, at present, no Polish taxpayers are required to do so
19%
of companies have not prepared any transfer pricing documentation so far
The report shows changes in the tax authorities’ approach to the question of control in the area of transfer pricing and the challenges which Polish taxpayers will have to face.
It is also the voice of businesspeople who, in an anonymous survey by PwC, have shared their observations about the changes which are taking place and have indicated what steps they will take in order to prepare for transfer pricing inspections.
Until recently, transfer pricing has been treated in an offhand manner by the tax authorities and tax inspection authorities whose priority was, in particular, VAT fraud. However, the topic is becoming a hot one because, in the near future, transfer pricing inspections are to contribute significantly to increasing the receipts of the State Budget whose needs are growing successively.
The tax authorities are making transfer pricing inspections more thorough
The Ministry of Finance in Poland has repeatedly emphasized the need to conduct close inspections in respect of related entities. In recent years, both the MoF and the Supreme Audit Office (NIK) have conducted several inspections which were aimed at verifying whether transfer pricing is indeed treated as an appropriately urgent priority.
The NIK’s findings pointed to the authorities’ ineffectiveness as regards transfer pricing inspections. As a result, transfer pricing inspections are increasingly frequently conducted by specialized entities which design strategic trends in inspections. At present, taxpayers are selected for transfer pricing inspections in a completely different manner.
New obligations as regards transfer pricing – are Polish companies prepared?
Businesses with foreign capital have been hearing announcements about the increased frequency of tax inspections for quite some time. However, it is for the very first time that the tax authorities are actually able to conduct such inspections. They have acquired such possibilities along with access to appropriate tools, better-qualified inspectors as well as access to information which will have to be disclosed as part of the new documentation obligations worked out by the OECD.
Over 40% of our respondents have noticed an increase in the inspectors’ competencies and their increased attention to details during the inspections. Despite this 13% of them have documentation prepared for their Groups only, and 19% have no documentation at all. However, it does not necessarily contain the elements specified in the Polish regulations. This, in turn, is becoming a problem because, as the respondents have indicated, in 70% of the cases the inspectors analyse the technical content of the documentation.
What’s next? – download the report
All signs show that this time the tax authorities are implementing their plans consistently. However, according to our survey only 11% of companies have all the necessary comparative analyses which meet the new requirements. Still, the need to revise the approach and to prepare both for potential inspections and new documentation requirements is a fact.
The first step is to update the format of Group documents, create procedures and policies.
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Partner zarządzający, Chief Operating Officer, PwC Poland
Tel: +48 502 184 645
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