Poland proposal would require large companies to make their tax policies public

By Dr. Monika Laskowska, Center of Tax Analyses and Studies, Warsaw School of Economics

Poland’s Minister of Finance on 4 September proposed corporate taxation legislative changes, including a proposal that would require large corporations to publish their tax policies and tax strategies.

The new obligation would apply to the 2700 largest corporations (.5% of all corporate taxpayers) and would be modeled after UK law. 

Poland corporate tax disclosure

From 2018, Poland’s Ministry of Finance has publicized on its website corporate tax data.  The data covers the largest taxpayers – those with revenue exceeding EUR 50 million from 2012. This list is annually updated every 30 September.

The publication of the data generated widespread public debate and media commentary. Some commentators argued that since the publicly available data covers only corporate income tax – not personal income tax or excise tax – it does not properly capture the full contribution of these large businesses make to the Polish budget. Strong arguments were raised about the diversity of companies’ strategies and their long-term obligations and contributions to the wealth of the Polish nation.

The new proposal should be seen partially as a response to these arguments. The Ministry of Finance highlighted that introduction of the new obligation should strengthen society’s control over big companies as well as provide data for scientific research. Poland’s Ministry of Finance said that new law should allow companies to explain why taxes paid in Poland are consistent with their economic activity in Poland.

According to the Ministry of Finance, by increasing tax transparency, companies will have an opportunity to explain the impact of their investments in Poland on their tax return.

Building the wealth of the hosting country should be seen as an element of the business’s social responsibility and should strengthen the corporations’ brands locally.

While some corporations already voluntarily publicize their tax policy, the government’s goal is to broaden transparency to all large taxpayers in Poland.

It’s not yet clear what exactly should be covered in such a tax policy and to what extent elements of a multinational’s global tax strategy should be addressed in the Polish disclosures.

Transfer pricing, withholding tax proposals

The new tax legislative package is the continuation of Poland’s anti-avoidance package.

The Ministry announced that the package would also include some changes to the tax tools for countering the shifting profits to tax havens through transfer pricing.

Further, the Ministry of Finance announced the continuation of a public consultation on changes to Poland’s withholding tax regulations.

The withholding tax amendments would modify the definition of a beneficial owner, restrict withholding tax refunds for passive income among associated companies, and clarify the due diligence requirements for verifying refund recipients.