The Polish government presented a draft of new transfer pricing documentation requirements to be introduced from 1 January 2016. The proposed changes are quite significant as compared to the current, limited requirements, and follow the OECD's proposals in Action 13 of BEPS.

There will be three types of transfer pricing documentation required depending on the size of taxpayer’s enterprise. All taxpayers generating total revenues or costs exceeding EUR2 million annually will be obliged to prepare the standard documentation for transaction with related parties (Local File), irrespective of the value of such transactions.

a. Local File

Information required in the local file will include relevant data grouped into the following three categories:

a description of a taxpayer (its organisational and management structure; scope of economic activities; applied business strategy, including transfers of economically relevant functions, assets or risks between related parties, competitive environment);

a description of the controlled transaction (type and subject of a transaction; description showing how a transaction complies with the arm’s length rule; financial data, including cash flows; identification of related parties; documents significantly influencing a transaction, in particular agreements, contracts or other documents evidencing the intention of the parties; description of assets, functions, risk; method of calculation of profits and determination of price; algorithm of calculation of settlements concerning a transaction); and

financial information about the taxpayer (supplemented with financial statements after it is approved).

In case of taxpayers whose annual turnover exceeds EUR10 million, the Local File will have to include an analysis of comparables used in the creation of the algorithm for calculating settlements concerning transaction. These taxpayers will also have to report in the annual tax return a simplified list of transactions with related parties or entities from tax havens.

b. Master File

Taxpayers whose annual revenues or costs exceed EUR20 million will need to prepare also a master file including information about the capital group which a taxpayer belongs to.

c. Country-by-country reporting

Polish parent companies who prepare consolidated financial statements covering its foreign subsidiaries and whose consolidated revenues exceed EUR750 million will be required to submit to the tax authorities a statement concerning revenues earned, tax paid and places where subsidiaries carry on business activities.

Taxpayers who conclude an advanced pricing agreement in Poland need to prepare limited transfer pricing documentation. The transfer pricing documentation will have to be prepared by the date for filing the annual tax return for the relevant tax year (i.e., three months after year’s end). The transfer pricingdocumentation will need to be reviewed and updated annually (the analysis of comparables once every three years). Taxpayers will not be obliged to prepare transfer pricing documentation in cases where the prices (or the method of determining the prices) of transactions are regulated by law.