Both regulations have entered into force on 14th October 2009. Amended provisions shall apply to cases initiated after that date.
In both texts of original regulations several significant changes have been introduces:
1. Provisions describing rules of examining comparability of transactions have been located in the isolated part „Analysis of transactions comparability” – this indicates that the conditions described in those provisions apply to the comparability analysis including use of all tax methods of transaction analysis, not just 3 “traditional” methods (comparable uncontrolled price method, cost plus method and resale price method),
2. It was underlined that in the analysis of transaction comparability it is necessary to include “differences within the economically significant features of compared transactions” and analysis of entities participating in the transaction should describe which entities play functions, engage assets and incur economically significant risks; additionally the example catalogue of factors that the auditors must take into consideration during that analysis was broadened – broadening of the catalogue shall result in including factors that must be taken into consideration during professional analysis of transfer prices (the above applies to factors usually included by the tax payers, which up till today were often omitted by the auditors),
3. It was indicated that the provisions of the regulation relate to determining part of income that can be attributed to the facility (Permanent Establishment):
1. national entity abroad (which results from – not very precisely formed – article 11, paragraph 1 updop and article 25, paragraph 1 updof),
2. foreign entity in Poland (which is a result of introducing on 1st January 2007 provision of article 11, paragraph 8a updop and article 25, paragraph 6a updof),
4. It was indicated that assessment of the income can be performed by the fiscal control entities only by using methods indicated in the tax regulations – it is worth noticing that it may cause problems relating to use of those entities other methods of analysing; a question arises if those entities accept analysis performed on the basis of other methods, which up till today was common (and rational) practice, or if they try to perform their own analysis using tax regulations,
5. Provision §7, paragraph 3 has been added in order to enable (in cases, when “applied method does not require strict comparability of the transaction subjects”) performing comparability analysis in relation to the branch to which the transaction relates to,
6. Additional condition has been introduced that relates to the auditors applying method chosen by the tax payer: tax payer presents tax documentation (the condition was not included in the previous regulation); it is worth emphasising that the auditors can apply the method chosen by the tax payer only when the tax payer applies comparable uncontrolled price method, resale price or cost plus method; such obligation does not apply to the bodies when the tax payer uses profits distribution method or transaction net margin method,
7. The rules relating to applying profits distribution method using the residual analysis method have been defined; it was indicated that during the first stage of analysis it is necessary to divide basic profit basing on the functional analysis of entities performing routine function, engaging typical assets and taking standard risk; at the same time, the reference to the situation when the profits sum earned by the entities participating in the transaction is lower than the profits sum attributed during the first stage of residual analysis (i.e. during the next stage there is loss to be distributed) has been removed from the definition – variance in interpretation of that provision in the context of distributing residual “loss” can be expected.
Procedure of eliminating double taxing in cases of correcting profits earned by affiliated companies
A new chapter has been added to the new provisions, which describes the procedure of eliminating double taxing basing on the Arbitrary Convention and agreement on avoiding double taxing. This procedure is initiated after a claim is submitted by the tax payer to the Finance Minister. Regulation’s provision describes the form of claim and the course of action and its finalisation. In particular, the new regulation specifies deadlines for submitting claims for initiating procedure of reaching mutual agreement on the basis of the Arbitrary Convention or on the basis of agreements on avoiding double taxing. According to the experts on the transfer process „it is necessary to pay attention to the fact that in the light of changes taking place in the methodology of transfer price control – tax documentation in order to remain effective defending device must include comparable analysis indicating the concordance of the solutions accepted with the market price rule.” (Tax Alert Deloitte nr 29/2009)

Hence, on the basis of a new version of article 9, paragraph 4 of that act, in the case the tax payer earns such revenues, provisions concerning declaration regarding choosing the form of lump-sum tax on recorded revenues apply respectively, however, the tax payer who starts earning such revenues during the tax year shall submit written declaration concerning choosing the form of lump-sum tax on recorded revenues for the given tax year to the head of revenue office applicable for the address of the tax payer no later than until 20th day of the month following the month during which the tax payer received the first revenue therefrom, or until the end of a tax year if the first revenue of such nature was earned in December of the tax year. Previous provisions required that such declaration is to be submitted before earning the first revenue. Thereby, the period during which the tax payer is able to choose the form of lump-sum tax on recorded revenues has been prolonged. This new provision has entered into force on 20th May 2010. However, to the property lease, sublease, rental, sub-rental or other contracts of similar character concluded before that date provisions applicable on the date of concluding the contract apply.

Pursuant to the amendment introduced to the article 9a, paragraph 3 of the Act on the Personal Income Tax, the exclusion from charging with 19% flat-rate tax was waived in relation to he circumstances, when the tax payer or at least one of the partners performed during the tax year predeceasing tax year, duties within the employment relationship or cooperative employment relationship for the benefit of the previous employer, from which he/she received revenues being taxed with flat-rate tax. This means that the tax payer, who since 1st January 2011 starts business operation taxed with flat-rate tax shall be able to provide services also for his/her previous employer, who was employing him/her until 31st December 2010. As opposed to the previously binding provisions, such situation shall not result in excluding from that form of taxing. This change entered into force on 20th May 2010, therefore now the above-mentioned tax payers are allowed to provide services matching their work performed for the employer who was employing them in 2009, but did not employ them in 2010.
Pursuant to the new version of article 21, paragraph 1, subparagraph 68a of the Act on the Personal Income Tax, the value of unpaid services mentioned in article 20, paragraph 1 (from other sources), received from the performance provider in relation with his promotion or advertisement – if the single value of such services does not exceed the amount of 200 PLN is tax free. However, the exemption does not apply if the service is performed for the benefit of the employee of the performance provider or person remaining with the performance provider in the relation under civil law. The limit entitling to exemption has been increased from 100 PLN to 200 PLN. This means that, e.g. presents for shop customers in relation to its advertisement or promotion up to the amount
of 200 PLN are exempted from tax. It is not necessary any longer to issue PIT-8C form for clients receiving the above-mentioned presents, and similarly they shall not have to show those revenues in the annual tax return. The above-mentioned provision (limit increased to up to 200 PLN) applies already to the income earned since 1st January 2010. The above-mentioned change limits the duties within issuing PIT-8C form, and thereby shall facilitate marketing activities related to issuing presents, gifts, gadgets, awards in the contests for the customers, etc.

1. taxing research and development units,
2. conditions for choosing the flat-rate tax (19%) by the natural persons conducting business activity,
3. conditions for taxing little value presents (up to 200 PLN)
4. and deadline for submitting declaration including the chosen tax form as a lump-sum tax.

Re 1. On the basis of article 12, paragraph 1, subparagraph 5c – a provision added to the Act of 15th February 1992 on the Corporate Income Tax, the taxable revenues in the research and development units shall include the following resources of the innovative fund:
a) funds unused during the tax year, during which they were transferred to that fund, or during the tax year following that year,
b) funds used not in conformity with the executive provisions issued on the basis of article 21 paragraph 8 of the Act of 30th May 2008 on Some Forms of Supporting Innovative Activity,
c) in the case, when the tax payer losses the status of research and development unit.
The amendment relates to the companies who have acquired status of research and development centre:
1) whose net revenues (excluding VAT) from sales of goods, products and financial operations for the previous turnover year were at least equal to the amount described in the regulations on accounting and bookkeeping as the minimum net revenue from sales of goods, products and financial operations for the previous turnover year of individuals, private partnerships of natural persons, registered partnerships to which regulations on accounting and bookkeeping apply;
2) whose net revenues (excluding VAT) from sales of own research and development services within the meaning of the regulations relating to Polish Classification of Products and Services or industrial ownership matters, are at least 20% of revenues described in item 1;
3) who do not fall behind with taxes and contributions for social and health insurance.

The most significant results of implementing VAT Package:
- New definition of tax payer purposed for services in international transactions,
- New general rule relating to cross border services, according to which the B2B services are deemed to be supplied, where the customer is located. Tax liability applies to the service provider, and the settlement of tax due shall be performed in accordance with the rule of so called reverse charge, well known to tax payers because this is how import of services is taxed. However, this rule has got few exceptions: e.g. services provided between the tax payer and the final customer – B2C; services related to immovable property, restaurants and catering. Temporarily, until the end of 2010, some services shall be charged the same way as prior to the amendment, i.e. where the service is actually provided: those are services relating to culture, art, education, entertainment, fairs and exhibitions. After 2010 – they shall be charged in accordance with new general rule,
- New records and reporting obligations. New general rule governing where the services are taxed is backed up by the new controlling mechanism, which shall be the broadened range of sales listings submitted every month and additionally including data relating to services provided for tax payers from other EU states, which should be settled according to the reverse charge rule in the country where the service is provided. So far, sales listings were prepared every three months and only in relation to the turnover of goods.
- New rules relating to refund of tax charged on the foreign entities. Previous mechanism based on the EU 8th Directive was replaced with new, simplified and more effective instrument. Claims for tax return shall be submitted electronically via the head of an applicable revenue office to the member state, which provides tax return; deadline for submitting claims shall be prolonged and tax payer shall be entitled to the interest on tax returns that do not meet the deadlines, as it is today. Deadline for submitting claims within the framework of the new system, which originally was determined to the end of September, is delayed due to technical issues (lack of IT background in some member states, including Poland).

[Rzeczpospolita]

[Gazeta Prawna 3.04.2009 r.]

The Deputy Minister has announced that “one counter” is only a prelude to the revolutionary changes that shall be introduced in accordance with the rule of “no counter”. Within the first half of 2011 when the new system is expected to come into effect, a new IT platform will be created along with necessary technological infrastructure thereof.

The change in the acts on PIT and CIT that is currently being prepared by the Government which includes the increase of relief is part of governmental program “Stability and development plan” that is aiming at fighting the crisis.

The increased limit shall be in effect during 2009-2010. It shall apply to the companies that start their business activities during 2009-2010 and also to the ones that have started business activity in 2008.

[Gazeta Prawna 3.04.2009 r.]