A SAF-T SAP add-on solution developed together by ‘Tax Assurance and certified SAP add-on specialists’ is now available for Poland, Lithuania and Norway and is scalable. The SAP add-on is extendable to other countries that uses the OECD framework as the basis for SAF-T reports.
Improve tax inspections
To support the development of this guidance the OECD has laid out the Standard Audit File for Tax Purposes (SAF-T). This guidance establishes the standard to be used for the exchange of tax data between companies and tax authorities.
The aims of the CFA guidance are to simplify tax compliance and audit requirements by clarifying the information required from business and accounting systems for tax reporting.
As a result SAF-T is intended to give tax authorities easier access to the tax relevant company data (corporate income tax and VAT) in a consistent format leading to more efficient control and audit of tax regulations.
Every company with a SAF-T-requirement is now facing the challenge of finding an easy and reliable way to deliver the required data. Multinationals have the further challenge of providing a range of country-specific information in a controlled and efficient manner.
Efficient use of technology lowers costs of data collection and compliance. As a result more and more tax administrations around the world are implementing electronic auditing of business’s financial records and systems as part of their compliance regime.
Countries might have their own specific local SAF-T requirements but in case the basic required data are covered in the OECD framework it could be managed with country specific variants. You can compare it with the EU VAT requirements: EU Directive as framework with some country specific rules based on the options in the EU Directive.
SAF-T and Tax Assurance objectives
Taxpayers will be obliged often to submit the SAF-T format:
- 'on request' in the case of a preliminary tax inquiry, a tax audit and tax proceedings and/or
- monthly mandatory 'VAT SAF-T'
The SAF-T VAT file should reconcile with the numbers of the VAT return to avoid a higher risk of a VAT audit.
Often I hear that the on request is given a lower priority. Be aware that 'audit defense' is an important building block for a sound tax strategy. Although it is an ‘on request’ obligation it is important to run this requests regularly and archive. See also the chapter 'Tax authorities peeking at your data'.
This data will be used by the tax authorities for a tax audit to check whether tax positions taken in the tax reporting and /or rulings closed (corporate income tax and VAT) actually reflect the data in the SAF-T files.
It is critical that your in-house tax department has sufficient time to assess the ‘on request’ data for any unacceptable tax risks. I recommend use this functionality in-house as a pre-audit prior to the law being in force.
Integrated scalable SAP add-on solution
A SAF-T SAP add-on solution developed together by ‘Tax Assurance and certified SAP add-on specialists’ is now available for Poland, Lithuania and Norway and is scalable. The SAP add-on is extendable to countries that uses the OECD framework as the basis for SAF-T reports.
Note that countries might have their own specific local requirements but in case the basic required data are covered in the OECD framework it could be managed with country specific variants. Certain countries such as France, Portugal, Austria, Luxembourg, etc. – have already SAF-T in force.
More detail also including an overview of the requirements for Lithuania, Norway and Poland and the challenges companies need to overcome when SAP is run can be found in attached slide deck.
Published by Richard Cornelisse
Richard advises multinational businesses in improving the efficiency and effectiveness of their Indirect Tax Function and Tax Control Framework.
He started his career as a manager at Arthur Andersen and then became a partner in EY where I led the indirect tax performance team for Netherlands and Belgium. Currently he is a senior managing director of Phenix Consulting.
Richard has over 20 years’ experience advising clients on international VAT issues. He is specialized in the tax aspects of financial transformations, shared service centre migration, and post merger integration work. Richard is also somewhat of a mentor, giving back to the profession. If you are interested in conversation and discussion, please feel free to contact him.