Standard Audit File for Tax Purposes

Transcription

1 Standard Audit File for Tax Purposes Poland introducing per July 1, 2016 Mandatory electronic audit files a worldwide trend By Richard Cornelisse

2 SAF- T Poland From 1st July 2016 onwards it is required to provide SAFT-PL files in XML format on request of the PL Tax authorities Polish: Jednolity Plik Kontrolny or JPK Filing SAF-T will be mandatory for large taxpayers: Employ more than 250 people or 50 million EUR sales revenue irrespective of whether they are established in Poland or not Per 1st July 2018 this extended to taxpayers with more than 9 employees or 2 million EUR sales revenue Foreign businesses not having a branch and/or fixed establishment but that are registered for VAT in Poland fall within the scope of the above reporting requirement when above conditions are met The first requests to submit audit files will likely take place September Phenix Tax Solutions SAF-T Cockpit #

3 OECD s SAF-T methodology Overview of data types to be provided Published by OECD: May 2005 : Version 1.0 April 2010: Version 2.0 OECD Requirements Specific lay-out for submitting data to revenue for tax audits Phenix Tax Solutions SAF-T Cockpit #

4 Scope and objectives Scope Applicable for Corporate Income Tax, Transfer Pricing, VAT, Customs Developed in cooperation with governments, accountancy and audit profession and software developers Objectives Reliable accounting data Exportable from accounting system Specific time period Easily readable (standard layout and format) Used by Revenue for compliance checking Ever country has its own requirements See anticipate for e-audits section for complete overview Phenix Tax Solutions SAF-T Cockpit #

5 SAF-T Poland and SAP SAP is currently only developing an extraction tool for SAP ECC 6 and higher version The generation of the SAFT-PL XML files is not included in the SAP Strategy at the moment Certain companies use older versions of SAP and will not be supported by SAP Based on SAP's OSS notes, SAP will only provide a functionality for gathering and downloading the transactional data It is not the complete set of data required and the creation of the SAF-T file for the tax authorities is also not included The functionality will also only be available for companies established in Poland and not for companies with a foreign Polish VAT registration That means lots of SAP companies will face compliance problems A SAFT-PL tool that already works for Portugal that includes also strategy for downloading the relevant data from SAP for older SAP versions Phenix Tax Solutions SAF-T Cockpit #

6 Phenix Independent External Solution In order to be able to comply with the requirements and provide the XML file on request in time, tooling needs either to be developed or purchased A SAFT-PL tool that includes a strategy for downloading the relevant data from SAP as this will not be available for older SAP versions We offer 2 solutions: 1. A software application called Audit Command Language (ACL). This software is commonly used by auditing firms, tax authorities and internal audit departments. The process will be that the client will download the data from SAP and make it available to the Phenix. Phenix will then generate the XML files and some control reports and provide these files and reports available to client for submission 2. A tool in MS Access or SQL in combination with a specific user interface for extracting the data from SAP. The result is a full in-house solution for the client Above process is based on our proven tool developed for the generation of the SAF-T files for Portugal Phenix Tax Solutions SAF-T Cockpit #

7 A worldwide trend The more efficient use of technology lowers costs of collection and compliance More and more tax administrations around the world are implementing electronic auditing of a business s financial records and systems Countries are adopting tools that can interrogate such records on the basis that they must support the standard audit file for tax (SAF-T) methodology Besides introduced now in Poland similar EU obligations exist already in Portugal (2013) Luxembourg (2013), Austria (2009), France (2014), Lithuania (2015) See anticipate for e-audits section for complete overview Phenix Tax Solutions SAF-T Cockpit #

8 Anticipate e-audits Phenix Consulting

9 Adapting to the new tax world Worldwide automation in data reporting Tax and accountancy software and the need for data analysis Software improvements and increasing requirements from tax authorities: Standard Audit File for Tax purposes is an OECD initiative to regulate tax audits on an international level Allows tax authorities to audit more taxpayers with limited resources Conducted by tax auditors or by data analysts Easier detection and quantification of errors Many jurisdictions have formally already introduced e-audits or are variants of SAF-T Submit data on time and in the right format European Commission looking to develop EU SAF-T Direct tax and indirect tax data is being shared among tax administrations Self assessment such as testing of risk based controls and disclose results OECD s enhanced relationship between taxpayer and tax authorities Phenix Consulting

10 Level of change in reporting and analysis Monthly or annual reports Real-time access Tax reporting Optional use of standardized formats Mandatory on request Mandatory on request with enhanced fields e-filing Paper filing Tax audit Phenix Consulting

11 Do the tax authorities carry out e-audits for VAT? Big4 survey E-audits is standard method E-audits is partly used No 26% 8% 66% Phenix Consulting

12 Is there specific country legislation for e-audit? Big4 survey Yes No No data 26% 21% Countries without legislation e-audits can be conducted anyway. From a tax audit defense such absence could result in uncertainties: AT, BE, BG, DK, HU, IE, NL, NO, PL, PT, SK, UK; etc. 53% Phenix Consulting

13 Is there a mandatory format for data request? Big4 survey No compulsory format Only one format accepted Several formats tolerated 25% 14% 61% Phenix Consulting

14 Examples of formats requested by authorities Country Format required Austria SAF-T France Accounting entry file (in CSV or TXT) Germany Standard format preferred (GDPDU-format) or IDEA (TXT, CSV) Hungary TXT, XML, CSV, DBF, DB, XLS Luxembourg FAIA (based on SAF-T) Poland SAF-T announced for 2016 Portugal XML Sweden SAF-T, SIE (standard import/export) Phenix Consulting

15 Multiple type of software used by authorities ACL Audicon IDEA MS Excel & Access Homemade Chair Several software Audicon AIS TAX Audit JAVA (JMV) KDVIRA Not disclosed No standardized approach: every Member State having its own rules Phenix Consulting

16 Are there specific penalties for failing to maintain e-audit data in the required? Big4 survey Specific penalties No specific penalties No data 27% 35% 38% Phenix Consulting

17 How much penalties for e-audit defaults? Country Minimum Maximum Czech Republic Reassessed on authorities estimate Denmark Approximately 670 Assessed by Court France 5,000 or 10% of the amounts 100% of the amounts reassessed reassessed Germany 2, ,000 Greece ,000 / e-audit Hungary Approximately 1,600 Ireland Eventually 4,000 Up to 5,000 per day of delay Luxembourg Poland Joint liability person responsible Portugal 300 3,750 Sweden Subpoena/injunction + penalty Phenix Consulting

18 Benchmark: capabilities of ERP system Big4 survey ERP system is able to provide accurate transactional data ERP requires also a lot of manual verification Too many ERP systems impact transactional data accuracy negatively Users are unclear about capabilities of ERP system More than 80% of businesses are still using spreadsheets to manage their VAT compliance in at least one jurisdiction in which they operate, despite tax authorities around the world investing in better tools. (International Tax Review) 50% 11% 28% 11% Phenix Consulting

19 Time spent by taxpayer on data analysis Big4 survey Up to 20% Up to 50% 50% or more 19% 3% 78% Phenix Consulting

20 Which of the following best describes your tax function s focus around data analytics? Big4 survey Extremely focused on analytics and using core data to drive our effectiveness and strategy Exploring the use of data analytics but it's still early Has not embraced the use of data analytics to any great extent 13,9% 40,4% 45,7% Phenix Consulting

21 Are you using tax analytics to address any of the following tax areas? Big4 survey Indirect taxes (sales & use tax, VAT, GST, customs duties) BEPS: The OECD's base erosion and profit shifting project Direct taxes, including tax compliance or tax provision Transfer pricing and intercompany transactions Choose your top area if there is more than one 24,4% 20,2% 6,5% 48,9% Phenix Consulting

22 Use of technology (overall) Big4 survey Currently use FTE s % VAT reporting 57% Data analytics 30% Tax engine 26% elearning 23% Workflow/visibility 21% Expected to use in 3 years FTE s % VAT reporting 62% Data analytics 51% Tax engine 43% elearning 31% Workflow/visibility 38% Phenix Consulting

23 Use of technology (turnover above $ 20 billion) Big4 survey Currently use FTE s % VAT reporting 62% Data analytics 41% Tax engine 41% elearning 41% Workflow/visibility 32% Expected to use in 3 years FTE s % VAT reporting 68% Data analytics 68% Tax engine 62% elearning 47% Workflow/visibility 50% Phenix Consulting

24 Anticipate an e-audit Data can be used for other taxes (e.g. Transfer Pricing) E-audits are expensive: Storage costs and maintain of accessibility (e.g. future changes in IT systems) Risk of data loss or lack of audit trail Costs incurred for retrieving requested financial information Costs incurred to give tax auditor access to the data stored What tests will be conducted by the authorities Who is responsible for retrieving and submitting the data and what are the controls setup? Risk assessment prior to submission Roles and responsibilities Archiving and audit trail Workflow management that deadlines for filing are monitored and met What is currently unforeseen or lacks visibility? What supportive tools are available in the market to manage and monitor and reduce future tax audit costs? Phenix Consulting

25 Contact details Phenix Consulting c/o Richard Cornelisse (Partner) Tel Beech Avenue PW Schiphol-Rijk The Netherlands Phenix Tax Solutions SAF-T Cockpit #