CORPORATE INCOME TAX, TAX PROCEDURE RULES (TRANSFER PRICING)

Group taxpayer status

It has been enacted into law in which cases and on which day the taxpayer's status as a member of a corporate income tax group ceases. This provision will enter into force later this year (on the 31st day after promulgation).

There will be a longer period for payment of advance corporate income tax in the event of termination of group membership: from the termination of group membership (or the group itself) until the end of the 6th month following the end of the tax year. The provision will enter into force on 1 January 2023.

Treatment of de minimis aid as state aid under the Crisis Communication

On 23 March 2022, the European Commission issued a Crisis Communication (Communication from the Commission Temporary Crisis Framework for State Aid measures to support the economy following the aggression against Ukraine by Russia 2022/C 131 I/01), which declares State aid that meets the criteria set out in the Communication compatible with the internal market for a limited period of time.

Under the amendment, taxpayers may opt to treat the aid which normally qualifies as de minimis state aid under the Corporate Income Tax Act as "Limited Amounts of Aid" under section 2.1 of the Crisis Communication. The election may be made for the first time in the corporate income tax return for the tax year beginning in 2022. The last time this election may be made is in the tax return filed before the deadline for the applicability of the Crisis Communication. As things stand, the provisions of the Crisis Communication are in force from 1 February 2022 until 31 December 2022, but the European Commission is expected to review the 31 December deadline.  

In light of this, a new Annex 4 has been added to the Corporate Income Tax Act, which concerns the treatment of "Limited Amounts of Aid " under the Crisis Communication in corporate income tax.

Amendments to the tax base reduction for electric charging stations

As of this year, the cap on the tax base reduction for electric charging stations will be abolished. Instead, the amount claimed as a reduction in the tax base, calculated at a rate of 9%, should be considered as de minimis aid and should, therefore, be included in the de minimis aid received in the tax year.

If the taxpayer opts for the treatment under the rules of the Crisis Communication, the election - as a derogation from the general rule – should be retroactive: the first time the taxpayer can make the election is in the tax return filed after 31 January 2022. If necessary, the tax return already filed should be corrected by self-correction in respect of the election to treat this tax base reduction.

Other amendments

The eligibility of trusts established by private individuals for the sole benefit of private beneficiaries for the statements substituting corporate income tax returns and tax exemption has been clarified.

The definition of pensioners in their own right has also been introduced in the Corporate Tax Income Act.

Tax procedure rules (transfer pricing)

The law was amended to further clarify the procedural rules related to the determination of the fair market price (Advance Pricing Agreements – “APA” - procedures), which were already amended in the summer. For bilateral and multilateral procedures started after 1 January 2023, the consultation with the competent authority of the foreign state should be completed within two years from the submission of the application, with the possibility of extending the deadline by one year if justified.

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This newsletter provides general information and does not constitute tax advice