Richard Cornelisse

Submitting data to the tax authorities

In Audit Defense, EU development, Processes and Controls on 23/04/2014 at 8:31 am

640-01356147The 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.

Portugal has now implemented this guidance per January 1, 2013. On monthly basis, companies are obliged to submit the SAF-T (PT) reports for sales invoices to the tax authorities. Besides the SAF-T (PT) requirement there is also a Portuguese requirement to implement a digital signature for all sales invoices.

All the actions proposed to be taken up by the Commission in this document are consistent and compatible with the current Multi-annual Financial Framework 2007- 2013 and the new Multi-annual Financial Framework 2014-2020.

31. Develop an EU Standard Audit File for Tax (SAF-T) The use of an EU standard audit file for tax (SAF-T), along the lines of what is already in force or under development in certain Member States, would both facilitate voluntary compliance from taxable persons and facilitate tax audits. A pilot project is currently under development in the specific context of the mini One Stop Shop for telecommunications, broadcasting and electronic services. Its further development should be envisaged.

A checklist re submitting data to the tax authorities

  1. Have you analyzed the data and performed a tax risk assessment?
  2. What are the tax authorities doing with this data: perform data analysis?
  3. Does not meeting the requirement result in a higher risk of a tax audit?
  4. What are the KPIs of the tax authorities?
  5. If not impacting the present does the company show a audit trail that can be retroactively be investigated and backfire to tax position taken (ammunition for contra arguments, increase of penalties)
  6. If the data provided does not meet the required data format could this result in a higher risk of a tax audit?
  7. To avoid unforeseen risks or mitigate this risk is it not necessary to perform a data analysis prior to submitting data, as an internal pre-audit?

Is the mandatory data request approach of the Portuguese tax authorities

  • Is the mandatory data request approach of the Portuguese tax authorities incidental or will this become a future trend?
  • Is it not likely in the downturn economy that more countries will follow this in order to maximize tax revenues?
  • What is the current status in the European Union or beyond?

Read more: Tax Authorities Peeking At Your Data.

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