Disclosure of reports on income tax of multinational companies

Multinational companies will be required to disclose reports regarding corporate income tax paid to individual countries, according to a draft amendment to the Accounting Law. The purpose of the provision is to ensure transparency in the tax activities of companies, as well as reduce the possibility of tax avoidance by shifting income to countries with low tax rates.

The draft calls for disclosure of information on income, expenses and income tax paid in each country where a company operates. These reports will be available to the public and provided to tax authorities.

Disclosure of income by country

The amendment to the Accounting Act implements obligations under the EU Anti-Tax Avoidance Directive. Poland is already late in implementing the directive, with a deadline of 2023.

For multinational companies, diverse and intricate tax laws facilitate aggressive tax optimization. Such actions can be treated as tax evasion. The new regulations are to address disclosure of reports regarding income tax paid in individual countries (separately), including tax havens. Such obligations are therefore of particular importance in terms of transparency of taxation and payment of tax in the country where the income is actually earned.

What information will be made available?

Companies will be required to share information on taxes paid in countries where they actually generated profit. They will provide the amounts of revenue, profit or loss, object of activity, number of employees. Information for the fiscal year beginning after June 21, 2024 will be made available for the first time. The obligations will be imposed on large companies based in the European Union and operating in the European Union through branches or subsidiaries. As a result company operating as Branch in Poland or subsidiary in Poland – will be obliged to report in Poland international financial data. Obligation will be binding from the moment of branch or company registration in Poland.