News items

Richard LinkedIn


I advise multinational businesses in improving the efficiency and effectiveness of their Indirect Tax Function and Tax Control Framework. I started my 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. I have over 20 years’ experience advising clients on international VAT issues. I am specialized in the tax aspects of financial transformations, shared service centre migration, and post merger integration work. 

I am also somewhat of a mentor, giving back to the profession. If you are interested in conversation and discussion, please feel free to contact me.


Where tax risk based controls should be expected
  1. Tax moral is shifting. More often what is (still) legally allowed may not automatically be accepted by the public opinion. Reputational damage is imminent.

    Both on direct and indirect taxation the tax authorities have set their priorities. The tax authorities not only want to receive more tax data, but also faster and more often. In addition, there is a tendency to allocate the ultimate tax responsibility at the highest level in a company. Since last year in the United Kingdom the Board of Directors has to sign off the company's tax strategy and also publish the strategy externally.

    Tax departments and the external auditors face due to these 2 tendencies new obligations. These tendencies could however also support change.

    The new data requirements of the tax authorities have to be properly assessed and interpreted from a tax risk management perspective to see whether the data requested contain any uneforeseen and major tax risks. The outcome of such an exercise could also make clear that the company has to reorganize its business and tax processes.

    When all tax disciplines (e.g. TP, indirect tax; etc.) work together a joint responsibility for the overall tax affairs of a company could be established. That might facilitate the buy-in for tax investments.

    When successful tax can take the place it deserves: an important part of a company's business strategy.

    The above will be further explained in detail the coming weeks:
    1. The external accountant not yet a tax risk analist
    2. New tax legislation in the UK: 'Tone at the top'
    3. More attention on Transfer Pricing
    4. … And on VAT
    5. Tax authorities request more, faster and more often tax data
    6. SAF-T rolled out in more countries
    7. The impact on in-house tax function
    8. Preaudit before submit
    9. Realise a joint tax responsibility

    Above is a translation of article published in Vakblad Tax Assurance. Dutch version can be downloaded for free: Download click the link


  2. Door Richard H. Cornelisse en Edwin van Loon Gepubliceerd in Vakblad Tax Assurance

    Samenvatting

    De belastingmoraal verschuift. Steeds meer wordt iets wat wettelijk gezien mag, niet automatisch ook geaccepteerd door de publieke opinie. Reputatieschade dreigt. Belastingdiensten worden ook scherper, op zowel directe en indirecte belastingen. Ze willen vaker, sneller en meer gegevens zien. Daarnaast is er een tendens om de eindverantwoordelijkheid voor fiscale zaken hoger in de onderneming te leggen; in het Verenigd Koninkrijk ligt die sinds vorig jaar zelfs al bij de Raad van Bestuur.

    Die twee tendensen stellen eisen aan de interne fiscale afdelingen en de externe accountants, maar bieden ook kansen. De gegevens die de belastingdiensten eisen, zouden door het bedrijf zelf goed gemonitord en geïnterpreteerd moeten worden, om te kijken in hoeverre die gegevens misschien wijzen op ongewenste situaties en te grote belastingrisico’s. Het kan ook zo zijn dat die gegevens duidelijk maken dat het bedrijf er misschien goed aan doet de bedrijfsprocessen anders te organiseren.

    Door samenwerking van fiscale specialisten kan een gezamenlijke verantwoordelijkheid voor het totale fiscale reilen en zeilen van de multinational ontstaan. Van daaruit is een beter zicht op mogelijk gewenste investeringen voor het bedrijf mogelijk. Zo kan fiscaliteit de plaats innemen die het misschien altijd al verdient: als belangrijk onderdeel van het totale overkoepelende ondernemingsbeleid.


  3. We offer a new SAP add-on solution that creates automatically the VAT Smartform from SAP. When our SAF-T SAP add-on solution has been purchased this additional functionality will be managed under SAF-T cockpit as a different report.
    Companies selling across European Union borders have to submit EC Sales List (ESL). This should contain the details of sales or transfers of goods and services to other VAT registered companies in other EU countries summarized per VAT registration number. The tax authorities in the EU use the listings to check whether VAT is declared by the parties involved in cross-border transactions (e.g. no mismatches).

    In Poland a specific extra local requirement applies. As of 1 January 2017 taxpayers making transactions with EU members will be required to submit mandatory the declaration in electronic format.

    The Polish tax authorities provides a VAT Smartform PDF that a company has to fill in with the requested information. That Smartform is mandatory and must be used to meet the requirement. Without automation support the data has to be entered manually by the company.
    Entering data is a time consuming process. Besides the impact on internal resources, such manual activity increases the risk of data errors, i.e. with entering the VAT registration numbers in the Smartform.

    Stricter penalties apply for individuals involved in tax fraud and penalties are introduced for taxpayers who do meet the legal requirement of submitting declarations in electronic format.

    Source: SAP - submitting close to real time data to tax authorities
  4. 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.

    SAP add on for SII

    The SAP add-on is based on the selection of the VAT relevant transactions from the SAP ledgers. This can be done manually with a new SAP transaction or in an automated way via scheduled batch jobs. The SII relevant data from the selected source transactions are stored in a new customized SII table. That single source ensures your data integrity and consistency. There will be no need for maintenance of multiple systems as it will all be maintained in SAP itself. All reportable SII data are available via a single SAP cockpit which enables easy (tax risk) management of the SII reports.

    Read more: In Spain on 1 July 2017: immediate supply of Information to tax authorities in force
  5. 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).

    SAP add-on solution

    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.

    Businesses classified as large companies will just have a couple of months left to adopt this new requirement in its processes, controls and systems.

    It will be a real challenge. Failure to comply in time could result in penalties and increased risk of a tax audit. The goods news is that we developed already a SAP integrated SII solution.

    That is not new for us as we have developed similar SAP add-on solutions before when SAF-T in Poland, Lithuania and Norway was introduced. SII is our next step in supporting clients that face IT business challenges.

    We developed a SAP add-on solution by which the e-submission of the required data from AR and AP invoices is fully integrated in SAP without an external interface or use of external software.  With this add-on the submission of the requested invoices can be done automatically and in time.

    Our SII for Spain is ready and functionality can be demonstrated via our own SAP environment.

    Read more: SAP add-on for immediate Supply of Information (SII) in Spain
  6. Tax authorities around the world want to receive more frequent and faster tax relevant data for e-audit purposes to analyse Corporate Income Tax (CIT) and VAT positions taken to combat VAT fraud and to determine whether actually a fair share is paid (Base Erosion and Profit Shifting: 'OECD's BEPS').

    More countries will therefore move to data request to monitor and electronic audits (e-audits) taxpayers. SAP itself does not provide an E2E solution to meet these (new) legal requirements.

    More an more countries will implement 'the Standard Audit File for Tax Purposes (SAF-T) developed by the OECD. This format is intended to give tax authorities easy access to the relevant data in an easy readable format. This leads to much more efficient and effective tax inspections.

    E-audits will be performed - using data analytics - on data submitted electronically by the taxpayers.

    Read more
  7. A Tax Control Framework should not operate in silo, but has to be aligned to the company's business control framework (BCF) and should cover more from a tax risk management perspective than only compliance and financial risks. There are various BCF models developed and therefore differences exist between companies.
    That same principle applies when we 'wish' for example to copy paste a 'Best practice tax technology framework' from one multinational to another multinational. The devil is often in the 'implementation' / 'configuration' detail as most of the time it is not 'Plug & Play'. For example the legacy systems, business models and/or the structure of the tax function could be different.

    When we talk about tax control framework do we focus nowadays not too much on compliance and financial risks?

    What has been designed from a tax planning is not always properly implemented or has changed after implementation due to new business initiatives that are an unknown to the tax function due to lack of visibility or disconnect. That could result in material tax risks. Take for example strategic tax risks such as the management of non-routine transactions:




    Technology might be an enabler to manage such change management process better, but the people element ('the interaction') - especially if many work streams are involved - are the key drivers that together can realise 'being in control' at go-live and beyond.

    Anticipating in time on tax developments and take action 'see the 4 questions I raised and the answer I gave above' is an other example that highlights why managing change is important from a tax control framework as it impacts all the risk categories including reputational, strategic and operational risks.

    Source: From tax strategy to artificial intelligence to automating the tax adviser | Richard H. Cornelisse | Pulse | LinkedIn
  8. I truly love innovation. The sooner the better, but I consider all the stories about artificial intelligence and robotics still science fiction when this is discussed in connection to indirect tax. 
    A critical condition for success would be that ERP systems supported by tax technology could actually present real-time all the company's (intercompany) business transactions. 

    However, real-time access to a company's blue print is often a recurring bottleneck during business model change (see example 'Commissionaire to LRD'). Certain consultancy firms perform such transaction mapping exercises still via interviews. 

    Without access to a complete data set, is artificial intelligence not useless?

    Automating the adviser

    That being said I think much more can be automated and will be automated. I published in February 17, 2012 my article 'Google the (tax) adviser of the future': [Time stamp 2012!] 

    I am following the developments of Apple’s Siri of and of Google in general with great interest. Siri is the speech recognition engine that Apple uses as a virtual personal assistant for their devices. 

    The software truly understands your questions, searches the web and provides you with answers immediately. 

    Google’s executive chairman, Eric Schmidt, has conceded that Siri could pose a “competitive threat” to the company’s core search business. 

    If that is the case, is it not realistic to assume that Google and/or other companies are going to invest a considerable amount of money in developing similar functionalities? 

    Such competition between these powerhouses will boost technology improvement.
    • Will such technology in the end truly understand all your technical questions?
    • Is a virtual personal assistant going to respond immediately?
    • Is this science fiction or our near future?
    I am aware that some people will argue that certain knowhow depends on individual skill sets and expertise. 

    For the moment, they are right, but they might be proven wrong in the future. 

    Can this also be automated? 

    What successful examples relate to strategic insight and decision-making? 

    Chess is a strategic game and relates on fact-based information (pieces on the chess board: relevant facts) and a number of possibilities (moves: calculation of the impact of various options combined with overall strategic insight).
    • If a chess-playing computer, Deep Blue, can beat world champion Gary Kasparov in a six-game match by two to one with three draws against, shouldn’t the automation of an adviser’s strategic decision-making also be possible?
    • Deep Blue’s successor - Watson - has beaten Jeopardy champions at their own game. What was needed to make that happen: “natural language processing, searching immense data sets and creating relationships among disparate sources of information to finally culminate in an answer.”
    The good news is that the profession of service providing is a people business. 

    We like to be connected to people. 

    Maybe the statement about automating the adviser is a bit too provocative, but I still believe a lot more can be automated than we can currently comprehend. Having an open mind is the message I want to get across. 

    The only things that probably cannot be automated are our feelings and interactions. 

     That is why it is and will remain a people business. 

    Last but not least, I don’t pretend to write the strategy plan for Google. I just admire companies like Google, Apple and Virgin for their innovations and culture. In this blog “Google” represents companies that are technology innovators. The future adviser could therefore be somebody else. 

    Do you agree? 

    Source: From tax strategy to artificial intelligence to automating the tax adviser | Richard H. Cornelisse | Pulse | LinkedIn
  9. Lets just assume that tax transparency and disclosure of tax risks to the tax authorities is mandatory in force in every country and that the effectiveness of a tax control framework should be proven.
    • Are OECD's Standard Audit File for Tax Purposes data requests (monthly and on request) - now rolled out in various European countries - the start of a new beginning for better audits by the tax authorities?
    • Is it likely that tax authorities will get access to more sophisticated tax analytics tools?
    • Do companies need better risk management tools to meet tax objectives set derived from business objectives?
    • Do companies face additional tax risk due to (close to) real time data requests of the tax authorities - implemented for example in Brasil and will be in force in Spain per July 1, 2017 - and does it impact a company's audit defense, tax risk management, ERP systems and tax technology?
    Without doubt, the answer to all questions is a resounding yes.

    Source: From tax strategy to artificial intelligence to automating the tax adviser | Richard H. Cornelisse | Pulse | LinkedIn
  10. 'Innovation' and 'Tax strategy' have my interest. In the UK the Executive has to sign off the company's tax strategy and publish. The strength of the UK approach is that the Executive has to take position and also has to keep its promise as a public statement is made.
    This legal change realises that it has now become an Executive owned KPI to manage 'overall tax risks' resulting that the supervisory board and external auditor have the responsibility to audit 'in compliant or not' as the company might face reputational risks when that promise is not kept.

    Without such Executive sign off not much would have changed tax function wise. At least that is the lesson learned from the Dutch initiative: 'Horizontal Monitoring' where such a sign off and public statement were missing.

    Do you see the difference from a governance perspective?

    Source: From tax strategy to artificial intelligence to automating the tax adviser | Richard H. Cornelisse | Pulse | LinkedIn
  11. PwC has taken over the global tax function of GE (600 people):

    "We will also integrate GE’s tax technologies and end-to-end global processes into our own significant investments, allowing us to meet all of GE’s tax needs seamlessly. From compliance to deals to defense and controversies to sophisticated planning, our team will cover everything for GE while also providing that same expertise and access to tax technologies and process to other clients."

    An unexpected move of one of the Big4 and tip of the hat is well deserved. The advantages are clear. A considerable amount of global tax industry knowledge that you can combine with PwC tax consultancy knowhow. The objectives for closing the deal are good, but in the execution realizing these synergies it often goes wrong. That risk should be remote as PwC Consulting supports multinationals in such change management exercises. I assume that this knowledge will now be used in-house.

    Siemens

    This deal is not entirely new. Siemens did a similar 'sale lease back' deal in 2000. Former employees of the central tax department of Siemens incorporated an own consultancy firm. The background for going independent was - if I understood correctly - that Siemens was involved in many M&A activities and when companies were sold historical tax knowledge was lost. That new company avoided such a loss.

    Incident or a trend

    Is this an incident or will after outsourcing routine work to Shared Service Centers of third parties vendors, the new trend be to outsource to third parties a Centre of Tax Excellence: a former in-house global tax function. 

    Is that a market that private equity will see opportunities in - future IPO - or is now my fantasy completely taking over?  

    "John Connolly, the former CEO of Deloitte is partnering with private equity firm HgCapital on an "audacious plan" that will include "a string of takeover deals" to build a new firm to compete with the Big 4" - Source Report: Former Deloitte UK CEO Planning a New Big 4 Firm

    Maybe we should reinvent and transform ourselves in dealmakers/brokers.

    On a more serious note it could change the tax market. Private equity could setup a new global tax competitor of the Big4 with a global network without audit services in such a way.

    Independence rules

    The Big4 are audits firms and that means that an auditor should not investigate during an audit himself including his tax colleague that has implemented for example a control framework or took managerial positions or implemented and configured own tax technology.

    The tax market nowadays is about (publishing and sign off by senior management - UK - of a company's) tax strategy, tax transparancy and implement an effective tax control framework that you should be able to demonstrate and defend to the tax authorities.

    When I was working at the Big4, it was not allowed to take managerial positions. I should always remain in my advisory role. That was also explicitly stated in the company's Terms and Conditions. 

    In my dialy practice nowadays it is essential that you can explain in an elevator pitch where you differentiate from other players in the market. I always mention that we develop our own technology, do not only design but as well can implement and when necessary can take managerial positions. We do not provide audit services and therefore are independent. 

    Where do I differentiate. Developing own technology in-house or implement the VAT determination logic in ERP systems itself, qualified in my time at the big4 as a red flag even if the client itself was not audited by the company I worked for. My consultancy work should always have left the door open for possible future work for my audit colleague. However, it could be that these rules have changed in the meantime.

    If the entire tax team left to PwC, is it not logical that managerial positions are taken if they still work in the same capacity for GE. Do people that remain at GE still have the tax knowhow to make own decisions or will they follow PwC GE blindly. The latter does not apply if sufficient tax knowledge remains behind at GE who can make these tax judgement calls. An other option might be second opinions. GE hires another third party to do such tax management for them when needed. That would bring outsourcing again to a complete next level. Every problem has obviously its solution.

    Spin off

    In the past an 'One Stop Shop' model at the Big4 was allowed and when a company was audited also tax services could be sold. That has changed for obvious and well known reasons. 

    Is the GE deal a trend and the end of the Big4 as we know it? 

    What is the reason besides income sharing that both audit and tax services are provided under one roof. If (tax) technology and implementing are the future does that not bite with audit services. If tax management consultancy - how to realize tax function effectiveness - is the future, is it not important that you can be managerial from time to time and do the implementation yourself? I believe that tax management consultancy under these terms will be the tax profession of the future.

    I have a reason for asking all these questions. It is in my own self interest. I always tell my clients to anticipate on new tax developments and take action. Should I not practice what I preach and make a SWOT analysis and when needed reinvent myself? 

    That being said I have got sufficient time as I predict that any changes mentioned will probably not go that fast.

    Am I wrong?

    Richard H. Cornelisse
  12. The objective is to bring commissionaire arrangements within the framework of dependent agency PE. Companies are converting commissionaire to LRD. Once a commercial and tax-efficient structure is determined— one that addresses both historical and potential risk - it is time to take the theory behind the structure into the realm of practice.

    Moving away from commissionaire structure

    As businesses are facing global challenges it makes sense that the existing business model is reevaluated and amended when necessary to meet the new PE environment. A less risky model is the limited risk distributor (LRD).

    That most likely means moving away from a commissionaire structure. Principal company sells to a master sales company (e.g., in the same country as the principal company) under a LRD agreement, and the master sales company resells through its local branches.

    Note that the tax authorities might have an extra interest in auditing the conversion.

    Read more: Converting the sales middleman function from Commissionaire to LRD
  13. This Inception Impact Assessment aims to inform stakeholders about the Commission's work in order to allow them to provide feedback on the intended initiative and to participate effectively in future consultation activities.

    Stakeholders are in particular invited to provide views on the Commission's understanding of the problem and possible solutions and to make available any relevant information that they may have, including on possible impacts of the different options.

    The Inception Impact Assessment is provided for information purposes only and its content may change. This Inception Impact Assessment does not prejudge the final decision of the Commission on whether this initiative will be pursued or on its final content.

    Source: Roadmaps published for three VAT initiatives on December 22, 2016
  14. Member Abdulaziz Al Zaabi also asked if the ministry had included expected revenues from the soon-to-be introduced value added tax (VAT) in its plan. "We are in the last stages of signing the VAT-related agreements with the GCC and it will be applied in 2018," the Finance Minister said. There were many speculations as to the revenues it would bring, he said, for instance, in the first year, it was expected to yield Dh12 billion, and up to Dh20 billion in its second year.  Source: Draft law for UAE 2017 federal budget approved | The National
     
    According to surveys not many businesses have an adequate accounting systems to deal with VAT. Besides that lots of businesses lack the VAT knowledge of how a VAT works. Investments and training are needed to be ready in time.

    To get VAT ready the following actions should be considered.
    1. Assess the business impacts
    2. Amend IT systems and business processes to the new situation forecasted and
    3. Review existing contracts and set rules for new contracts
  15. Creating XML SAF-T Structures directly in SAP ECC. SNI SAF-T is a SAP add-on that runs over SAP ECC, is compatible with OECD standard and covers the steps of creation of necessary structures in XML format including E-submission with signature and encryption.
    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.
    The SAF-T standard, originally created by the OECD, is intended to give tax authorities easy access to the relevant data in an easily readable format. This leads to much more efficient and effective tax inspections.

    Tax authorities collect and analyze already indirect tax data (e.g. SAF-T for VAT). The focus is not only about timely and accurate VAT reporting but as well whether on high risk areas an effective tax control framework is in place. Tax risk management methods are assessed.

    Source: Standard Audit File for Tax Purposes in OECD format
  16. In order to implement Brexit, SAP settings have to be changed. From an operational perspective processes and controls of companies have to be updated to the new situation at hand. SAP must reflect these changes which means that tax determination logics, tax codes, invoice and reporting requirements have to be assessed and the new rules should be implemented.

    Besides assessments by the tax function, a considerable effort by the IT department is required to implement Brexit. Change management processes follow strict IT policies and specific and extensive test rules apply before changes can go to the ERP production system. Those mandatory test cycles are time consuming and have a huge impact on resources.

    When manual processes and controls are set up to manage complex VAT transactions that include dealing with the UK, new guidance should be drafted and ongoing review should take place to check if these new procedures are actually complied with.

    A thorough and effective preparation should include a stakeholder analysis and the development of a SAP roadmap for change. This will provide insight into the work effort and the amount of time and money that you’ll need to invest. To help you manage and process changes, such as 'Brexit' or the accession of a new EU member state, PwC developed the SAP add-on tax engine Taxmarc. When this add-on is up and running in your SAP environment changes become transparent and easy to manage.



  17. Quarterly informative report VAT invoices data

    Starting from 1 January 2017 a new informative report of VAT data related to AP and AR invoices, including related credit and debit notes and customs bills, has to be filed by taxpayers on a quarterly basis (former Spesometro).
    This new report should include the following data:
    • The parties involved in the transaction: VAT number, name, address, fiscal representative
    • Date and reference number of the invoices
    • Taxable basis, VAT rate and VAT amount
    • Type of transaction, reason of VAT exemption
    • For correction invoice the reference to the reported original invoice
    The deadline for filing will be the last day of the second month following each calendar quarter (e.g., 31 May 2017 for the first quarter of 2017). Penalties apply in range from a minimum of € 2 to a maximum of € 1,000 per quarter will be imposed for any omission or incorrect filing of each invoice.

    Quarterly VAT calculations data report

    As of 1 January 2017, on a quarterly basis the figures for calculating the periodical VAT settlements - periodical VAT calculations as well as VAT calculations showing a VAT credit - have to be reported and submitted electronically. The deadline for filing will be the end of the second month following the each calender quarter (e.g., 31 May 2017 for the first quarter of 2017).

    The tax authorities will perform a consistency check between the data reported and the VAT payments made. In the case of inconsistencies, penalties could apply from a minimum of € 500 to a maximum of € 2,000 for submitting an incomplete or inaccurate report.

    We offer a new SAP add-on solution by which the quarterly informative report can be submitted timely via our integrated SAP solution in an automated fashion. We can provide support as well with implementing the right processes and controls of the quarterly VAT calculations.

    Source: SAP - submitting close to real time data to tax authorities
  18. Companies selling across European Union borders have to submit EC Sales List (ESL). This should contain the details of sales or transfers of goods and services to other VAT registered companies in other EU countries summarized per VAT registration number. The tax authorities in the EU use the listings to check whether VAT is declared by the parties involved in cross-border transactions (e.g. no mismatches).

    In Poland a specific extra local requirement applies. From 1 January 2017 taxpayers making transactions with EU members will be required to submit mandatory the declaration only in electronic form. The aimed is earlier identification of possible abuse. The summarized amount per VAT registration number for the sales of goods, acquisition of good and services need to be reported separately to the authorities in PDF.

    The PL Tax Authorities provides a VAT Smartform Pdf that a company has to fill in with the requested information. That Smartform has to be mandatory used to meet the requirement and without support the data has to be entered manually by the company.
    Entering data is a time consuming process. Besides the impact on internal resources, such manual activity increases the risk of data errors, i.e. with entering the VAT registration numbers in the Smartform Pdf.

    Stricter penalties apply for individuals involved in tax fraud and penalties are introduced for taxpayers who do meet the legal requirement of submitting declarations in electronic format.
    We offer a new SAP add-on solution that creates automatically the VAT SmartPdf file from SAP. When our SAF-T SAP add-on solution has been purchased this additional functionality will be managed under SAF-T cockpit as a different report.
    Source: SAP - submitting close to real time data to tax authorities
  19. In Spain a new VAT reporting system “Suministro Inmediato de Información” (SII) will enter into force on the 1st of July 2017 that will impact approximately 62,000 companies. These companies have to submit electronically to the Spanish tax authorities data from all AP and AR invoices within 4 days after an invoice is either issued or booked. In the first 6 months - as a transitional period - the companies will have 4 extra days (8 days in total) to submit these invoices.

    Automated extraction of the invoice data will be essential to meet the new rules in an automated fashion. The required invoice data has to be transformed in the required SII format (XML) and due to the short deadlines for submitting the report it is preferred to do it in the source system where the invoices are captured. For most companies the required data are already available in the SAP system. When e-submission of invoice data is implemented the administrative burden will also be lowered as only certain tax self-assessments has to be filed and certain cumbersome declarations no longer need to be submitted.

    Businesses classified as large companies will have just over 6 months to adopt this new requirement in its processes, controls and systems. It will be a real challenge. Failure to comply in time could result in penalties and increased risk of a tax audit.
    We developed a SAP add-on solution by which the e-submission of the required data from AR and AP invoices is fully integrated in SAP without an external interface or use of external software.  With this add-on the submission of the requested invoices can be done automatically and in time.
    Source: SAP - submitting close to real time data to tax authorities
  20. Dubai: With the forthcoming implementation of value-added tax (VAT) in the UAE and across the region, companies are going to face a huge talent crunch next year, according to recruitment specialists.Businesses in the UAE are gearing up for the collection of VAT in 2018. It was earlier forecast that the next tax policy will generate thousands of new vacancies for finance professionals. Source: UAE firms face hiring crunch as VAT implementation nears | GulfNews.com
    According to surveys not many businesses have an adequate accounting systems to deal with VAT. Besides that lots of businesses lack the VAT knowledge of how a VAT works. Investments and training are needed to be ready in time.
    To get VAT ready the following actions should be considered.
    1. Assess the business impacts
    2. Amend IT systems and business processes to the new situation forecasted and
    3. Review existing contracts and set rules for new contracts
  21. The European Taxpayers' Code provides a core of principles, which compiles the main existing rights and obligations that govern the relationships between taxpayers and tax administrations. 

    Source: Guidelines for a Model for a European Taxpayers’ Code
  22. Tax revenues collected in advanced economies have continued to increase from last year’s all-time high, with taxes on labour and consumption representing an increasing share of total tax revenues, according to new OECD research.

    The 2016 edition of the OECD’s annual Revenue Statistics publication shows that the OECD average tax-to-GDP ratio rose slightly in 2015, to 34.3%, compared to 34.2% in 2014. This is the highest level since the Revenue Statistics series began in 1965. An increase in tax-to-GDP levels was seen in 25 of the 32 OECD countries that provided preliminary data in 2015, while tax-to-GDP levels fell in the remaining seven countries.

    Consumption Tax Trends 2016 highlights that VAT revenues are the largest source of consumption tax revenues in the OECD, and have now reached an all-time high of 6.8% of GDP and 20.1% of total tax revenue on average in 2014.
  23. The European Commission released legislative proposals to remove VAT obstacles for e-commerce to realize fair competition between traditional business and e-commerce.

    The Commission has proposed practical new measures to support the digital economy when it comes to VAT compliance, which can currently place heavy burdens on small companies operating online. The new rules should help to accelerate growth for online businesses, in particular startups and SMEs.

    Proposals include:
    • New rules allowing companies that sell goods online to take care of all their VAT obligations in the EU through a digital online portal ('One Stop Shop'), hosted by their own tax administration and in their own language. These rules already exist for online sellers of electronic services ('e-services');
    • To support startups and micro-businesses, the introduction of a yearly VAT threshold of €10 000 under which cross-border sales for online companies are treated as domestic sales, with VAT paid to their own tax administration. This goes hand in hand with other initiatives such as same invoicing and record keeping rules. Our aim is to make trading in the single market as similar as possible to trading at home for these companies;
    • The removal of the current exemption from VAT for imports of small consignments from outside the EU, which leads to unfair competition and distortion for EU companies;
    • A change to existing VAT rules to enable Member States to apply the same VAT rate to e-publications like e-books and online newspapers, as they apply to their printed equivalents.
    These new rules will have a major effect for companies selling goods and services online that will now be able to benefit from fairer rules, lower compliance costs and reduced administrative burdens. Member States and citizens will benefit from additional VAT revenues of €7 billion annually and a more competitive market in the EU.


  24. 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. 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;
    • - 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 defence 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. 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.

    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.

    Richard H. Cornelisse, Tax Assurance specialist- access PowerPoint for further explanation
  25. There is one common denominator that is too often missing from the strategic or planning elements of a business model change — indirect tax.

    But do these taxes get the attention they need, especially in light of increasingly complicated and globalized business models? And although these tax considerations may not be among the issues that drive a financial transformation, tax can certainly give rise to some significant and costly challenges.

    That is particularly true of value added tax (VAT), which hits a number of disparate points within the enterprise as diverse as finance, procurement, IT or HR. One of the most common side effects of an integration that cannot be fully realized surfaces in the realm of invoicing.

    For example, large numbers of payable invoices are not correctly coded so VAT is not deducted (in time). Or when the legacy system is only half integrated into the new model, incorrect sales invoices are issued, causing problems for customers, incorrect reporting of tax figures, and missed compliance obligations.