Tax strategy

Further to the contemplated amendments to the CIT Act as of 1 January 2021, a new requirement will be introduced for businesses to publish a tax strategy in relation to their Polish taxation.

A company’s tax strategy would cover expenditures determining the company’s overall tax liability, as well as operations connected with keeping records and accounts. Taxpayers should also report expenditures required to address tax problems and mitigate tax risks.

Taxpayers may opt for one of the following two types of tax strategies:

• conservative approach – aimed at duly performing tax obligations and avoiding disputes with the tax authorities;
• aggressive approach – aimed at minimising its tax liability.

The tax strategy would cover:

1. a description of the taxpayer’s approach to:
   1. processes and procedures for managing its tax obligations; and
   2. voluntary forms of cooperation with the National Revenue Administration;
2. a description of the taxpayer’s approach to performing its tax obligations in Poland, along with information on the number of MDR reports on tax schemes, as set out in Article 86a § 1(10) of the Tax Ordinance, broken down by the taxes they relate to;
3. information on:
   1. related-party transactions with a value exceeding 5% of the sum of the assets disclosed in the balance sheet; and
   2. restructuring activities planned or undertaken by the taxpayer that may affect the amount of its liabilities, or those of its related entities.

The obligation to disclose a tax strategy will apply to:

• CIT payers with revenues exceeding EUR 50 million; and
• tax capital groups irrespective of revenues.

The proposal fails to specify whether the obligation to publish a tax strategy is effective for tax years ended on or after 31 December 2020. If the Act enters into force this year, the entities that are required to publish tax strategies will need to do so for the first time in respect of the full financial year 2020.