Anti-abuse provisions (e.g. GAAR, MDR)

Amendments to the anti-avoidance clause (GAAR). Preparation of defense file. Mandatory disclosure of information on tax arrangements (MDR).

Anti-avoidance clause (GAAR). Mandatory disclosure of tax schemes (MDR).

In recent years a number of measures have been introduced into Polish tax system to combat tax avoidance, including the general anti-avoidance clause (GAAR) or the reporting obligation under Mandatory Disclosure Rules (MDR).

The lack of precision in definitions used in the anti-abuse regulations impedes their unambiguous interpretation and assessment whether tax consequences of a certain transaction could be challenged by tax authorities. Such provisions may concern also transactions concluded before the GAAR regulations entered into force or transactions that were secured by tax rulings.

The risk of application of anti-abuse regulations may concern also entities performing economically justified but complicated transactions, which may potentially result in obtaining a tax benefit. For such transactions, a defense file describing the context of the transaction and economic justification could be the proper measure to mitigate the GAAR-related risk.

There are more tax instruments to counter tax avoidance. Moreover, modifications to existing instruments are possible – these will further complicate the application of the existing regulations.

In order to exclude or minimize the risk of the negative consequences associated with the above tax instruments, the International Corporate Tax Team offers the following services to its Clients:

review and evaluation of current and planned transactions and analysis of the risk of application the general anti-avoidance rules or specific anti-avoidance rules,
verification of the reporting obligations under the MDR provisions,
preparation of defense files,
preparation of applications for tax advance rulings.