One of the key obligations for affiliated entities is to draw up tax documentation (transfer pricing documentation) covering controlled transactions (i.e., activities of economic nature identified based on actual behaviour of the parties), which exceed a specific limited amount, conducted with affiliated companies.
Taking this requirement lightly or postponing it until the last minute is not worth it. The lack of transfer pricing documentation may expose a taxpayer to tax authorities imposing a so-called additional tax liability (superseding the 50% penalty tax rate as of 2019), varying from 10% to as much as 30% of the amount, regardless of the reported or overstated tax loss, and taxable income unreported in whole or in part.
It should also be pointed out that 1 January 2019 saw the introduction of amendments in the penal and fiscal regulations related to transfer pricing, including the lack of a TRP declaration with a statement on the marketability of transfer pricing applied. As a rule of thumb, violating this obligation constitutes a fiscal offence punishable by a fine of up to PLN 21 MM, and a fiscal violation in cases of lesser gravity.
Therefore, drawing up appropriate transfer pricing documentation enables limiting the risk of transfer pricing being questioned and eliminating the risk of tax sanctions being applied in the event of a potential dispute with tax authorities related to the level of transfer pricing employed. It also protects the persons responsible for tax settlements of a taxpayer against any possible penal and fiscal liability.
We provide services related to developing transfer pricing with the goal to offer professional assistance to our clients in satisfying their numerous obligations imposed by the regulations in relation to transfer pricing, while simultaneously ensuring maximum tax protection, achieved through drawing up a complete tax documentation.
Our services in this regard include, among others:
- determining the scope of the documentation obligation (indicating transactions subject to documenting and potential exemptions) and verifying its implementation;
- developing local transfer pricing documentation (Local file);
- developing group transfer pricing documentation (Master file);
- verifying the tax (local and master) tax documentation held by the client in terms of compliance with applicable regulations;
- market analysis for transfer pricing documentation purposes;
- verifying the impact of the COVID-19 pandemic and other crisis factors in the years 2022-2023 on transaction terms, transfer pricing calculation methods, economic environment and the validity of comparative analyses.
