Taxpayers should not miss any of the elements provided for by the Polish Corporate Income Tax Act (CITA) when preparing transfer pricing documentation.

There are no special requirements regarding the manner of presentation and details that such documentation should include, so a taxpayer has a kind of discretion in this respect. However, one needs to remember the purpose of the tax documentation. The main purpose is to assess whether the rules of the transaction between related parties have been set at arm’s length. Such a purpose will be reached only if the documentation is prepared in the most detailed manner.

Sanctions for absence of the documentation
The Polish CITA provides that taxpayers can pay a penalty for failing to prepare transfer pricing documentation regarding a transaction between related parties. Tax authorities may request a taxpayer to provide them with such documentation. Upon such request, the taxpayer is obliged to submit the relevant documentation within seven days of delivery of the request for such documentation. Otherwise, if the tax authorities assess the taxable income to be higher than that declared by the taxpayer, and the taxpayer does not provide tax authorities with the requested tax documentation, the difference between the income declared and that assessed might be subject to taxation at a rate of 50%. In the light of such a regulation, it seems that the deadline provided for filing tax documentation might be insufficient for the taxpayer to meet it.