Polish GAAR Regulation – New Developments

On February 25, 2016 the Permanent Committee of the Polish Council of Ministers approved and recommended a Bill to amend the Tax Ordinance introducing an anti-tax avoidance clause (the "GAAR"). We estimate that the Bill will soon be accepted by the Council of Ministers and presented to the Polish parliament.

The GAAR is designed as a new tool that the tax authorities can use to reclassify business transactions in situations where a taxpayer was demonstrated to have achieved substantial tax profits through tax avoidance strategies. The draft amendment will now allow the authorities to ignore artificial legal arrangements, which means taxpayers may end up having to pay the avoided tax with default interest and become exposed to criminal fiscal liability.