Simplified APA procedure
Tax Alert 4/2018 | 13 April 2018
On Thursday, April 12, 2018, during the first session of the Transfer Pricing Forum, Polish Ministry of Finance informed that the draft amendment to the Tax Ordinance Act, introducing a simplified APA procedure, has been submitted for inter-ministerial consultations.
According to the information presented, the aim of the Simplified APA (uAPA) is to confirm the methodology and
mark-up applied in the intragroup settlements concerning selected transactions’ types listed in the art. 15e of the CIT Act. This article has limited the possibility to include in tax expenses costs of intangible services (e.g. management fees) and intangible assets (e.g. trademark royalties) purchased from related entities. Limitation of cost deduction does not apply to the abovementioned cost of intangible services that will be covered by uAPA.
In particular, under the uAPA procedure, the taxpayer will be obliged to submit standardized application covering some descriptive part as well as information on selected financial data and selected ratios. It should be noted that the application will not contain financial forecast’ data.
The uAPA decision is to be issued for a 3-year period (with the possibility to extend it), in contrast to the standard APA decision issued for a 5 year period.
It is planned that uAPA fee will be significantly lower (compared to the fee for the standard APA) and will not depend on the value of the transaction covered by the application.
Simultaneously, the Ministry of Finance informed that there will be a change in the provisions governing the possibility to apply for an APA with regard to transactions that are subject to tax audit or proceedings before administrative courts at the moment of application. Current legislation completely precludes settlement of APA applications in such cases.
Publication of the amendments introducing uAPA changes to the Tax Ordinance Act is planned at the end of April / beginning of May. Relevant updates will be published by Deloitte.