Report on payments of entities operating in the mining industry

At the end of 2022, the deadlines for the preparation of financial statements for most Polish companies began to run. With regard to some entities with a specific scope of activity, the Polish Accounting Act contains provisions imposing additional reporting obligations beyond the standard ones. Below is information on entities operating in the mining industry or logging primary forests industry and their specific obligations related to the closing of the financial year.

Obligation to submit a report on payments to public administration

An entity operating in the mining industry or an entity dealing with the logging of primary forests prepares, at the balance sheet date, together with the annual financial statements, a report on payments to the public administration.

Pursuant to the definition provided in the Act, an entity operating in the mining industry is an entity conducting activities consisting in the exploration, prospecting, discovery, exploitation and extraction of mineral deposits, oil, natural gas or other raw materials, as part of specific types of economic activity listed in the Polish Classification of Activities.

A primary forest logging entity is an entity that harvests timber in areas of primary forest, i.e. forests with native species, where there are no clearly visible traces of human activity and where ecological processes are not significantly disturbed.

However, not every such entity is covered by the additional reporting obligation, but only capital companies, limited joint-stock partnerships, general partnerships or limited partnerships, whose all partners with unlimited liability are capital companies, limited joint-stock partnerships or companies from other countries with a similar form to these companies that meet the following criteria:

1. the entity belongs to entities operating on the basis of the Banking Law, regulations on trading in securities, regardless of the amount of revenue, or is a national payment institution or electronic money institution (the exhaustive list is contained in the provisions of the Act), or
2. in the financial year for which the entity prepares the financial statements, and in the year preceding that year, at least two of the following three values were exceeded:
3. PLN 85,000,000 – in the case of the total assets of the balance sheet at the end of the financial year,
4. PLN 170,000,000 – in the case of net revenues from the sale of goods and products for the financial year,
5. 250 people – in the case of average annual employment in full-time equivalents
   – and if a single payment or the sum of related payments made by that entity was at least the equivalent of PLN 424,700 in the financial year.

The content of the payment report

The payment report should contain the following information:

• the total amount of payments made to the public administration of a given country, broken down by payments to the relevant levels of public administration;
• the total amount of payments made to the appropriate level of public administration of a given country, divided into the following titles:

1. production receivables,
2. taxes levied on the income, production or profits of companies, excluding value added tax, personal income tax or sales tax,
3. royalties,
4. dividends,
5. royalties and bonuses for discovery and production,
6. license fees, lease fees, start-up fees and other benefits for granting licenses or concessions,
7. payments for infrastructure improvements,

• if payments have been assigned by the entity to a specific project – the total amount of payments made for individual projects, divided into payment titles indicated in the paragraph above.

Exemptions from the reporting obligation

An entity may not prepare a statement of payments if its parent company located in the European Economic Area prepares a consolidated statement of payments in accordance with the law of the EEA state to which it is subject, and payments made by this entity to public administration are included in this consolidated statement from payment.

The parent company may not prepare a statement of payments if it prepares a consolidated statement of payments and payments made by that parent company to the public administration are included in this consolidated statement of payments.

In addition, a lower-level parent company may not prepare a consolidated statement of payments if its upper-level parent company with its registered office or place of management in the EEA prepares a consolidated statement of payments in accordance with the law of the EEA country to which it is subject, and payments made by this downstream parent company to government are included in this consolidated statement of payments.

We invite you to contact our office regarding the performance of reporting obligations and the preparation of financial documents: [email protected]