CFC Legislation and Tax Planning from the Polish Perspective
Journal Title: Zeszyty Naukowe Wyższej Szkoły Bankowej w Poznaniu - Year 2017, Vol 77, Issue 6
Abstract
In accordance with the European directive against tax avoidance (ATAD), all Member States of the European Union (EU) have to adopt the legislation tackling controlled foreign companies (CFC) as tax planning vehicles. This EU directive is an outcome of the recommendations worked out in 2015 by the Organisation for Economic Cooperation and Development (OECD) as part of the project addressing tax base erosion and profit shifting (BEPS). Against the background of the “hastily” introduced CFC legislation in Poland, this article investigates the advantageousness of tax planning through a CFC, especially for Polish corporations as shareholders, by comparing the tax burden before and after tax optimisation. Although the corporate income tax (CIT) rate in Poland is relatively low compared to other OECD countries, there is a fiscal risk associated with tax planning in Poland because of a very low tax level in some non-OECD jurisdictions, significantly reduced rates on certain types of income and opportunities for tax deferral. When compared to the OECD recommendations and the ATAD requirements, the Polish CFC legislation has some drawbacks. The thresholds for the exemption of the CFC income (of 50% and 10%) as well as the non-inclusion of shares held by associated enterprises do not fulfil the requirements of the ATAD. Moreover, the benchmark for the low tax should refer to the effective tax burden rather than the statutory tax rate. Nevertheless, the recent tax law amendments in Poland eliminate the aforementioned non-conformities with the ATAD and thus must be viewed positively. Regarding the profit repatriation, the approach for elimination of double taxation remains unclear.
Authors and Affiliations
Wojciech Stiller
Keywords
Related Articles
- EP ID EP274438
- DOI -
- Views 83
- Downloads 0
Fair value measurement in the prospective orientation of contemporary financial reporting – Who needs it?
The purpose of this paper is to analyze the role of fair value measurement in contemporary financial reporting, the consequences it has for the quality of financial information, and to examine the real economy impact of...
Transfer nowoczesnych technologii energetycznych z uczelni do MSP – uwarunkowania organizacyjne, prawne i polityczne
Transfer technologii i komercjalizacja wyników badań naukowych są obecnie w kręgu zainteresowania decydentów, naukowców, a także przedsiębiorców. Podejmowane publiczne debaty na ten temat, liczne studia przypadków oraz a...
Wybrane innowacje w zarządzaniu finansami samorządowymi. Przegląd i ocena
W artykule szczególną uwagę zwrócono na instrumenty noszące cechy innowacyj- ności, które mają wyprzedzać przewidywane zmiany w otoczeniu rynkowym i instytucjonalnym. Innowacje, o których mowa mają różne oblicza, począws...
The non-capitalist sector in Switzerland
The above discussed economic units can be classified into three types: – Type 1 comprises units facing tight competition and behaving like capitalist companies. This is the case for larger firms such as Migros, Coop, Rai...
Decentralization and Debudgeting as Manifestations of Structural Changes within the Public Sector in Poland
This article discusses the problems of the structure of the Polish system of public finance in the context of decentralization and debudgeting (debudgetization). The considerations are based on the data from reports on t...