standard audit file for tax purposes - · pdf filestandard audit file for tax purposes poland...

Standard Audit File for Tax Purposes Poland introducing per July 1, 2016Mandatory electronic audit files a worldwide trendBy Richard Cornelisse

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Phenix Tax Solutions | SAF-T Cockpit

• From 1st July 2016 onwards it is required to provide SAFT-PL files in XML format on request of the PL Tax authorities• Polish: “Jednolity Plik Kontrolny” or “JPK”

• Filing SAF-T will be mandatory for large taxpayers: • Employ more than 250 people or 50 million EUR sales revenue irrespective of whether

they are established in Poland or not • 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

• The first requests to submit audit files will likely take place September 2016

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SAF- T Poland

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• Overview of data types to be provided

• Published by OECD:• May 2005 : Version 1.0• April 2010: Version 2.0

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OECD’s SAF-T methodologyOECD Requirements

Specific lay-out for submitting data to revenue for tax audits

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• Scope• Applicable for Corporate Income Tax, Transfer Pricing, VAT, Customs• Developed in cooperation with governments, accountancy and audit profession and

software developers• Objectives

• Reliable accounting data• Exportable from accounting system • Specific time period • Easily readable (standard layout and format)• Used by Revenue for compliance checking

• Ever country has its own requirements • See anticipate for e-audits section for complete overview

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Scope and objectives

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• SAP is currently only developing an extraction tool for SAP ECC 6 and higher version• The generation of the SAFT-PL XML files is not included in the SAP Strategy at the moment

• Certain companies use “older versions” of SAP and will not be supported by SAP• Based on SAP's OSS notes, SAP will only provide a functionality for gathering and

downloading the transactional data• 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• That means lots of SAP companies will face compliance problems

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SAF-T Poland and SAP

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

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• 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

• A SAFT-PL tool that includes a strategy for downloading the relevant data from SAP as this will not be available for older SAP versions

• We offer 2 solutions:1. 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

2. A tool in MS Access or SQL in combination with a specific user interface for extracting the data from SAP. The result is a full in-house solution for the client

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Phenix’ Independent External Solution

Above process is based on our proven tool developed for the generation of the SAF-T files for Portugal

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• The more efficient use of technology lowers costs of collection and compliance• More and more tax administrations around the world are implementing electronic auditing of

a business’s financial records and systems• Countries are adopting tools that can interrogate such records on the basis that they must

support the standard audit file for tax (SAF-T) methodology• Besides introduced now in Poland similar EU obligations exist already in Portugal (2013)

Luxembourg (2013), Austria (2009), France (2014), Lithuania (2015) • See anticipate for e-audits section for complete overview

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A worldwide trend

© Phenix Consulting 2016

Anticipate e-audits

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© Phenix Consulting 2016 9

• Worldwide automation in data reporting • Tax and accountancy software and the need for data analysis • Software improvements and increasing requirements from tax authorities:

• Standard Audit File for Tax purposes is an OECD initiative to regulate tax audits on an international level

• Allows tax authorities to audit more taxpayers with limited resources • Conducted by tax auditors or by data analysts • Easier detection and quantification of errors • Many jurisdictions have formally already introduced e-audits or are variants of SAF-T • Submit data on time and in the right format • European Commission looking to develop EU SAF-T

• Direct tax and indirect tax data is being shared among tax administrations • Self assessment such as testing of risk based controls and disclose results

• OECD’s enhanced relationship between taxpayer and tax authorities

Adapting to the new tax world


Level of change in reporting and analysis

Paper filing

e-Filing

Optional use of standardized

formats

Mandatory on request

Mandatory on request with

enhanced fields

Monthly or annual reports

Real-time access

Tax

repo

rting

Tax audit


Do the tax authorities carry out e-audits for VAT?

26%

66%

8%

E-audits is standard methodE-audits is partly usedNo

Big4 survey


Is there specific country legislation for e-audit?

Big4 survey

26%

53%

21%

YesNoNo data

Countries without legislation e-audits can be conducted anyway. From a tax audit defense such absence could result in uncertainties:

AT, BE, BG, DK, HU, IE, NL, NO, PL, PT, SK, UK; etc.


Is there a mandatory format for data request?

Big4 survey

25%

14% 61%

No compulsory formatOnly one format acceptedSeveral formats tolerated


Examples of formats requested by authorities

Country Format requiredAustria SAF-TFrance Accounting entry file (in CSV or TXT)Germany Standard format preferred (GDPDU-format) or IDEA (TXT, CSV)Hungary TXT, XML, CSV, DBF, DB, XLSLuxembourg FAIA (based on SAF-T)Poland SAF-T announced for 2016Portugal XMLSweden SAF-T, SIE (standard import/export)


Multiple type of software used by authorities

• ACL• Audicon

IDEA• MS Excel &

Access• Homemade• Chair

• Several software

• Audicon AIS TAX Audit

• JAVA (JMV)• KDVIRA• Not disclosed

No standardized approach: every Member State having its own rules


Are there specific penalties for failing to maintain e-audit data in the required?

Big4 survey

27%

38%

35%

Specific penaltiesNo specific penaltiesNo data


How much penalties for e-audit defaults?

Country Minimum Maximum

Czech Republic Reassessed on authorities’ estimate

Denmark Approximately € 670 Assessed by Court

France € 5,000 or 10% of the amounts reassessed

100% of the amounts reassessed

Germany € 2,500 € 250,000

Greece € 100 - € 150 € 30,000 / e-audit

Hungary Approximately € 1,600

Ireland Eventually € 4,000

Luxembourg Up to € 5,000 per day of delay

Poland Joint liability person responsible

Portugal € 300 € 3,750

Sweden Subpoena/injunction + penalty


Benchmark: capabilities of ERP system

Big4 survey

50%

11%

28%

11%

ERP system is able to provide accurate transactional dataERP requires also a lot of manual verificationToo many ERP systems impact transactional data accuracy negatively Users are unclear about capabilities of ERP system

More than 80% of businesses are still using spreadsheets to manage their VAT compliance in at least one jurisdiction in which they operate, despite tax authorities around the world investing in better tools. (International Tax Review)


Time spent by taxpayer on data analysis

Big4 survey

3%19%

78%

Up to 20%Up to 50%50% or more


Which of the following best describes your tax function’s focus around data analytics?

Big4 survey

40,4%

45,7%

13,9%

Extremely focused on analytics and using core data to drive our effectiveness and strategyExploring the use of data analytics but it's still earlyHas not embraced the use of data analytics to any great extent


Are you using tax analytics to address any of the following tax areas?

Big4 survey

24,4%

48,9%

6,5%

20,2%

Indirect taxes (sales & use tax, VAT, GST, customs duties)BEPS: The OECD's base erosion and profit shifting projectDirect taxes, including tax compliance or tax provisionTransfer pricing and intercompany transactions

Choose your top area if there is more than one


Use of technology (overall)

Big4 survey

Currently use

FTE’s %

VAT reporting 57%

Data analytics 30%

Tax engine 26%

eLearning 23%

Workflow/visibility 21%

Expected to use in 3 years

FTE’s %

VAT reporting 62%

Data analytics 51%

Tax engine 43%

eLearning 31%



Use of technology (turnover above $ 20 billion)

Big4 survey

Currently use

FTE’s %

VAT reporting 62%

Data analytics 41%

Tax engine 41%

eLearning 41%


Expected to use in 3 years

FTE’s %

VAT reporting 68%

Data analytics 68%

Tax engine 62%

eLearning 47%



• Data can be used for other taxes (e.g. Transfer Pricing) • E-audits are expensive:

• Storage costs and maintain of accessibility (e.g. future changes in IT systems) • Risk of data loss or lack of audit trail • Costs incurred for retrieving requested financial information • Costs incurred to give tax auditor access to the data stored

• What tests will be conducted by the authorities • Who is responsible for retrieving and submitting the data and what are the controls setup?

• Risk assessment prior to submission • Roles and responsibilities • Archiving and audit trail • Workflow management that deadlines for filing are monitored and met

• What is currently unforeseen or lacks visibility?

What supportive tools are available in the market to manage and monitor and reduce future tax audit costs?

Anticipate an e-audit

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Phenix Consulting

c/o Richard Cornelisse (Partner)Tel. +31 6 53 99 48 74Beech Avenue 54-801119 PW Schiphol-RijkThe Netherlands

16.06.2014

Contact details

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