New statistics on Advance Pricing Agreements (APA) were presented by the National Revenue Administration (NRA) last week.
As a reminder, APA is a formal agreement between a taxpayer and the tax authority, in which the authority accepts the taxpayer's chosen transfer pricing method and its application in transactions with related entities. APA serves as an effective tool for minimizing the risk of transfer pricing adjustments and challenges by tax authorities. It also allows taxpayers to exclude certain transactions from the requirement of tax documentation. However, until the APA process is finalized, taxpayers cannot enjoy the aforementioned benefits, which results in additional economic burdens.
The published statistics reveal that in the first half of 2023, 32 unilateral APAs and 3 bilateral APAs were concluded. Similar to previous years, no multilateral pricing agreements were reached during this period. This marks a decrease of 8 APAs compared to the same period in 2022. Notably, since 2021, the number of concluded APAs has significantly increased compared to previous years, indicating a continuing trend.
According to the data provided by the NRA, as of June 30, 2023, there were a total of 319 ongoing cases. Analyzing statistics from previous years suggests that most of these cases have been ongoing for several years, although the number of ongoing cases seems to be decreasing year by year.
Further presented data pertained to the applied transfer pricing methods in the already concluded APAs from 2006 to June 30, 2023. The most frequently used methods were the transactional net margin and the comparable uncontrolled price methods. The most common type of transaction covered by APAs was the purchase of services by a domestic entity. Additionally, transactions such as the sale of tangible goods to Poland, the sale of tangible goods outside Poland, and the provision of services by domestic entities were also popular.
The NRA also presented selected financial indicators and their value ranges based on agreements from January 1, 2020, to June 30, 2023. During this period, the operating markup ranged from 1.56% to 16.71%, the operating margin ranged from 1.27% to 5%, and the sales commission ranged from 0.005% to 5%.
The complete statistics (in Polish) are on the page here.
If you are considering starting an APA procedure, we invite you to contact us!