We inform that the draft amendment to the Accounting Act and certain other acts ("the Amendment") has been sent to the president for signing. In accordance with the Amendment, large multinational undertakings will be obliged to disclose a report on income tax paid in countries where they carry out their activities ("the Report"). These regulations are a result of the implementation of European Union law, i.e. Directive (EU) 2021/2101 of the European Parliament and of the Council of 24 November 2021. 

Which entities do the amendments to the Accounting Act apply to?

In accordance with the Amendment, the reporting obligations concerning ultimate parent undertakings (or standalone undertakings) will be imposed on:

1. the following entities which are established in Poland – within the scope of drawing up, publishing, and making accesible the Report:
   1. an ultimate parent undertaking – if its revenues, as reflected in its annual consolidated financial statements, exceed, for each of the last two financial years, a total of PLN 3,500,000,000;
   2. a standalone undertaking (i.e. such which is not part of a group) – if its revenues, as reflected in its annual financial statements, exceed, for each of the last two financial years, a total of PLN 3,500,000,000.

Provided that at least one subsidiary undertaking (or branch) of this entity is established or has a fixed place of business outside Poland.

2. the following entities which are established in Poland – within the scope of publishing and making accesible the Report:
   1. a subsidiary undertaking which is not a micro- or small enterprise, and which is controlled by a parent undertaking established outside the European Economic Area – if its revenues, as reflected in the annual financial statements of the parent undertaking, exceed, for each of the last two financial years, a total of EUR 750,000,000;
   2. a branch whose revenues exceed, for each of the last two financial years, a total of PLN 51 million – if it is a branch of:
      1. a standalone undertaking established outside the EEA – if its revenues, as reflected in its annual financial statements, exceed, for each of the last two financial years, a total of EUR 750,000,000;
      2. an affiliated undertaking of a group established outside the EEA – if its revenues, as reflected in the annual financial statements of the ultimate parent undertaking of this group, exceed, for each of the last two financial years, a total of EUR 750,000,000, and the parent undertaking is established outside the EEA.

To sum up, after exceeding the specified thresholds, the reporting obligations may apply to, among others:

• a company established in Poland – which belongs to a multinational group and is a parent undertaking;
• a subsidiary established in Poland – which belongs to a multinational group whose parent company is established outside the EEA (e.g. in the UK, the USA, Japan, or Switzerland); 
• a branch of a foreign company established outside the EEA – which belongs to a multinational group whose parent company is established outside the EEA (e.g. in the UK, the USA, Japan, or Switzerland).

What data will have to be included in the Report on income tax?

In accordance with the Amendment, the Report will cover the following information:

1. the name of the ultimate parent undertaking or the standalone undertaking and, where applicable, a list of all subisidiary undertakings included in the consolidated financial statements of the ultimate parent undertaking;
2. the financial year to which the Report on income tax applies;
3. the presentation currency of the Report on income tax;
4. a brief description of the nature of the activities;
5. the number of employees (in full-time equivalents);
6. revenues, including from transactions with related entities; 
7. the amount of profit or loss before tax;
8. the amount of income tax accrued during the relevant financial year;
9. the amount of income tax paid during the relevant financial year;
10. the amount of accumulated earnings at the end of the relevant financial year;
11. information stating that the Report is drawn up in accordance with the provisions of law.

The data included in the Report will have to be disclosed separately for all EEA countries and the so-called tax havens in which a particular undertaking conducts its activities.

If an ultimate parent undertaking (or standalone undertaking) does not deliver a Report to a subsidiary undertaking or branch for publication, the latter entities will be obliged to independently draw up a Report on the basis of available information, and then to publish and make it accessible. In addition, together with this Report, it will be necessary to publish and make accessible a statement that the relevant parent (or standalone) undertaking has not provided the subsidiary undertaking or branch with a Report or information necessary for its preparation.

The form of publication of the Report on income tax

The Report, together with the statement (in the cases referred to above), will have to be:

1. submitted to the National Court Register (publishing); 
2. posted on the website of the undertaking and kept there for at least five years (making accessible).

Date of entry into force of the amendments to the Accounting Act

The provisions of the Amendment will apply to the Report for the financial year beginning after 21 June 2024. It will have to be submitted within 12 months from the balance sheet date. In practice – for entities whose financial year is the same as the calendar year – the first Reports will have to be published by 31 December 2026.

Assessment of the regulations on public disclosure of a report on income tax

The implementation of these EU regulations will supplement the existing CBC-R obligations. The aim of the Amendment in question is to eliminate aggressive tax planning by large multinational entreprises, which are already obliged to report to tax authorities information on income tax paid and other tax-related information on a country-by-country basis. 

The Amendment also introduces an obligation to disclose these data to the public, which is another reporting requirement, and can be of key importance for increasing the tax transparency of these companies.

If you wish to discuss this topic in more detail, contact our expert. Tomasz BEGER, our Tax Partner, will answer all your questions and clear up any doubts.