Potential fines for non-compliance with transfer pricing obligations
Fines are imposed as multiples of “per diem” charges. Under Art. 23 §3 of the Fiscal Penal Code, a single per diem charge cannot be lower than 1/30th of the minimum monthly wage in Poland or higher than 400 times 1/30th of the minimum monthly wage. Consequently, in 2021 the per diem charge can range between PLN 93.33 and PLN 37,333.33.
- Failure to prepare transfer pricing documentation on time is subject to a fine of up to 120 per diem charges, and thus in 2021 the maximum fine would be about PLN 4.5 million.
- Preparing transfer pricing documentation with inaccurate information is subject to a fine of up to 240 per diem charges, and thus in 2021 a maximum of about PLN 9 million.
- Filing a false statement on preparation of complete tax documentation, failure to file a TPR form with the head of the National Revenue Administration, late filing of a TPR form, or filing a TPR form with inaccurate information can be subject to a fine of up to 720 per diem charges, i.e. in 2021 up to about PLN 27 million.
The Polish Deal and criminal sanctions for transfer pricing compliance
The Polish Deal package introduces several key tax changes, but in this context the changes in sanctions under the Fiscal Penal Code are particularly notable.
Increase of the gross minimum monthly wage to PLN 3,010 will change the level of per diem charges, which from the start of 2022 will range from PLN 100.33 to PLN 40,133.33.
The fine for failure to prepare local transfer pricing documentation (known as a “local file”) even though the taxpayer has reached the documentation requirement will be up to 720 per diem charges. The same fine will potentially apply to the duty to prepare group transfer pricing documentation (master file). Consequently, the maximum fine for the taxpayer’s failure to prepare transfer pricing documentation starting from 2022 may be as high as nearly PLN 29 million.
Preparing local or group transfer pricing documentation after the statutory deadlines will entail a risk of a fine of up to 240 per diem charges, which in an extreme case from 2022 may be as high as more than PLN 9.5 million. The same penalty will be possible also in the case of filing transfer pricing information after the deadline specified in the Corporate Income Tax Act.
The Polish Deal regulations greatly increase the scope of liability of taxpayers’ management board members, and can also increase the scope of liability for noncompliance with transfer pricing obligations.
The act was signed into law by the President and enters into force at the start of 2022.
