Richard Cornelisse

Mandatory electronic audit files: a worldwide trend?

Richard Cornelisse

By Richard Cornelisse, CEO of the KEY Group

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.

The legal requirements of the file are in line with the obligation of using certified billing and logistic software that prevent changes on documents already issued.

Besides Portugal similar obligations exist already in Austria, Canada (voluntary basis), Luxembourg and Singapore. In Belgium, Croatia, Finland, France, Germany, Lithuania, Malta, Spain, Slovak Republic, Slovenia, and UK discussions on SAF-T are already taking place. Countries like Sweden and Netherlands have their own e-audit file standard.

We are currently testing a solution built in SAP that will be able to generate automatically the mandatory SAF T files based on the specific country’s legal requirements.

Somehow related to SAF T is the new mandatory electronic Tax Balance sheet requirement in Germany. From January 1, 2014 it becomes mandatory to send Tax Balances electronically.

We have launched successfully “eBilanz-Cockpit”: an easy-to-use, user-friendly, cost efficient and fully integrated SAP solution for German electronic tax balance.  See attached Powerpoint of the KEY Group for more detail.

All our products are in SAP integrated products (without external interface) and have been implemented by major multinationals and of course client references are available.

Background

The OECD’s Committee on Fiscal Affairs (CFA) recently approved two notes arising from work to develop a set of guidance on business accounting system data requirements for tax audit purposes, and associated practical implementation issues for software developers. The set of guidance was prepared by a task group consisting of representatives of national revenue authorities, the Business Applications Software Developers Association (BASDA), accounting bodies, and other interested parties.

The aims of the guidance are to simplify tax compliance and tax audit requirements as they relate to information required for tax purposes from business and accounting systems. This guidance should encourage voluntary compliance by businesses that will also add to profitability by encouraging better internal control procedures. The guidance should also help promote compliance with new legislation on accounting standards such as Sarbanes Oxley and IFRS (International Financial Reporting Standards). The application of standards through software development also provides both public and private auditors with a reference point.

Guidance Note: Guidance on Tax Compliance for Business and Accounting Software

This guidance note describes the processes needed in business and accounting software to attain a sufficient level of reliability for electronic records kept in support of tax returns during the retention period prescribed by tax legislation in individual countries.
The principles outlined cover:

  1. integration of effective tax protection controls;
  2. production of audit trails;
  3. enabling audit automation;
  4. production of SAF-T
  5. allowing users to file returns electronically;
  6. archive procedures to ensure integrity and readability; and
  7. provision of comprehensive documentation.

Communication from the Commission to the European Parliament and the Council An Action Plan to strengthen the fight against tax fraud and tax evasion

On 2nd March 2012, the European Council called on the Council and the Commission to rapidly develop concrete ways to improve the fight against tax fraud and tax evasion, including in relation to third countries and to report by June 2012. In April the European Parliament adopted a resolution echoing the urgent need for action in this area.

(…)

Future work on these actions will be guided by the need to reduce costs and complexity of tax systems for both the taxpayers and the tax administrations. For taxpayers, decreasing costs and complexity would encourage better tax compliance. For tax administrations, the development and full use of automated tools and risk management techniques would release human and budgetary resources to concentrate on achieving targeted objectives.

The Commission will also continue to promote the most effective use by all Member States of practical IT tools for all taxes. It will also promote a more joined-up approach between direct and indirect taxes and between taxation and customs by making appropriate use of the FISCALIS and CUSTOMS programmes to enhance communication and promote a more systematic sharing of best practices and tools, where appropriate. This can help to improve the efficiency of audits and controls and reduce the burden on taxpayers.

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

KEY Group Final front

Download in PowerPoint

RELATED SAF-T TOPICS

  1. New requirement for submission of tax report with transaction details in Portugal (SAFT-PT)
  2. Tax Authorities peeking at your data – Are you still confident about your tax position?
  3. On monthly basis, companies are obliged to submit the SAF-T (PT): how to be compliant?
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