International Personal Finance’s Polish home credit company, Provident Polska, is to appeal the decision by the Polish Tax Chamber regarding a transfer pricing challenge related to an intra-group arrangement with a UK entity in 2008 and the timing of taxation of home collection fee revenues in the country.
The company said it “strongly disagrees” with the interpretation of the Polish Tax Chamber, the upper tier of the Polish tax authority, and will appeal to the District Administrative Court.
It said that a during a previous tax audit by the same tax authority, both items were challenged and the company’s treatment of them was accepted as correct, while Provident Polska’s treatment of these items has not changed since then.
The company will pay the amounts assessed, expected to be around £20m, in order to appeal the decision, and it stressed that the payment of the sum is “not a reflection of our view on the merits of the case” as it believes its case to be “very strong”.
IPF will also start a process with the UK tax authority to ensure that the intra-group transaction is not subject to double taxation but taxed in accordance with international tax principles.
The company expects to receive the same decision shortly from the Polish Tax Chamber for the 2009 financial year which would likely give a similar liability to that for 2008, while the 2010 financial remains under audit and all subsequent years remain open to future audit.
It maintained that it, and Provident Polska, “do not adopt aggressive tax strategies as evidenced by Provident Polska’s average effective tax rate since 2008 which exceeds the Polish corporate income tax rate of 19%”.
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