In 2021, a new obligation for companies to prepare and publish information on execution of the tax strategy has come into force.
According to the Act of 28 November 2020 amending the Corporate Income Tax Act, taxpayers have 12 months after the end of the tax year to publish certain information on their website and submit the website’s address to the tax office.
A fine of up to PLN 250,000 is provided for failure to comply with this obligation.
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- Who is obliged?
- Which tax year should be reported as first?
- What information should be published?
Who is obliged?
- taxpayers whose revenues exceeded EUR 50 million in a tax year
- tax capital groups
A list of such entities is published annually by the Ministry of Finance.
Which tax year should be reported as first?
There are no temporary provisions to define the first tax year for which information on execution of tax strategy should be published, hence this raises doubts. However, a communication published by the Ministry of Finance indicates that the first reporting should be made in 2021 for 2020.
Due to the fact that information on the implemented tax strategy will directly relate to the tax strategy as well as tax processes and procedures in force in 2020, we recommend to start the verification of the completeness and effectiveness of the required areas as soon as possible. This is necessary to ensure that there is a solid basis for the information to be published on your website.
What information should be published?
Taxpayers shall prepare and disclose information on, inter alia:
- procedures and processes used for managing tax obligations and ensuring their proper execution,
- the number of submitted reports on tax schemes (DAC6 / MDR), separately for each tax,
- transactions with related entities, the value of which exceeds 5% of the assets balance sheet total (based on the Statutory Financial Statements),
- tax settlements in countries applying harmful tax competition,
- restructuring activities planned or undertaken by the taxpayer,
- submitted applications for an individual tax ruling, binding VAT rate information (Polish: Wiążąca Informacja Podatkowa- WIS) and binding excise information (Polish: Wiążąca Informacja Akcyzowa - WIA),
- voluntary forms of cooperation with the National Fiscal Administration.
The above catalog is an open directory and the tax strategy as well as information for the website should be prepared having in mind the nature, type and size of the business activity.
The provisions do not define what a tax strategy is or what kind of procedures the taxpayer should have. Therefore, in order to fulfill the new obligations, if there will be no specific explanations issued by the Ministry of Finance, it may be necessary to refer to other provisions and regulations (e.g. Guidelines on Tax Control Framework concerning cooperation with the Head of the National Revenue Administration under the Cooperative Compliance Program).
The support offered to our clients in the process of applying for the Cooperative Compliance Program with the National Revenue Administration has highlighted the level of complexity of the issues related to tax strategy and the need for a deep understanding of tax processes.
Our support
The obligation to implement a tax strategy and publish information on it’s execution is another step towards increasing tax transparency. For this reason, publishing information on the website should be the final element of the preparation of a tax strategy adapted to individual requirements, industry and business specifics.
Preparation of information for the website should be preceded by:
Evaluation of whether the Client is ready to publish information about the implemented tax strategy.
In this module we perform a brief review of tax procedures and documentation supporting the existing tax processes and run workshops with the Client using Tax Management Maturity Model (T3M). The discussion during the workshops will include in particular:
- business and tax environment of the Client,
- preparation of tax settlements,
- tax risk management,
- internal controls.
Preparation of a tax strategy will be done based on information and data obtained during the workshops.
A tax strategy should refer to matters such as:
- tax vision and mission,
- long-term tax planning,
- client's approach to reducing tax risk,
- the level of acceptable tax risk,
- the level of involvement of the management body,
- tax risk management,
- tax reporting.
Preparation of a tax policy which describes tax governance and addresses potential fiscal penal liability matters.
In order to regulate separation of duties among the individual departments and their employees with regard to tax settlements, and thus reduce the risk of personal liability (criminal and fiscal -penal liability), we recommend preparing a separate tax policy. It covers in particular the following matters:
- general rules on allocation of roles & responsibilities,
- consultation and decision making process,
- general allocation of responsibilities in the area of tax compliance,
- rules for cooperation and communication with inspectors during tax audits,
- procedures in case of identification of errors and tax risks,
- general rules on how to operate e in the case of fiscal penal proceedings.
Review of correctness of tax settlements
Our support may also include verification of tax settlements. In order to identify risk areas, we will review major transactions, conduct interviews and check tax calculations. A tax review typically concerns CIT, VAT or PIT, but may also cover real estate tax or excise duty.
We have broad experience gained during tax function assessment projects using the Tax Management Maturity Model (T3M), preparation of tax strategies and tax policies, as well as and the latest in supporting clients in joining the Cooperative Compliance Program with the National Revenue Administration.
We support our clients in the preparation of media information, taking care not only of the correct implementation of the obligation to tax authorities, but also of the proper understanding of information by contractors and employees.
If you are wondering whether the new obligation applies to your company and how to get started, our experts will be happy to help you.
Contact us
Partner, CEE Tax Reporting and Strategy Leader, PwC Poland
Tel: +48 22 746 7449
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