Design and implement

Design and implement

Friday, December 23, 2016

Standard Audit File for Tax Purposes in OECD format

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

Saturday, December 3, 2016

OECD – Consumption Tax Trends 2016

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.

Wednesday, November 23, 2016

A cost efficient way to submit SAF-T files and perform risk management



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

Thursday, November 17, 2016

Innovation and tax audits

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 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. Looking to the future The submission of the SAF-T file means that a taxpayer has to provide specific data to the tax authorities every month. From a tax controversy strategy it is common practice that before information is provided to the authorities, a company performs a risk assessment and determines the worst case scenario to avoid unforeseen tax risks.

Monday, October 17, 2016

Norway introduces SAF-T to improve tax inspections


Norway is introducing SAF-T reporting for corporate entities, either resident or with physical presence in Norway (VAT registered businesses). From 1st January 2017 onwards it is required to provide SAFT-NO files in XML format on request of the Norwegian Tax authorities.

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.

Thursday, October 13, 2016

A scalable SAP solution for countries implementing SAF-T


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.

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.

Our partner's core business is to develop SAP certified add-ons and many well-known multinationals companies have implemented it for the comparable submission of electronic data.

The SAF-T SAP add-on solution is now available for Poland, Lithuania and Norway. 

Our SAF-T 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 customized tables and own transaction codes and menus.

We provide 12 months of free maintenance service and yearly maintenance agreements (optional) for consecutive years. Maintenance services include version upgrades according to new regulations issued and bug-fixing:
  • Online Helpdesk
  • Dedicated Project Manager (SPOC -Single Point Of Contact)
  • 2 hours response time for first priority issues.
  • Mail tracking
  • Ticket Reporting

Scalable solution 

The solution is scalable.   The SAP add-on is extendable to countries that uses the OECD framework as the basis for SAF-T reports. Countries could be added quickly in an (cost) efficient and effective manner as the SAF-T add-on is designed in a way that it allows companies to extend SAF-T requirements for other countries:

Product consists of two main parts;
  1. Core Part : The data extraction and main functionalities.
  2. Localization part : Designed for further country adaptation requirements.


Country adaptations are as you can see quite straight forward after the core implementation.

Turn key solution

The solution is a turn key solution and that means:
  • Implementation (4-6 weeks)
  • Training
  • Support & Maintenance (one year free & yearly renewable)
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.

Strategic partnership

SNI and KEY Group have formed a strategic partnership to leverage the synergies between KEY Group's tax and SAP services and SNI’s SAP add-on solutions.

The partnership positions the KEY Group as a preferred partner of SNI. Through this strategic alliance, the two organizations will bring to market SAF-T SAP add-on and web based portal solutions. We work for some of the world’s biggest businesses in the areas of tax, ERP consulting and technology.

The service will be provided by our core team and supported by our operations in Poland, The Netherland and Turkey.

This team is led by experienced and highly regarded Tax and SAP professionals who will be actively involved in all stages of the work we undertake. Our senior team is supported by experienced and motivated professionals with backgrounds as tax lawyers, chartered accountants and SAP (technical architects and functional).

The team has enormous experience in this type of SAP work including having managed migration / on-boarding projects and on-going (tax) performance advisory services for a number of global businesses.

Case studies outlining similar projects could be provided.


Friday, October 7, 2016

Strategic partner alliance - leverage synergies

SNI and KEY Group have formed a strategic partnership to leverage the synergies between KEY Group's tax and SAP services and SNI’s SAP add-on solutions. The partnership positions the KEY Group as a preferred partner of SNI.

Integrated SAP solution for SAF-T


Besides recently Poland, SAF-T is introduced now also for Lithuania and Norway. A fully integrated solution in SAP without an external interface or use of external software is available for Lithuania, Poland and Norway.

Other countries will follow.

This integrated SAP solution is developed together with a certified Global SAP Application Partner. 

Thursday, August 25, 2016

SAP add-on for SAF-T Poland

In Europe SAF-T is now in force in Austria, France, Lithuania, Luxembourg and Poland. 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.

SAF-T SAP solution: fully integrated in SAP

We now offer a SAP add-on solution for SAF-T Poland (ABAP) at a fixed all inclusive fee. It is 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.
Our IT solution can be reused for other countries.

SAF-T Poland

Besides the monthly SAF-T VAT file in Poland, companies have to be able to meet the SAF-T obligation 'on request' containing different legal requirements. This submission applies in case of a preliminary tax inquiry, a tax audit and tax proceedings 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.

To establish synergies we have setup a joint venture initiative with a global development partner of SAP and leading software company in the area of e-invoice, e-bookkeeping, e-archive, e-ticket and such SAP add-ons in Poland. This company provides SAP certified add-ons for legal compliance to a large number of global well-known companies.
  • Runs over SAP
  • User friendly with single user interface (SAP)
  • Easy to install by external SAP transport
  • Easy to maintain by upgrades via transport files
  • Has its own global SAP namespace so there is no effect on SAP standards and is not affected by SAP upgrades
  • Standard SAP authorizations used
  • Open source code as ABAP programming language
  • Vendor independent
  • One year free maintenance service including bug-fixes & upgrades according to legal compliance
Last Thursday - 25 August 2016 - was the deadline of the monthly VAT SAF-T PL submission.
Our generated SAF-T VAT file reconciles with the numbers of the Polish VAT return and have also been checked with the official tool of the Ministry of Finance.

Tuesday, August 9, 2016

Norway might introduce SAF-T

Norway has now also proposed to introduce SAF-T reporting for VAT registered businesses with a go-live date of 1 January 2017.

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.
  1. Mandatory e-filing
  2. Benchmark: SAP and SAF-T PL
  3. Innovation and tax authorities

Friday, July 29, 2016

Real time VAT ledgers in Hungary

Following the changes announced on ERP and invoicing software requirements in Hungary, the Hungarian government recently announced that businesses issuing invoices using an invoicing software will be required to provide real time data regarding these invoices.
The real time data provision will have to include all transactions in which another business with a Hungarian tax number is involved and the invoice includes at least 100,000 HUF VAT.

The new real time data providing requirement will be introduced in two steps. As the first step from the 1 January 2017 (as a test phase) it will be optional to provide the additional data. The system will go live and the new requirement will become an obligation from the 1 July 2017. The new requirement assumes additional IT development in terms of the invoicing software on the side of the taxpayers issuing invoices.

Since the invoicing software is supposed to be able to provide data for the Tax Authority in case of an audit since the 1 of January 2016, the new requirement is not supposed to put an excessive administrative burden on the taxpayers.

As these rules are in the proposal phase right now, nothing is certain until the Hungarian Parliament approves them. What is certain is that it is never too early to start preparing for these changes, which will affect the administrative obligations of a great number of business.

Read more: Real time VAT ledgers in Hungary

Wednesday, June 29, 2016

Monthly SAF-T VAT file in Poland (JPK-VAT)


According to new regulation Large Enterprises are obliged to submit mandatory VAT SAF-T file in legal XML format for the first time on 25 August 2016. It is a monthly obligation even if the VAT reporting period itself is quarterly.

SAP and VAT SAF-T

I refer for complete overview to 'SAF-T for Poland and SAP'.

Most companies download the standard SAP VAT return reports from SAP to Excel and have an Excel working paper for review and adjustments. The data in the SAP reports are retrieved from various SAP tables.

The SAF-T VAT file need to reconcile with the submitted VAT return (monthly or quarterly). If this file does not reconcile to the submitted VAT return the risk that the PL tax authorities will ask questions - explain the differences - is high.

Our SAF-T VAT solution for Poland
  • First deadline to submit SAF-T file is August 25, 2016 (feasible)
  • Our solution ensures the completeness of the required data
  • Meets legal XML format
  • A control report exists that the total VAT amounts and data in the SAF-T VAT file reconcile
Read more

Monday, June 27, 2016

HMRC guidance: publish your tax strategy - June 24, 2016


Who needs to publish
If you’re a company, partnership, group or sub-group, you’ll need to publish a tax strategy if in your previous tax year you have either a:
  • turnover above £200 million 
  • balance sheet over £2 billion
For groups and sub-groups, it’s the combined totals of all the relevant bodies that you must use. This is separate to the 2014 Organisation for Economic Co-operation and Development’s (OECD’s) ‘Country-by-Country Reporting’ model (CBCR). A business not headed by a UK company not meeting the threshold in its own right may still qualify if they satisfy the OECD’s CBCR framework threshold of a global turnover of more than €750 million.

Who doesn’t need to publish
You don’t need to publish a tax strategy if you’re an:
  • open-ended investment company
  • investment trust

Responsibility
Your business is responsible for determining whether it meets the threshold and for publishing the tax strategy, unless it’s part of a group or sub-group. In these cases it’s the responsibly of the head of the group or sub-group. You can publish a strategy on behalf of a group or sub-group if your company is registered in the UK.

What to include in your strategy
Your tax strategy will explain your business’s tax arrangements. You don’t need to include amounts of tax paid or commercially sensitive information. If your group has a separate UK tax strategy you should publish the relevant parts.

Partnerships
HMRC wants to know how your partnership as a whole manages its tax affairs.

Multinational
If your business is part of a multinational group, you should publish any strategy, or parts, relevant to UK tax.

How you manage tax risks
You should work out and include what tax risks are linked to your business’s size, complexity and any changes to your business. Other information on governance arrangements to include:
  • details on how you manage your business’s tax risk
  • a high level description of key roles and their responsibilities
  • information on the systems and controls in place to manage tax risk
  • details on the levels of oversight of your business’s board and its involvement

Your attitude to tax planning
If your business has a code of conduct you should include details of it. You should also include:
  • why you might seek external tax advice, if any
  • an outline of your tax planning motives
  • the importance of each to your tax strategy
Where your business forms part of either a group or sub-group, you should include the group’s overall approach to structuring tax planning.

Your tax risks
You should say if your business’s internal governance has rigid levels of acceptable tax risk. If so, you should explain how it is influenced by stakeholders.

Working with HMRC
While your business’s approach to working with HMRC will be understood by your Customer Relations Manager (CRM), you’ll still need to put it in your tax strategy. You should include:
  • how your business meets its requirement to work with us
  • how you work with us on:
    • current, future and past tax risks
    • tax events
    • interpreting the law
You can include further information to add value, understanding or context. CRMs won’t give you any clearances in relation to publishing details of your dealings with us.

How to publish
You must make your tax strategy available free of charge on the internet as either a:
  • separate document
  • self-contained part of a wider document
You must make it available to the public free of charge until the following year’s strategy has been published. It doesn’t need to be called a strategy.

When to publish
Your first strategy should be published before the end of your first financial year commencing after Royal Assent of Finance (No. 2) Bill 2016. Your strategy counts as ‘published’ when it is first put on the internet. After the first strategy, you must publish one each year, within 15 months of the last one being published. Although you don’t have to notify HMRC when you’ve published, it would be helpful for HMRC to assess compliance if you let your CRM know when you have done so.

Penalties You can get a penalty if you haven’t published your tax strategy correctly and in time. You may also receive a penalty if your strategy doesn’t remain accessible free of charge until publication of the next strategy. HMRC will send you a warning notice giving you 30 days to either publish your strategy or make it available again (free of charge).
Any penalty will run from the first day you didn’t publish your strategy properly. The penalties are for:
  • the first 6 months - up to £7,500
  • 6 to 12 months - a further penalty of up to £7,500
  • more than 12 months - £7,500 every additional month
If your business is part of a group or sub-group the head will get the penalty.

Appeals
If you believe you shouldn’t have a penalty, you should speak with your CRM first. You can appeal any penalty.

HMRC - Large businesses: publish your tax strategy 
HMRC Guidance - historical background

Thursday, June 9, 2016

SAFT-T Demo - OECD


Detailed information about SAF-T compliance and planning


Detailed information about SAF-T compliance and planning


SAF-T Poland

From 1st July 2016 onwards it is required to provide SAFT-PL files in XML format on request of the PL Tax authorities.
Per 1st July 2018 this extended to taxpayers with more than 9 employees or 2 million EUR sales revenue. Foreign businesses not having a branch and/or fixed establishment but that are registered for VAT in Poland fall within the scope of the above reporting requirement when above conditions are met.

On 19 May 2016 the Upper Chamber of the Polish Parliament passed a bill on the amendment of provisions of the Tax Ordinance and of some other acts. According to the bill adopted by the Parliament, the obligation to generate VAT reports in a SAF-T data format and their monthly reporting to the tax authorities will apply initially only to the largest enterprises for each month begun on or after 1 July 2016.

According to new regulation It means that Large Enterprises will be obliged to file VAT reports in the SAF-T data format already on 25 August 2016. Thus, Large Enterprises will be obliged to submit in monthly period VAT register in SAF-T format (according to JPK_VAT structure 4 – VAT register) even if the VAT reporting period is quarterly.

Taxpayers will be obliged to submit the SAF-T format:
  • on request in the case of a preliminary tax inquiry, a tax audit and tax proceedings;
  • monthly mandatory – with respect to the VAT sales and purchases records only (Article 109(3) of the Value Added Tax Act of 11 March 2004 (VAT records) by submit monthly a SAF-T file that contains VAT sales and purchase records

The first requests to submit audit files at their discretion will likely take place September 2016.  The monthly VAT reports on 25 August 2016.

Not complying with this obligation will not only negatively affect the position of taxpayers during a tax audit but also result in unforeseen tax costs as penalties will be levied.


SAFT Poland and SAP


The generation of the SAFT-PL XML files is not included in the SAP Strategy at the moment. SAP is currently only developing an extraction tool for SAP ECC 6 and higher version. Certain companies use “older versions” of SAP and will not be supported by SAP.

Based on SAP's OSS notes, SAP provides only at the moment a functionality for gathering and downloading some transactional data. However, it is not the complete set of data required and the creation of the SAF-T file for the tax authorities is also not included.

The functionality will also only be available for companies established in Poland and not for companies with a foreign Polish VAT registration. In order to be able to comply with the requirements and provide the XML file on request in time, tooling needs either to be developed or purchased.


Our solution


A SAFT-PL tool that already works for Portugal that includes also strategy for downloading the relevant data from SAP  for older SAP versions.

The basic design for a workaround solution is to extract the raw source data from the relevant SAP tables and use software tools to load the relevant data from the source SAP tables, perform additional mappings and data preparations and create the required XML files.

We offer 2 solutions:

  • A software application called Audit Command Language (ACL). This software is commonly used by auditing firms, tax authorities and internal audit departments. The process will be that the client will download the data from SAP and make it available to the Phenix. Phenix will then generate the XML files and some control reports and provide these files and reports available to client for submission.
  • A tool in MS Access  in combination with a specific user interface for extracting the data from SAP. The result is a full in-house solution for the client.

Detailed information about SAF-T compliance and planning