Transfer pricing: Continuation of the COVID facilitations and more time to meet the transfer pricing obligations for 2021

It might seem that along with the change in the legal situation from an epidemic to an epidemic threat in Poland, all the facilitations in the field of transfer pricing, introduced by the so-called COVID Act, will disappear at the same time. Nothing could be further from the truth!

COVID facilitations

For the duration of the state of epidemic threat announced in connection with COVID-19, the possibility of signing a statement on the preparation of local transfer pricing documentation (TP statement) by persons authorized to represent the Company in accordance with the manner of representation indicated in the National Court Register (KRS) remains in force.

In addition, related entities still do not need to have a related entity's declaration on making a transfer pricing correction.

Another facilitation in the field of transfer pricing, which has been maintained for the duration of the epidemic threat, is the exclusion of the condition of not incurring a loss by a related entity in the scope of the obligation to prepare transfer pricing documentation in the event that the taxpayer's revenues in a given tax year decreased by 50%.

Extension of time limits

Additional facilitation for taxpayers is introduced by the act amending certain acts to automate the handling of certain matters before the National Revenue Administration, changing the content of the COVID act in terms of transfer pricing deadlines. In accordance with the wording of the act signed by the President on June 10, 2022, deadlines for submitting information on transfer pricing (TPR-C information) and TP's statement for 2021, which, as a rule, are 9 months from the end of the fiscal year are extended:

until 30 September 2022 - if this period expires in the period from 1 January 2022 to 30 June 2022 and
by 3 months - if this period expires in the period from 1 July 2022 to 31 December 2022.

The extended deadlines will enter into force on the date of announcement of the above-mentioned act, however, they will apply retroactively, from 31 December 2021 for TPR-C information and from 1 January 2022 for TP's statement.

Please note that the extension of the deadline for submitting TP's statement is also accompanied by the extension of the deadline for the preparation of group transfer pricing documentation (the so-called Master File). As a consequence, the deadline for fulfilling this documentation obligation was extended to the end of the third month, counting from the day following the expiry of the deadline for submitting TP's statement.

Admittedly, the Ministry of Finance indicates that the main purpose of extending the above-mentioned deadlines is to make it easier for entrepreneurs to fulfill their obligations in the area of transfer pricing and to adjust them to the changed deadlines for the preparation and approval of financial statements. Nevertheless, from the perspective of taxpayers, the extension of the deadlines is extremely helpful also due to the fact that, starting from 2021, the obligation to prepare local transfer pricing documentation also applies to the so-called indirect haven transactions, i.e. transactions with entities (related and unrelated) if the beneficial owner of the receivables of this transaction is a tax haven entity. And although the new documentation obligation covers these homogeneous transactions (as a rule, only cost transactions (and thus resulting in receivables)), the value of which with one contractor exceeds PLN 500,000 during the taxpayer's tax year, entrepreneurs who have already started work related to the fulfillment of documentation obligations in the field of transfer pricing for 2021 have found out that their verification is quite problematic and time-consuming.

If you are interested in Mazars' support in the field of transfer pricing, please contact our Tax Advisory Department.

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