Tax law

Tax law is characterized by such phenomena as tax liabilities, tax information, tax proceedings, tax audit and verification activities, customs and fiscal audit, and tax secret. A tax liability is the obligation to pay tax as provided for in provisions of law (and nowhere else). Tax legislation consists of tax laws, international tax treaties, and implementing regulations. It is important to bear in mind that, while the tax arises solely from the provisions of the Tax Act, its interpretation must be consistent with the Constitution of the Republic of Poland, EU law, and the provisions of international agreements. Tax law does not include individual tax interpretations, advance protective tax rulings or binding rate information. Tax clarifications are also not included in the tax law.

Disputes with the various tax authorities, also known as "tax offices," are common due to the high level of complexity of tax law. In practice, tax offices are frequently incorrect. Tax office decisions are frequently repealed in favour of the taxpayer (payer, collector) in administrative proceedings as a result of an appeal to the competent director of the tax administration chamber. Nevertheless, each year, tens of thousands of cases are heard by the administrative courts, which include the provincial administrative courts and the Supreme Administrative Court. Several tens of per cent of these cases are also decided in favour of the taxpayer.

In Poland, tax doubts should be resolved in favour of taxpayers. Tax offices often forget about this principle. However, the entrepreneur should always be aware of his or her taxpayer rights, such as the right to tax deductions and exemptions, as well as the right to select the most favourable taxed form of business, including the right to select such a form abroad. The tax office cannot require an entrepreneur to pay more taxes than the law provides for. However, public officials are allowed to review the transaction in terms of various aspects. This is especially associated with the compliance with the transfer pricing principle between related parties. The purposes and manner of the transaction are also verified. A transaction carried out in an artificial manner for the purpose of gaining a tax advantage may result in its undermining and, consequently, the imposition of a surcharge tax. As a result, documentation requirements, which are constantly changing and new ones are occurring every year, have become of key importance in business activity. The basis is the transfer pricing documentation. It should be noted that the documentation issues are not entirely resolved by transfer pricing documentation. It can be said that in tax audits, public officials frequently transfer the burden of proof to the entrepreneur, and such an obligation sometimes arises directly from the law. It is therefore in the entrepreneur's interest to keep records of entitlement to tax, allowances, exemptions, tax deductible costs, input tax deduction or application of a reduced tax rate.