Innovation and tax audits

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Tax authorities, due to technological innovations, have become increasingly better in executing their tax audit. The probability that the Tax Authorities will issue additional assessments and penalties in the near future because errors in indirect tax are detected, increases by the day. An increase of e-filing of returns but as well of e-audit capabilities. Technology will result in effective tax data collection and efficient and effective tax audits. The OECD has issued in May 2005 a guidance note on the development of Standard Audit File –Tax (SAF-T) and recommends the use of SAF-T as a means of exporting accurate tax accounting data to tax authorities in such way that can it can be analyzed easily. Mandatory data filing gives food for thought.

In Spain on 1 July 2017: immediate supply of Information to tax authorities in force

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In Spain a new VAT reporting system will enter into force on the 1st of July 2017. The new Spanish requirements will have a huge impact on many (multi)nationals that run SAP.

Enablers of the tax function

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For a tax function to produce timely deliverables and satisfying the requirements of the board and other stakeholders, the effectiveness of tax department’s 'governance', 'operation' and 'infrastructure' are essential enablers. This article sets out the business challenges and areas of improvement for these enablers.

VAT function effectiveness

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A key business objective in today’s complex regulatory environment is the promotion of shareholder confidence in a company’s financial statements. Finance functions of major multinationals operate within a corporate culture that places increasing emphasis on the core values of trust and integrity. Within this culture the overriding strategic imperative of many CFOs is to manage their company’s financial reporting obligations and avoid reputational risk.

Introducing a new VAT system

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On 16 June 2016, the Finance Ministers of the Gulf Cooperation Council (GCC) held an extraordinary meeting in Jeddah, Saudi Arabia on GCC Value Added Tax (VAT). GCC States - Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates that make up GCC - will most likely introduce VAT on 1 Jan 2018 or by 1 Jan 2019 at the latest.

Approaches and models

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A Tax Strategy should cover all taxes and all key business locations and should be aligned to the overall business strategy. A tax strategy document should also include guidelines as to acceptable planning, which is then further detailed in a Tax Planning Policy. 

Migration to new jurisdictions

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From a Tax Control Framework perspective, for setting up risk based controls, the more unusual the transactions, the greater the tax risks. Migration to a new jurisdiction will most likely involve dealing with VAT. For some migrating corporations it may mean having to deal with VAT for the first time although probably for most, VAT will be a familiar concept with some variations from the ‘old’ jurisdiction. 

Publishing your tax strategy

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Certain businesses have to publish their tax strategy and be able to demonstrate how the tax strategy is being applied in practice. The strategy should set out the business’ attitude to tax risk, its appetite for tax planning and its approach to its relationship with HMRC. Although it applies to the UK, being consistent across jurisdictions is important as these obligations might be a global tax trend.

SAP add-on for SAF-T Poland

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We can offer a SAP add-on solution for Poland (ABAP) at a fixed all inclusive fee. Fully integrated in SAP without an external interface or use of external software. All inclusive means implementation, training and 1 year of free support and maintenance for bug-fixes & legal updates.

Full VAT automation of AP and AR

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If the aim of your organization is full VAT automation of AP and AR, it is important to have a clear understanding of your material risks at hand, and your lowest performing processes in order to define the functional specifications for a solution.

Manage reputational tax risks

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Reputational risk is a key element in tax risk management as it is it not only considers individual tax risk but also sees how tax risk may influence the positions in other areas, negatively or positively.

VAT findings for benchmarking

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Benchmarking exercises against trends in the indirect tax market can be done via global surveys that capture info on tax function, attitudes and priorities. These surveys are useful as they give insight into what others are facing or have faced and how you could improve yourself.

SAP add-on for immediate Supply of Information (SII) in Spain

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SII (“Suministro Inmediato de Información”) in Spain is about changing the current VAT management system which has been in place for 30 years, introducing a new bookkeeping system for VAT on the AEAT online system, by providing all billing records virtually immediately. The new Immediate Supply of Information accelerates the gap between recording or booking invoices and the actual realisation of the underlying economic transaction. It is introduced because the current technological situation allows its implementation at this time, to improve both taxpayer assistance as taxation controls (e-tax audits).

The auditor is not (yet) a risk analyst

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The external auditor’s task is only to provide an opinion whether the annual accounts provide a true and fair representation of the company's affairs. He or she is not asked to provide a statement regarding the accuracy or the acceptability of the submitted return for corporate tax, income tax, VAT, etc.

Why and what needs to be done

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Even as the world is shrinking, businesses and their growth strategies are becoming more complicated. A schematic drawing of the functions of a typical multinational today might look like a Rube Goldberg contraption—a complex of moving parts that must connect one to another for tax, regulatory, and reporting purposes. 

SAF-T what is next ... Lithuania!

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In Europe SAF-T is now in force in Austria, France, Lithuania, Luxembourg and Poland. We understand that Germany, UK, Ireland, Norway and the Czech Republic are most likely next to introduce SAF-T. Lithuania is expanding its SAF-T. Starting October 1, 2016 all VAT-registered taxable persons, - including foreign companies registered for VAT - will be required to submit a SAF-T file in XML format to the LT Tax authorities on a monthly basis.