Page 49 - Central and Eastern European Transfer Pricing Review

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determination of the strategy Transfer pricing audit transfer pricing audits conducted in
infuencing the transfer price and penalties cooperation with other countries tax
(this element becomes obligatory authorities (cooperation includes, for
if it infuences the value of the When the tax authority requests instance, exchange of information
transaction) between the tax administrations)
a taxpayer s transfer pricing
determination of other factors documentation, how long does transfer pricing audits focusing on
infuencing the transfer price the taxpayer have to submit its more complicated transactions than
(this element becomes obligatory documentation? the ones that were examined in the
if it infuences the value of the Seven days following request. past (for instance, sale of economic
transaction) ownership of a trademark).
If an adjustment is proposed by the
determination of the benefts tax authority, are dispute resolution
expected due to services purchased options available to the taxpayer Special considerations
(regarding the purchase of services outside of competent authority? Are secret comparables used by tax
or transfer of intangibles). authorities?
No.
A benchmarking study or any other Secret comparables are not allowed.
comparable economic analysis If an adjustment is sustained, can Nevertheless, in practice, cases of the
documenting the compliance of the penalties be assessed? If so, what tax authorities using secret comparables
transaction with the arms length rates are applied and under what do occur.
standard is highly recommended. conditions?
Is there a preference, or requirement,
Yes. If a taxpayer fails to submit
Does the tax authority require an such documentation or provides by the tax authorities for local
advisor/tax practitioner to have documentation which does not meet the comparables in a benchmarking set?
specifc designation in order legal requirements, and the tax authorities Yes. The consequences of not having
to prepare or submit a transfer therefore assess an additional income, local comparables depend on the level of
pricing study?
the assessed income will be taxed at comparability between Poland and other
No formal qualifcations required to the penal 50 percent tax rate (instead of markets. The worst-case scenario is
prepare transfer pricing documentation. standard rate currently 19 percent). challenging the whole search.
However, normally done by licensed tax
advisors. In the case of benchmarking To what extent are transfer pricing Do tax authorities have requirements
analyses access to databases (like penalties enforced? or preferences regarding databases
Amadeus or Tegiel a Polish database Always. for comparables?
including information on local companies) Preference (but no obligation) to use
is essential in order to prepare the study. What defenses are available with the local database, as it provides more
respect to penalties? details on local comparables. The
Transfer pricing methods Documentation provides for penalty preferred databases are: Tegiel (Polish
protection against 50 percent penalty database), Amadeus, Monitor Polski B
Are transfer pricing methods tax rate for adjusted incomes. Country- (registry court data).
outlined in Chapter II of the OECD specifc documentation, including
Guidelines acceptable? What level of interaction do tax
a benchmarking search with a local
Yes, with some exceptions (Berry ratio database, confrming the arms length authorities have with customs
is not an advisable method). standard of the transactions will mitigate authorities?
the risk of the prices being challenged. High.
Is there a priority among the
acceptable methods? What trends are being observed Are management fees deductible?
Yes. If application of the transaction- currently? Yes. Management fees may be
based methods by the tax authorities The following trends are currently being tax deductible if all of the following
verifying the transaction is impossible, observed: conditions are met: the recipient of
the proft-based methods can be applied. the management service can prove
a shift to a signifcantly more fexible that services have been factually
If there is no priority of methods, and business-friendly approach by rendered; the expense is incurred for
is there a best method rule? the Ministry of Finance APA team to the purpose of earning revenue and
Not applicable. taxpayers and transactions subject to does not arise from a simple shifting of
an APA expenses incurred on the group level

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