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.
The SAF-T SAP add-on solution is now available for Poland, Lithuania and Norway
SAF-T is recently implemented in Poland, Norway and Lithuania and we have developed an integrated SAP E2E solution.
Besides the monthly SAF-T VAT file in Poland and Lithuania, companies have to be able to meet also the SAF-T obligation 'on request' containing different tax requirements. This submission applies in case e.g. a tax audit - scope CIT and VAT - is announced where the SAF-T file should be provided to the PL tax authorities in a short timeframe. To avoid disputes and or penalties it is therefore important that a company is ready.
Our SAF-T SAP add-on solution runs over SAP ECC, is compatible with OECD SAF-T standard and covers the steps of creation of necessary structures in XML format including e-submission with signature and encryption (E2E). The solution is fully integrated in SAP without an external interface or use of external software and SAP release and upgrade independent. It is implemented without core modification and ABAP is the programming language. Installation done simply by external transport file. It contains user-friendly screens, own customised tables and own transaction codes and menus. The solution is available for Poland, Lithuania and Norway and extendable to countries that uses the OECD framework as the basis for SAF-T reports.
Credentials - all listed companies with strict IT policies - are available.
Further innovations and tax risk management
In Spain you have to provide close to real time data to the authorities per July 1, 2017. On that same date in Hungary real time data has to be provided. In Italy new quarterly reportings are introduced. We have anticipated on these business challenges - are confirmed as a 'issue to solve' by our clients - and are developing add-on solutions.
Besides SAP functional and technical we are also tax assurance experts. Some tax risk management that need attention:
- VAT SAF-T should reconcile with VAT return submitted. Differences are caused due to manual corrections (Excel). A mismatch between the files will result in an increased risk of tax audit (material tax risk)
- SAF-T on request: data is provided to the tax authorities. Does this data contradict for example with the factual circumstances of any tax rulings closed or with tax planning: in alignment with the conditions of the company's business model. It could for example be that the financial data in the system does not reflect the business model design or that any business change after go-live is not properly managed (material tax risk).
Written 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 an EY partner where he led the indirect tax performance team for Netherlands and Belgium. Currently, he is a managing director of SAP Tax Consultancy Firm.
Richard has over 20 years of experience advising clients on international VAT issues. He is specialized in the tax aspects of financial transformations, shared service center migration, and post-merger integration work.