COSTS OF NEW OBLIGATIONS DUE TO LEGISLATIVE CHANGES IN THE AREA OF TRANSFER PRICE DOCUMENTATION BASED ON POLAND EXAMPLE - Наукові конференції
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COSTS OF NEW OBLIGATIONS DUE TO LEGISLATIVE CHANGES IN THE AREA OF TRANSFER PRICE DOCUMENTATION BASED ON POLAND EXAMPLE

24.09.2019 14:04

[Секція 7. Податкова система. Бюджетна система]

Автор: Emilia Sielicka, PhD Candidate, Wrocław University of Economics, Wrocław, Poland; Alicja Choma, PhD Candidate, Wrocław University of Economics, Wrocław, Poland; Damian Kowalczyk, PhD Candidate, Wrocław University of Economics, Wrocław, Poland


In the era of increasing uncertainty, growing competition and dynamic changes in demand, enterprises have to constantly seek sources of competitive advantage and optimize the costs of doing business, in particular financial and organizational costs. The new commitments regarding transfer pricing documentation have been in force since January 2017 [Official Journal 2015; item 1932]. The regulations are important for taxpayers who make controlled transactions which value exceeds statutory thresholds. The change has had the significant impact in the field of transfer pricing documentation on the business costs covered by enterprises, in particular by small and medium-sized enterprises. Such a significant change encouraged authors to check the real, financial effects of its for small and medium-sized enterprises functioning. One of the main results was presenting on the below flowchart. In general, the subject of the research was to check a change in the obligations in transfer pricing documentation due to statutory changes in Poland and identify the most often cost range with enterprises need to cover. 

Since January 2017 year statutory thresholds include homogeneous transactions or transactions which total value exceeds the equivalent of EUR 50,000 made in the chosen, financial year.  Enterprises which revenues or expenses calculated on the basis of accounting books do not exceed the equivalent of EUR 2 million in the previous tax year are exempted from the obligation of preparing transfer prices documentation [Official Journal 2015; item 1932]. The change in legal regulations in this area affects the organizational and financial costs of the enterprise, which should also be considered from the level of the cost of implementing changes in the enterprise, in particular from the perspective of small and medium enterprises, whose revenues exceed the level of EUR 2 million [RSM 2015]. Before changes in statutory regulations those enterprises did not have obligation of preparing transfer prices documentation.

Regulatory changes connected with obligations on preparing transfer pricing documentation by enterprises affect the level of financial costs, which is particularly noticeable for small and medium-sized enterprises [Rossing et al., 2017]. For this study were collected offers from advisers on the preparation of transfer pricing documentation for small and medium-sized enterprises.




According to the study, the costs of preparation the transfer pricing documentation by specialists are mainly in the range of EUR 2000 – 3000 (so, PLN 10 000 – 15 000). Depending on current activities of enterprises the additional costs may occur such as be the costs of implementing and adapting the prices used between related entities.

Additionally since January 2019 the limits for preparing tax documentation have changed. The new regulations provide rise of documentation thresholds, after which an obligation to prepare transfer price documentation arises. In addition, the mechanism for determining thresholds will change and will be based on the value of the controlled transaction. The will be two limits for individual transactions. For the purchase / sale of tangible current assets (e.g. raw materials), fixed assets, acquisition / granting of debt financing, surety or guarantee it will be threshold on the level PLN 10 000 000 net (round EUR 2 300 000). For transactions of purchase / sale of services, intangible assets, use / provision of fixed assets (including renting, leasing, leasing), intangible assets (including licenses), assigning income to a foreign plant and other transactions it will be PLN 2 000 000 net (round EUR 460 000). The aim of the thresholds rise aims is to reduce documentation obligations, however, it should be noted that it may result in the obligation to prepare documentation for taxpayers who currently do not have such an obligation, e.g. due to revenues and costs below 2,000. 000 euros [Official Journal 2018; item 2193].

All statutory changes in transfer pricing documentation since January 2017 should be considered from the point of view of the costs of financial services - mainly external specialists and organizational and implementation costs [United Nations 2017]. The analyses show that these costs depend on the nature and size of transactions carried out by enterprises and are within the limits of several dozen thousand EUROs. Those costs are particularly important during budgets planning in small and medium-sized enterprises.

Bibliography:

1. Official Journal of Polish law: 2015; item 1932: Dziennik Ustaw 2015 pozycja 1932, Ustawa z dnia 9 października 2015r. o zmianie ustawy o podatku dochodowym od osób fizycznych, ustawy o podatku dochodowym od osób prawnych oraz niektórych innych ustaw.

2. Official Journal of Polish law: 2018; item 2193: Dziennik Ustaw 2018 pozycja 2193, Ustawa z dnia 23 października 2018 r. o zmianie ustawy o podatku dochodowym od osób fizycznych, ustawy o podatku dochodowym od osób prawnych, ustawy - Ordynacja podatkowa oraz niektórych innych ustaw

3. Rossing Ch., P., Cools M., Rohde C., International transfer pricing in multinational enterprises, Journal of Accounting Education, 2017, Volume 39, p. 55-67,

4. RSM, Dokumentacje cen transferowych według nowych regulacji, RSM, 2015, [Online access 15.08.2019]: http://www.rsmpoland.pl/sites/default/files/attachments/tax-alert-22-2015.pdf 

5. United Nations, Practical manual on transfer pricing for developing countries (2017), Department of Economic & Social Affairs United Nations, 2017, [Online access 15.08.2019]: http://www.un.org/esa/ffd/wp-content/uploads/2017/04/Manual-TP-2017.pdf 



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