Norway SAF-T delayed to 2020

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Norway has announced to introduce an on-demand mandatory Standard Audit File for Tax (‘SAF-T’) requirement for taxpayers starting from 1 January 2020.

'Brexit' is it already time to act

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Relax, the VAT law will probably not change in the next 2 years. The UK must first give the European Council notice of its intention to withdraw and a 'Brexit' agreement has to be negotiated.

Italy - Quarterly informative report VAT invoices data

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The Italian authorities passed a series of measures aimed at detecting and combating tax fraud: "Quarterly informative report VAT invoices data". The aim is to get close to real-time information of company transactions, which will allow the tax authorities to perform a more efficient tax audit and reduce processing time. Companies face business challenges to implement these new requirements.

Criminal charges and jail time

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59 percent of respondents (53 percent in 2014) expect the personal liability of compliance officers to increase in 2015, with 15 percent expecting a significant increase. Compliance officers or its Executives at firms as diverse as Swinton Insurance, Bank Leumi, Bank of Tokyo-Mitsubishi, Brown Brothers Harriman and Deutsche Bank (DB: VAT fraud) having been fined, banned or jailed (or a combination).

Spreadsheets and VAT Compliance

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With human error added into the equation, some defects are going to occur. If the tax function only has MS Excel to perform data transformation to make the data tax ready, the volume of procedures and controls will have to be significantly greater. The problem is that in Excel altered data can lose its audit trail back to its source: mismatches with a companies ERP system. A point of attention as ERP data is the source of truth by the tax authorities (e.g. e-audits such as SAF-T).

How to get ready in time for SII Spain

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Any SII Spain solution should be implemented on 1 July 2017 as the first mandatory submission is already 8 days later. There are rumours that submission deadline might be delayed but that is still a big uncertainty. The decision that you have to make is whether you accept non tax compliance in the worse case. If that is not acceptable you should buy the right solution and start implementing asap to be compliant in time.

Italy: update about mandatory e-invoicing

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Some important updated concerning mandatory e-invoicing obligations in Italy such as soft landing and digital signatures and how invoices should be stored.

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. 

VAT neutrality has to be earned

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Often the question is asked what risk management even has to do with VAT/GST. The reasoning behind this question is that VAT/GST is typically cost neutral for most businesses: “a cash in and cash out” scenario. However, every indirect tax function knows that deductible input VAT and liable output VAT have to be managed separately to avoid substantial VAT assessments, penalties and interest payments. It is a risky business to monitor only the balance between output VAT and input VAT. Neutrality can only be achieved – better is the word ‘earned’ – if certain formal and material requirements are met.

What is considered tax avoidance

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"Tax avoidance is an attempt to exploit legislation to gain a tax advantage that was never intended. This often involves artificial transactions that serve little or no purpose other than to produce a tax advantage. But tax avoidance is not the same as tax planning, which involves applying tax legislation in the way it was intended - for example saving in an ISA (Individual Savings Account) where you don't pay tax on the interest."

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.

Commission develops TNA software to identify fraudulent networks

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To speed up the joint processing and analysis of data within Eurofisc, the Commission is currently developing TNA software for voluntary use by the Member States as of 2018.

SAP End-to End solution for periodic SII files in Spain

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In Spain a new VAT reporting system will enter into force on the 1st of July 2017.

UK MTD - SAP add-on for MTD UK

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Starting April 2020 the digitally linked VAT accounting data will have to be submitted to the tax authorities either periodically or on request. That data will be used to review whether the numbers of the nine VAT returns submitted are correct (tax audit (almost) real-time).

UK: Making Tax Digital (MTD)

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An API to HMRC is mandatory from 1 April 2019. HMRC will, however, introduce a soft landing period' until 1 April 2020. Taxpayers will, in the end, have to transfer data without manual intervention. Re-keying of large amounts of data and using copy/paste functionality will be forbidden. When Taxpayers use flat files such as CSV files and automated downloads, this may be satisfactory for the ‘digitally linked’ requirements. A proper VAT configuration of a company's tax determination logic is thus crucial for being MTD compliant.