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Michał Gosek

Steuerberater (Polen)
Senior Associate
Phone: +48 61 624 49 39
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Inspections of business activities conducted within a Special Economic Zones in Poland (SEZ)may comprise various aspects. As a result, both the scope of the inspection and the number of entities authorised to carry out the inspection work are much greater with regard to enterprises operating in a SEZ than with regard to those operating in “typical” conditions. 

An entity may be inspected to check if:

  • it has correctly used the state aid granted in the form of tax exemptions (the inspection is carried out by tax authorities and tax inspection authorities);
  • it has met the conditions required for the tax exemption (the inspection is carried out by the SEZ managing entity acting on behalf of the Minister of Economy); and 
  • the state aid has been granted in compliance with the common market rules (the inspection is carried out by the European Commission).

Because the scope of the inspection is so wide, the entities operating within SEZs can in fact be obliged to keep their documentation for a much longer period than the entities operating outside SEZs.

Inspection checking the correctness of using state aid granted in the form of exemption from tax on income from the business activity conducted within a Special Economic Zone (SEZ) in Poland

During inspections conducted by them, both tax and tax inspection authorities are obliged to observe the tax regulations, including those of the Polish Tax Act (Tax Act). According to Article 86(1) Tax Act, taxpayers obliged to keep the books of account must store those books and documents connected with their keeping until the relevant tax obligations become time-barred. The statute of limitations for tax obligations is directly stipulated in Article 70 Tax Act, according to which tax obligations become time-barred after five years from the calendar year in which the tax became due. In some cases the law provides for a longer statute of limitations. For example, according to the current case law, entities accounting for tax losses must keep their books of account till the statute of limitations runs out for the last tax year in which an enterprise accounted for the tax loss. 

The statute of limitations set out in Article 70 Tax Act can be neither deferred by the tax authorities nor prolonged by the Minister of Finance. In cases strictly regulated by the Tax Act, the statute of limitations can be interrupted or suspended.  The Accounting Act imposes on taxpayers the obligation to store financial statements for an unlimited period, and other documents for five years from the beginning of the year following the financial year to which those documents refer. 

The legislator has not directly provided for other regulations in this respect that would apply to entities operating within a SEZ. Consequently, according to the binding regulations of the Tax Act, entities operating within a SEZ must store their tax documentation for six years after the end of the tax year to which this documentation refers.

Inspection checking the compliance with the common market rules

Another matter is inspection by the European Commission, which can be carried out directly on the beneficiary's site whenever there are doubts whether the state aid has been granted to an enterprise in Poland in compliance with the law or whether it has been used by it in accordance with the intended purpose. If the European Commission finds out that the state aid has not been used according to its intended purpose, it can undertake all necessary measures to recover the aid funds from the beneficiary. It should be pointed out here that the powers of the European Commission as regards the recovery of aid funds are subject to the statute of limitations of ten years. The statute of limitations starts to run on the day on which the beneficiary was unlawfully granted the state aid.

Inspection checking the compliance with the conditions for granting the permit to conduct business within a Special Economic Zones (SEZ) in Poland

Still another matter is checking the compliance with the conditions for granting the permit to conduct business within a SEZ, which allows using the state aid in Poland. According to Article 18 of the Special Economic Zones Act (the SEZ Act), the minister in charge of economy is responsible for inspecting the business activity of an entity which has obtained the permit to conduct business within a SEZ (the actual accountability for inspection activities to be conducted in this regard rests with the entities managing the respective SEZs). However, pursuant to Article 19 SEZ Act, the Minister of Economy may revoke the permit if e.g. the enterprise has terminated the business under the permit in the zone, or has grossly violated the terms set in the permit concerned. 

According to Article 17(5) CIT Act, in the event the permit to operate in a SEZ in Poland is revoked, the taxpayer loses the right to tax exemption and is obliged to pay the tax for the entire period of enjoying the tax exemption (this does not apply to permits issued before 01/01/2011, in which case the enterprise that lost the permit must pay the tax for the period from the time in which the circumstances leading to the revoking of the permit arose). 

An enterprise which has lost the permit to operate in a SEZ in Poland may be obliged to reclassify from tax-exempt to taxable the income it earned five years earlier. In such a case the statute of limitations would not apply yet. The reason is that the tax obligation with respect to the income that has been tax-exempt so far arises only when the permit is lost. This means that the 5-year statute of limitations stipulated in Article 70 Tax Act starts to run not earlier than when the permit is lost. 

The practical consequence of the aforementioned regulation is that it is in the interest of entities operating within a SEZ in Poland to store any tax documentation throughout the period from starting to terminate their activity within the SEZ.

Consequences of lack of tax documentation

The basic risk to which an enterprise is exposed if it does not keep the required tax documentation is its inability to document business transactions concluded in the period to which the lost documentation refers. According to Article 23(1) Tax Act, if the books of account or any other data necessary to determine the taxable base are missing or the data contained in the books of account do not allow determining the taxable base, the tax authority will measure the taxable base by way of assessment. The main burden of collecting evidence for the concluded transactions rests in this case with the taxpayer. As it has been emphasised in the case law (including, e.g. the ruling issued by the Provincial Administrative Court on 18 June 2009, file no.  I SA/Gd 27/09), although tax authorities are obliged to undertake all necessary measures to clarify the facts and circumstances of a case, they are not obliged to supplement the evidence with the missing documents. Therefore, if  the entity does not undertake any measures aimed at restoring the tax documentation, it runs the risk that its income (taxable base) will be determined by way of assessment. 

To sum up, it can be stated that according to the tax regulations enterprises operating in Special Economic Zones in Poland should keep the tax documentation for at least six years after the end of the tax year to which this documentation refers. However, since an enterprise may lose the permit to conduct business in a SEZ as a result of an inspection carried out by the SEZ managing entity on behalf of the Minister of Economy, we suggest storing tax documents referring to transactions concluded in the entire period of operation within a SEZ. The loss of permit, namely, would result in the loss of the right to the exemption from income tax for the whole period in which the taxpayer enjoyed the state aid in Poland. Of course, one can hardly image that an enterprise stores the documentation for over ten or even several tens of years. In extreme cases, a separate warehouse would have to be dedicated to this purpose. This problem can be solved by storing the documents on electronic carriers.

Our tax advisers working in Rödl & Partner offices in Gdansk, Gliwice, Cracow, Poznan, Warsaw and Wroclaw will gladly review your tax documentation related to your investment in a Special Economic Zone and propose a solution allowing minimising your tax risks.  We are also on hand to answer any other tax-related questions you may have. Our offices offer legal advice in Poland with conducting business within a SEZ and with any other aspects of your operations.