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Transfer pricing reporting obligations – what’s new

by Jakub Zawadzki

13 June 2023

2023 sees another round of changes in transfer pricing legislation. One of the most important are shorter – compared to the period of pandemic – deadlines to prepare transfer pricing documentation and fulfil reporting obligations, as well as the new TPR-C form.

What it used to be like

Under the legislation applicable until the end of 2021, associated enterprises which were obliged to prepare the Local File submitted the transfer pricing report to the Head of the National Revenue Administration by the end of the nineth month after the end of their tax year. The same deadline applied to the statement confirming the preparation of transfer pricing documentation submitted to the relevant revenue office. For the organisations whose tax year matched the calendar year, this meant the end of September. In practice, taxpayers had to submit two documents:

transfer pricing report – it included, among other things, details of the taxpayer, the associated enterprises and controlled transactions, as well as methods and transfer prices used in the documented transaction;
statement confirming the preparation of transfer pricing documentation – the taxpayer stated that he had prepared the Local File and that the transfer prices in the documented transactions were set on terms that independent enterprises would have agreed.

The above deadlines were also the deadline for the preparation of Local Files. The Master File, in turn, had to be ready by the twelfth month after the end of the tax year.

What it is like now

At present, associated enterprises have to prepare electronic Local File by the end of the tenth month after the end of their tax year. This essentially means that the deadline for transfer pricing documentation has been cut short – compared to the past years – by two months.

Moreover, the lawmakers have introduced a single document which combines the existing statement confirming the preparation of transfer pricing documentation and the transfer pricing report. Associated enterprises have to file transfer pricing reports with the competent revenue office. The report includes, among other things, details of the filing entity, the associated enterprises and controlled transactions, information about methods and transfer prices used in the documented transaction, as well as the taxpayer's statement that the Local File is true to the facts and the transfer prices in the documentation are on terms that independent enterprises would agree.

The existing 9-month deadline has been extended until the end of the 11th month after the end of the tax year. This means that taxpayers have to file the transfer pricing report until the end of the 11th month after the end of the tax year.

The deadline for the Master File preparation has not changed.

New deadlines in transfer pricing

as of 31/12/2021	now
preparation of the Local File
do końca dziewiątego miesiąca po zakończeniu roku podatkowego	do końca dziesiątego miesiąca po zakończeniu roku podatkowego
preparation of the Master File
do końca dwunastego miesiąca po zakończeniu roku podatkowego
reporting obligations
filing deadline of the end of the nineth month after the end of the tax year for: transfer pricing report (TPR) statement confirming the preparation of transfer pricing documentation	filing deadline of the end of the eleventh month after the end of the tax year for the transfer pricing report

New TPR form

The TPR form itself has also changed. As the statement and the TPR-C form has been combined into one TPR report, it should be signed by the entity’s manager (member of the management board or another governing body). The TPR-C form may be signed by an attorney being an attorney at law, tax adviser or statutory auditor. However, the attorney must first be reported to the revenue office and obtain the power of attorney on the UPL-1 form. The new form should be signed using a qualified electronic signature.

This change sparks major doubts about the liability (attorney vs taxpayer) for the accuracy of the information in the TPR form.

The new TPR form includes a new ratio: costs of operating activities with associated enterprises to total costs of operating activities. This new ratio sits next to the existing ones (operating margin, gross profit margin, return on assets, return on equity). The obligation applies to entities other than banks and insurance and reinsurance companies or micro and small enterprises.

Practically, the new ratio may be difficult to disclose as the profit and loss accounts do not have separate lines for costs of operating activities related to associated enterprises and independent enterprises. This may require additional calculations and computations and digging through in-house data.

Summary

Associated enterprises have to meet the above transfer pricing reporting deadlines for 2022. Keeping the deadlines is paramount for compliance with tax laws and avoidance of legal consequences. The changes described in this article cause numerous practical problems and uncertainties. They require further interpretation and involve waiting for more regulations from the lawmakers and revenue authorities.

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Daria Walkowiak-Dobner

Attorney at law (Poland)

Associate Partner

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