Ministry of Finance declares that it is going to repeal regulations on indirect transactions with tax havens
On 22 August 2022 the Ministry of Finance published a document in response to comments presented during public consultations. The Ministry declared that the controversial regulations on indirect transactions with tax havens (i.e. Art. 11o par. 1a and 1b of the CIT Act) would be repealed. The information comes as a surprise because originally, in the bill of 27 June 2022, a thorough amendment of the regulations was planned, and the Ministry informed about its intention to waive the obligation of reporting indirect transactions with tax havens.
The Ministry of Finance took into account a comment submitted by a participant of the consultations, who explicitly asked for repealing Art. 11o par. 1a and 1b of the CIT Act. The response of the Ministry to other critical comments regarding the proposed wording of the regulations on indirect transactions with tax havens is: “the comment is not longer applicable due to repealing the regulations on indirect transaction reporting”. Therefore, it can be assumed that the short era of the tax regulations on indirect transactions with tax havens has just come to its end. Consequently, it seems justified to say that taxpayers will not need to undergo the burdensome procedure of verification of beneficial owners of payments under controlled transactions or other transactions that exceed PLN 500,000 and to prepare the local transfer pricing file for transactions which were found to have a beneficial owner residing, established or managed in/from a territory or country which applies harmful tax competition.
It is noteworthy, however, that apart from the announcement made by the Ministry of Finance, there is still no draft act which would repeal said regulations. It is important because the obligations of taxpayers also depend on transitory regulations and regulations which implement the new legislation. Both the scope and term of applicability of the cancelled regulations on indirect transactions with tax havens, as well as the moment of entry into force of the new legislation is extremely important. Moreover, the position presented by the Ministry of Finance during the consultations is not legally binding – it is just a response to comments made by entities which objected to the bill, and the actual situation may change with respect to this act of law (although it seems that withdrawing from the announced change would infringe the constitutional principle of citizens’ trust to the state and the laws it establishes). Thus, the revelations announced by the ministry should be approached with a certain degree of caution until the bill incorporating the planned changes is published. We will follow the latest communications and bills pertaining to indirect transactions with tax havens and inform you about them promptly.
The course of the legislative process and the document of the Ministry of Finance’s response to the comments presented during the public consultations: https://legislacja.rcl.gov.pl/projekt/12361255/katalog/12889728#12889728