TP Statement for 2022 – less formalities, wider scope

Q1 2023 is coming to an end and taxpayers have already familiarized themselves with the changes brought in by the new year in the area of transfer pricing. The key one are shortened documentation and reporting deadlines, but apart from that, a number of seemingly minor changes were introduced at the beginning of the year. Smaller but no less important. An example is the scope and manner of filing the TP statement.

Changes regarding TP statement

For 2022, there is no obligation to file a separate statement on having prepared the Local File and on the arm’s length nature of the prices applied. Instead, the statement is an integral part of the transfer pricing information (TP-R). Thus, filing the TP-R form will be tantamount to filing the TP statement. This reduces the number of formalities required to meet all transfer pricing obligations and as such should be assessed positively.

The TP-R form template for 2022 has not yet been published, so we are still waiting to see what the statement part will look like. Judging based on the amended CIT Act and the draft regulation on TP-R, its scope will be extended. On top of confirming that the transfer prices are set on terms that would be agreed by third parties, taxpayers will also declare that the Local File has been prepared in accordance with the facts of the case.

The change may seem to be focused on making the statement more precise, yet please note the changes in the wording of the statement are also followed by consequences in terms of sanctions related to TP documentation and reporting obligations. If data is inconsistent with the facts of the case, there is a penalty of up to 720 daily rates involved, i.e. even over PLN 28 million – the same as for failure to submit the form (together with the statement).

In conclusion, filing the statement is not just a simple reporting obligation.

No formal document, but more responsibility and less time to collect data

Taxpayers should be aware of the new scope of the statement. Simply updating the documentation, without reviewing the facts of the case, is risky. Often times inconsistencies in the facts of the case are scrutinized by the inspectors and this causes unnecessary stress and increases complexity related to making appropriate explanations in a limited time. In addition, entities belonging to international groups often have problems with obtaining all the detailed information and documents regarding controlled transactions.

So far, the authorities have been of the opinion that the taxpayer is obliged to obtain relevant information while the group should have a clear policy. The previous informal position has now been reflected in the revised wording of the statement. It should be assumed that since the regulations in this respect have been clarified and the sanctions increased, the authorities will pay even more attention to verifying the transfer pricing documentation in terms of its details and compliance with the facts. It may seem that the deadlines for fulfilling transfer pricing obligations are distant. However, please note that if obtaining data from the group has been problematic so far, now it is absolutely necessary to contact related entities to get appropriate data to prepare the documentation. Data collection can be time-consuming and demanding, especially for entities that have not done it before.

The deadlines for fulfilling the obligations are shorter than last year – complete documentation must be ready by the end of October while the TP-R form must be submitted by the end of November. To facilitate the fulfillment of obligations, we have prepared a calendar that summarizes all TP obligations for 2022. It is a simple tool for your month by month planning: when and what steps should be taken to ensure that all TP obligations are fulfilled on time.

Have a look and see how user friendly it is >> link