The Board of Directors of Play Communications S.A. ("Company") informs that on November 20, 2020 its subsidiary P4 sp. z o.o. ("Play") submitted a corrective declaration for corporate income tax settlements for 2014. This adjustment reflects the findings of the result of the customs and tax inspection delivered on November 13, 2020 concerning the above settlements led by the Head of the Masovian Customs and Tax Office in Warsaw.
As a result of the inspection, the authority recognized Play's settlements for license fees paid to the related entity, i.e. Play 3GNS spółka z ograniczoną odpowiedzialnością sp. k. as correct.
Despite the fact that:
- the authority questioned the value of trademark depreciation write-offs included in Play's tax settlement, assuming that their initial value is determined by the lower limit indicated in the trademark appraisal report, prepared by an independent entity; and as a consequence, the partial deduction of depreciation write-offs in the amount of PLN 25,508,298.48 was questioned,
- moreover, similarly to the proceedings regarding Play's tax settlements for corporate income tax for 2013, the authority questioned the amount and nature of the license fees previously paid to Play Brand Management Limited based in Cyprus; and as a consequence, it stated that Play unjustifiably recognized the amount of PLN 25,548,683.59 as tax deductible costs,
acceptance of the inspection findings does not result in the obligation to pay tax arrears due to the settlement of losses from previous years. Consequently, the above findings are irrelevant from the perspective of Play's interests. In connection with the above, Play decided not to question the findings of the inspection result.
As a result, Play also took steps to discontinue the proceedings before the administrative court regarding settlements in corporate income tax for 2013, as this case lost its significance due to the findings made during the customs and tax inspection of Play's corporate income tax settlements for 2014.
The findings of the inspection authority for 2014 regarding the adoption of a lower value of trademarks as the basis for calculating depreciation may have an impact on Play's tax liabilities in subsequent years and result in the obligation to pay tax arrears in the total amount of at least PLN 29 million plus due tax interest.
Legal basis: Art. 17 MAR