On August 25, the Sejm received a draft amendment to the Corporate Income Tax Act (https://sejm.gov.pl/Sejm9.nsf/druk.xsp?nr=2544), which included changes beneficial to taxpayers in the area of ​​preparing transfer pricing documentation for so-called tax haven transactions. The most interesting change for taxpayers is certainly the repeal of Article 11o, paragraphs 1a and 1b of this Act – the effect will be the lack of the obligation to prepare transfer pricing documentation for indirect transactions with tax havens. This obligation arose in a situation where a given taxpayer’s contractor (very often an unrelated entity) made a transaction with an entity from a tax haven (reading the provision literally, even transactions of minimal value).

From the very beginning, these provisions were widely criticized – by both taxpayers and tax advisors – as an excessive (and often impossible to fulfill in practice) administrative obligation. One of the arguments was that the provisions did not generate any significant benefit for the State Treasury. In our opinion, there are other, better tools to combat transfers to tax havens than transfer pricing documentation dedicated to transactions with related entities.

Incidentally, another beneficial change was introduced for taxpayers, this time those entering into direct transactions with entities from tax havens. Although the obligation to document these transactions remains, the thresholds from which it arises have been significantly raised – PLN 2,500,000 for financial transactions and PLN 500,000 for non-financial transactions. The previous threshold was PLN 100,000 regardless of the type of transaction. This change will certainly result in a significant decrease in the administrative burden on taxpayers by reducing the circle of transactions covered by the obligation to prepare transfer pricing documentation for direct tax haven transactions.

To sum up – the current legislative proposals of the Ministry of Finance are most advisable and beneficial for taxpayers. In a word: finally!