Undoubtedly, above means that taxpayers should pay particular attention to transactions’ documentation not only by preparation of transfer pricing documentation but also by preparation of comparative analysis and submission of documents on the basis of which price was calculated.
What is comparative analysis? This is a comparison of the conditions of transactions which have been established between related parties with the conditions of transactions which would be established between independent parties or which one of the related entities would establish with the independent entity in comparable circumstances. Although it does not constitute obligatory part of transfer pricing documentation nonetheless it can be crucial in explaining doubts concerning market value of the transaction.
In addition, according to a Regulation of the Minister of Finance dated 10th September 2009 on the manner and procedure of determination of corporate income through assessment and on the manner and procedure of elimination of double taxation of corporate income in case of adjustment of related parties’ profits (Dz. U. of 2014, pos. 1186, hereinafter: the Regulation) if the taxpayer evaluates market value of a subject matter of transaction on the basis of a method or methods stipulated in §12 - §14 of the Regulation and submits to the tax authorities tax documentation and data on the basis of which price was calculated and correctness and impartiality of submitted data does not raise reasonable doubts, tax authorities shall evaluate market value of a subject matter of transaction on the basis of a method adopted by the taxpayer (unless use of a different method proves to be more appropriate in the light of the provisions of the Regulation and available data). Therefore, if comparative analysis is correct, there is a high probability that tax authorities will not question the method chosen by the taxpayer as well as market nature of the transaction.
Source: Russell Bedford Poland