In July, 2014 the minister of finance revealed the draft Tax Code bill. It addresses many issues identified by the government as leading to (i) income leakages from state budget (ii) ineffective tax collection. The main modifications concern GAAR, tax rulings and penalty interest scheme.

1. 1
The Polish Tax Code amendment process is
underway
In July, 2014 the minister of finance revealed the draft Tax Code bill.
It addresses many issues identified by the government as leading to (i) income leakages
from state budget (ii) ineffective tax collection.
The main modifications concern GAAR, tax rulings and penalty interest scheme.
Re-introduction of GAAR
GAAR was once present in the Polish tax law, but the Constitutional Tribunal repealed it
2004 (as GAAR wording was found unconstitutional).
It is claimed the new GAAR was prepared after the insightful analysis of the
Constitutional Tribunal ruling. The Minister of Finance says also, the proposed wording
of GAAR is similar to clauses present in other jurisdictions. The GAAR defines tax
avoidance as ‘a deliberate application of an artificial legal construct set up mainly to
achieve a tax benefit unintended by the tax regulations and contrary to these regulations’.
If an arrangement is classified as falling within GAAR’s scope, the tax office will be
entitled to assess the tax due as if the artificial arrangement was not in place. The
assessment will be made in reference to another arrangement that would typically be
used instead of the artificial one (provided the tax office will be able to show what typical
arrangement would be used).
The explanatory memorandum accompanying the draft bill gives a list of several
arrangements the minister of finance expects to be caught by the new GAAR. Hopefully,
the arrangements will be questioned only if they are found to be ‘artificial’. However, one
has to take into account any ‘untypical’ schemes, in particular these involving items listed
below will by default draw the tax office’s attention after the GAAR is introduced:
• hybrid financing arrangements,
• trusts,
• any entities domiciled in tax havens (in particular holding intangible assets such
as copyright, trademarks, image rights),
• artificial holding entities located in Cyprus, Slovakia, Luxembourg or similar
jurisdictions,
• Singaporean Qualifying Debt Securities (QDS) or similar securities.
The introduction of advanced opinions confirming non-applicability of GAAR to a given
arrangement is also considered. Unfortunately, the fees for issuing such opinions will be
significant.
Tax rulings
As these are inexpensive and offer good protection from any future tax assessments, there
are tens of thousands of individual rulings currently issued by the minister of finance.

2. 2
The tax rulings system is to be modified in the following ways:
• the rulings will not offer protection from any arrangements which may be subject
to GAAR,
• it will be possible to file for joint rulings (where several parties are engaged in one
transaction, one of them asks for a ruling which will apply to all the parties),
• general tax law interpretations are to be used on a wider basis – if any individual
tax law ruling is recognized by the Minister of Finance as covered by the general
tax law ruling – a note confirming the applicability of the general tax law ruling
will be issued.
Penalty interest
In short, steps undertaken with this respect focus on:
• 50% of penalty interest rate (currently the rate is at 10% p.a.) reduction for
taxpayers which self-correct their tax settlements within 6 months of filing the tax
returns,
• 200% of the standard penalty rate for tax fraudsters, who are defined as either
VAT or excise duty taxpayers who either do not file their tax settlements (do not
report turnover subject to these taxes) or declare tax amounts which are
significantly lower than what they should be (which means that there is a
difference of more than 25% between tax declared and tax that should have been
declared).
Initially it was planned the Tax Code modifications will enter into force on 1 July 2015.
Now the deadline is postponed until 1 January, 2016.
For any questions concerning the above contact our partners:
Maria Kukawska, partner Mariusz Machciński, partner
maria.kukawska@stonefeather.pl mariusz.machciński@stonefeather.pl