On 1 January 2019, the revised CIT law introduced five conditions allowing taxpayers to recognise transfer pricing adjustments as tax-deductible. According to article 11e of CIT Act, taxpayers may adjust transfer prices and change the amount of revenue earned or tax-deductible expenses incurred provided that all of the following conditions are met:
1). the conditions in the controlled transactions are the same as would be set between unrelated entities;
2). an important change in circumstances occurred during the tax year affecting the terms previously agreed or updated cost or revenue information requires an adjustment to the transfer prices to ensure that they conform to conditions that would be agreed between unrelated parties;
3). at the time of the correction, the taxpayer possesses a statement of the related party confirming that it has adjusted transfer prices by the same amount as the taxpayer;
4). the related party has its place of residence, headquarters or management in Poland or in a country with which Poland has concluded an exchange of tax information agreement and double tax treaty;
5). the transfer pricing adjustment is included in the annual tax return for the fiscal year to which it relates.
If you are considering making a year-end transfer pricing adjustment, we remind you to obtain the statement mentioned in point 3) above from your related entity.
If you have questions, please contact one of ASB Tax specialists:
Łukasz Bączyk
Tax Director
E: lbaczyk@asbgroup.eu
Piotr Szeliga
Senior Tax Consultant
E: pszeliga@asbgroup.eu
Photo: Canva