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Deloitte Academy Seminar – SAF-T© 2017 Deloitte Belgium 1

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Headline Verdana BoldDeloitte Academy SeminarFrom e-Audit files upon demand to real-time reporting. Are you ready for SAF-T?Deloitte Belastingconsulenten/Conseils Fiscaux

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Agenda

Topic Content Presenter Timing

Welcome & Registration (sandwich lunch)

Introduction Global Trend on Tax Transparency, audit and data Frederik 13:00 p.m. – 13:15 p.m.

Current evolutions in EMEA From e-Audit to Real-Time Reporting Pieter 13:15 p.m. – 13:45 p.m.

Addressing the Challenges Technology, Process and Data Pieter 13:45 p.m. – 14:00 p.m.

Break

Process Support Solution Approach

Demo

Pieter 14:15 p.m. – 14:45 p.m.

(Disruptive) Technology Update Sample Case: Blockchain Frederik 14:45 p.m. – 15:15 p.m.

Final Conclusions Conclusion and next steps Liesbet 15:15 p.m. – 15:30 p.m.


Introduction


A variety of forces are combining to change the world of compliance:

financial pressure on governments to focus on tax take

public focus on transparency from corporate taxpayers

This has resulted in a variety of new laws and efforts at national and international level

Tax environment now focussed on transparency and data

Setting the scene

Introduction


Countries worldwide are adopting new ways of monitoring, many of these are Digital:

Digital Tax is growing fast (some examples)

Digital Tax Policy VAT rules in digital economy e-Commerce and MOSS

Cross-Border collaboration, information sharing and joint audits.

Legal disclosure and approval (local) Netherlands: Horizontal Monitoring UK: SAO

Electronic invoice disclosure and required e-invoicing Belgium: B2G France: B2G Italy: B2G Spain: SII Brazil: SPED China: Golden Tax System

Legal initiatives e.g. Country-by-Country Reporting (Global) OECD Countries

Electronic disclosure of VAT Ledgers Poland Czech Republic

Electronic Audits and SAF-T Norway Lithuania: iSAP Germany: GDPdU Poland: JPK France: FEC Luxembourg: FAIA …

Modernization of tax authorities and audit procedures. UK: Making tax Digital


Different ways of Electronic Audits

Digital Tax is growing fast

Electronic audit files

Standardized Electronic audit files

Standardized Electronic

Transactions and Ledgers

Next: Blockchain ?

• Digital technologies allow for more data to become available.

• The level of detail and the variety of data is increasing.

• Authorities explore use of sophisticated, and cognitive technologies to use tax data.

• End-to-end transparency is anticipated with the introduction of new disruptive technologies such as Blockchain.

Structured Format

OECD SAF-T Elements

Ad hoc Format

Structured Format

OECD SAF-T Elements

Detailed line level

Data Frequency and Format

Distributed/Shared Data

Immutable Records and audit trail.

Upon Request Periodic and (Near) Real-TimeUpon Request

© 2016 Deloitte Belgium 9Deloitte Academy Seminar – SAF-T

From eAudit to Real-Time Reporting


Example: Belgium

eAudit upon demand

SAP ERP Tables for FY2016

• Financial/Tax Posting

• Master Data

Customers/Suppliers

Accounts/Cost centers

Tax codes

1 month for data extraction

+1 month, after additional information requested from the inspector

Classic audit support

Analyze and reconcile data, find underlying documents and off system information

Prepare for questions and responses

Data Requested Lead Time Typical Activities


Example: France

SAF-T upon demand

Fichier d’Écriture Comptable (FEC) On-site: 1st meeting

Off-site: 15 working days

Assistance on the preparation (format) and testing of the FEC file (content)

Pro-active validations

In advance



Example: Poland

SAF-T Periodical

JPK_VAT - VAT sales & purchase register

Assistance in the preparation and filing of the reporting

Embedded in compliance process

Challenge : link with compliance process (to reconcile) + shorter lead-time

Monthly



Example: Brazil

Real-time reporting

Sales invoices Real-time


Set up of the process

Embedded in the sales and supply chain process

Involvement in IT infrastructures


Brazil: Invoice Flow

Real-time reporting

1

2

3

4


SAF-T: Introduction


Europe: Standard Audit File for Tax (SAF-T)

SAF-T: Introduction

Periodically per legal entity General ledger

• Journals

Accounts Payable

• Supplier master data

• Invoices

• Payments

Accounts Receivable

• Customer master data

• Invoices

• Payments

• Fixed assets

Asset Master Files

• Depreciation and revaluation

Inventory

• Product master data

• Movements

Across taxes, including info relating to

• VAT

• CIT

• Transfer pricing

Masterdata

Trans-action

Balances

SAF-T has been designed to capture data from a number of areas found in a typical business accounting system


The changing face of tax complianceThe move towards Electronic Audits

Need toupdate

IT systems

Production of compliant

standard data

Yesterday

• Manual keying of data

• Slow and uncertain transmission of returns

• Risk of loss of documents and penalties

• Sample-based approach for audits

Today

• Automatic or semi automatic keying of data

• Automatic production of reporting documents

• Some e-filing/cross checkingof information

• Direct audits of ERP systems/ accounting software

Tomorrow

• (already today?)

• New form of automatic controls

• In theory faster, surer, more precise, more efficient

• Issue: Need for standardized documents for taxpayers’ IT systems

• Death of the tax return?

Today

• Safe transmission of data

• Automatic consistency checksperformed

• Incontestable proof of filing

• General lack of consistencyin testing/filing of data

• Slight country variations in format and requirements

From taxpayers’ information systems to authorities’ audit software


SAF-T: upon request


Country Legal ent. Non-est. VAT reg. Comments

Austria

France All VAT registered companies and branches.

Germany

Lithuania

Luxemburg

Exceptions:- Taxpayers exempt from Standard Chart of Accounts ("PCN")

obligation- Taxpayers subject to the simplified VAT return regime- Taxable turnover whose annual turnover is below 120.000,00 EUR- Small taxpayers with few transactions (+-500) so that manual

check is easier than submission of an electronic file.

SAF-T: upon request



Netherlands

Norway

All companies currently liable to maintain book-keeping information electronically.

Exceptions: (1) Companies with VOES registrations in Norway (2) Companies with turnover of less than 5 Million NOK(3) Companies with less than 600 vouchers a year

Companies liable to keep books that are covered by the exceptions (2) and (3), but have bookkeeping information available “electronically”, are still covered by the SAFT requirement.

Poland

-JPK_KR (Accounting books)-JPK_WB (Bank account statement) -JPK_MAG (Warehouse)-JPK_FA (Invoices)-JPK_PKPIR (Revenue and expense ledger)-JPK_EWP (Revenue registry)

Portugal Companies subject to Corporate Income Tax

SAF-T: upon request


SAF-T: periodical



Czech Republic VAT Control Statement

Lithuania i.SAF : VAT records

i.VAZ, data relating to goods consignment/transport

Portugal Companies subject to Corporate Income Tax

Poland JPK_VAT, VAT sales and purchase register

Slovakia VAT Control Statement

SAF-T periodical


Real-time reporting


Country Requirement Legal ent. Non-est. VAT reg. Comments

FranceElectronic reporting for all sales with VAT

Law has been declared unconstitutional because the fine for non-compliance was considered disproportionate.

Hungary

Electronic reporting of all B2B sales invoices with VAT above HUF100,000. (From 1 July 2018)

Businesses will receive in return from the tax authorities a unique invoice number that they must include on the invoice prior to issuance to their customers.

The maximum fine for failing to comply with the new rules will be up to HUF500,000 per invoice.

No other details yet.

Poland

Daily reporting of JPK_WB (Bank account statement) (From 1 Sept 2017)

early stage / an idea to cross check payments with supplies. Lots of resistance from business and financial sector, so it is uncertain if it will go ahead

SpainElectronic reporting for all sales with VAT (From 1 July 2017)

SII – Suministro Inmediato de Información

4 day timeframe as of the moment they issue or receive them (deadline extended to 8 working days between July 1st, and December 31st 2017)

Real-time reporting


Real-time reporting requirements

Spain – Suministro Immediato de Informacion

• The requirement is to submit invoice records, plus certain additional information, not the invoices themselves

• The regulations apply to large businesses (€6M turnover), those in a refund regime and VAT groups. Taxpayers can also optionally adopt

• The introduction of the SII regime removes the requirement to submit the monthly, quarterly and annual informative declarations returns (the Modelo 347, 340 and 390), not the VAT returns themselves that would still need to be filed

• The regulations apply to both invoices issued and invoices received. Different XMLs for invoices issued/received, capital goods, Intra-EU movements; payments in cash

The timing of submission is eight days after issuance for 2017, and reduces to four days in 2018

• For AR, this is from invoice issuance date

• For AP, this is from the date the invoice is accounted

• The tax authority will have a web portal for manual submission, where there are minimal transactions

• There will be a web service, which can integrate larger volume of invoice records – this could be “bolted on” to the ERP, or used as an XML import tool (either manually or through third parties)

• There will be some cross-validation of data by the Tax Authority of the invoice records


Compliance impacts


• Submission contents

− Content of filings is not the same as the current purchase books – new reports will be required

− Submission deadlines (tending to daily filings)

− Descriptions are not standardized, but should not conflict with the VAT rate provided

− Recoverable tax amount reported for each invoice – partial exemption adjustments? Impact to other Special Schemes (TOMS)?

− Employee reimbursements – report against employee or underlying supplier?

• Retroactive reporting solution required

− The regulation is effective from 1 July 2017 – but also note that during July – December 2017, there is a requirement to retroactively submit all invoice records from 1 January 2017 to 30 June 2017

• Non-ERP based transactions (e.g., intercompany invoices, retail systems, etc.) – how do these consolidate into the SII submission?

• Timing of reporting of transactions, submission deadlines (daily submissions)

• Submission and audit processes

ERP data

External data

Web portal

Tax Authority database

Consolidate and

validate data

Audit process


Key items


New obligations on transactions recording

• The new Anticipated Electronic VAT Reporting System (SII) entails the electronic supply, through the Spanish Tax Authorities on-line platform, of billing registries which are part of the VAT ledgers

Ways of submission

• On-going basis through a “web service” from the Spanish Tax Authorities on-line platform

• Taxpayers with few operations could report the information through a “web form”

Dates of implementation

• Entry intro force by 1 July 2017.However, the VAT ledgers covering the first half of 2017 must be submitted before 1 January 2018

• Mandatory for large entities, VAT grouping, and companies included in the Monthly VAT Refund Registry -REDEME- (62.000 taxpayers more or less = 80% of VAT revenues in Spain)

• Optional for taxpayers who voluntarily want to enroll the system, by submitting the corresponding census form

Deadline to submit the information

• Issued invoices: Four days from its issuance.If its issued by the recipient or a third party,eight days. Anyway, always before the 16th dayof the following month from the accrual date

• Received invoices: Four days from its accounting. Always, before the 16th day of the following month from the accrual date

• Imports: Four days from the date in which the accounting document (in which the VAT quotais indicated) was registered. Always, before the 16th of the following month from the accrual date

• Saturdays, Sundays and national holidays are excluded from counting

• Temporary period: (1 July – 31 December 2017) deadline is extended from four to eight days

• Billing by a third party: Eight days

Key issues


Challenges


Challenges driven by the tax authority

• Short implementation time

• Requirements not/limited available in local language

• Tax inspector cannot bring clarity/lack of experience

Challenges driven by the company

Process

• Indirect – direct – statutory accounting process

− Local COA

− Out of book adjustments

− Opening balance/closing balance bookings

• Reconcile with compliance process

Challenges


Technology

• ERP landscape

• Underlying sub systems

• How to extract

• How to validate

• How to generate compliant files

• How to communicate towards tax authorities

Data

• Which data to extract

• Where to extract from

• Master Data completeness

• How to reformat data / fixed values

Challenges


Break


eAudit: different ways to get prepared


Country-by-country or a strategy

eAudit: upon demand or periodical

PolandBelgium

Spain

Portugal

Spain

Poland

Portugal


Country-by-country

eAudit Process

Country specific Data Model

Per jurisdiction, the specific data model is linked to the e-process

Country data models often captures info from General Ledger Accounts Receivable Accounts Payable Fixed Assets Inventory

E-requirements per country: What can be requested/when Indirect vs direct tax Penalties for non compliance Overview of data fields Overview of data format Matching with overall structured

data model

KnowledgeSpain

PolandPortugal


Strategic approach

Structured data model is based on the OECD SAF-T model.

Data model captures info from General Ledger Accounts Receivable Accounts Payable Fixed Assets Inventory

E-requirements per country: What can be requested/when Indirect vs direct tax Penalties for non compliance Overview of data fields Overview of data format Matching with overall structured

data model

1 time analyze phase Applicable to countries where no SAF-T is yet in place Prepared for change upfront Risk & opportunity drivers can be applied

eAudit Process

Overall Corporate Data Model

Knowledge

Poland

Belgium

Spain

Portugal


eAudit: Dashboard Demo


Example for Spain

Real-time reporting process

ERP

FTP Server

1. Raw SII Data

SII convertor/generator

3. SII XML file

Spanish Tax Administration

Communication platform

4. SII XML response

SII Communication process & error

handling


Technology Update


Tax Analytics Implications

Exponential technologies

• Exponential technology is already disrupting the work of tax professionals

• At simplest level automation reduces the amount of mundane/repetitive task

• Exponential technologies contribute to an increase in the availability of data, which in turn drive more sophisticated analytic approaches

• Cognitive technologies can help analyse legislation, or help extract/categorise tax data from underlying sources

• Scope for cognitive and analytics technologies to interact provides valuable predictive knowledge searches on tax technical issues


Overview

Connected world

• Interoperability of services and data is ever more important in the tax world

• Both tax authorities and commercial enterprises are embracing APIs (application programming interfaces) to better serve clients

• We are now seeing the advent of ‘Digital Government’ where interfaces enable data exchange in support of various government services

• There is future potential for corporate to leverage APIs as well as explore Blockchain as a means to maintain and demonstrate the reliability of shared data


More than crypto-currencies, Blockchains have multiple applications

Blockchain as a system

As a Currency

Systems’ native currencies (e.g., Bitcoin, XRP)

• Measures the market value of goods and services

• Intermediates the exchange of goods and services

• Can be reliably saved and retrieved as store of value

As a System

Systems’ network (e.g., Blockchain, the Ripple Network)

• Enables efficient transfer of value and information

• Immutability of the system guarantees high-fidelity

• Allows for programmability

Blockchain

System

Record Keeping

Create an immutable record without reliance on a trusted third party

Improve efficiency of record keeping via automation

Transfer of Value

Enable low-cost, near real-time value transfer without an intermediary

Expand to transfer of other assets beyond “money”

Smart Contracts

Program protocols to execute transactions when a set of pre-determined conditions are met

Each application serves as the foundation for more sophisticated uses

Greater sophistication

Examples

• Digital certificate of ownership for physical assets

• Transaction validation of digital assets

• Financial accounts

• Digital cheques / IOUs

• Automatic financial instruments

• Parametric insurance contracts

• Automated market making

• Domestic and international remittance

• Internal payments settlement

• Clearing and settlement of securities

• Exchange of low liquidity assets


Example – High Level overview of a system using electronic messaging with shipment approval and confirmation

Example for Physical Supply of Goods

Vat automation in the Digital Supply Chain

Approval

e-Invoice

Paper Invoice

Approval Code


1. Each transaction consists of one block.

2. Mutual agreement on content of the block.

3. Each Block is added to the chain to form a distributed ledger.

Possible Blockchain applications?

VAT and Blockchain

120

20

Blockchain

Bank transfer

MessageVAT N°

Taxable amount and VAT

Description good/service

Etc.

20


Faster:

From ad-hoc to monthly and real-time.

Immediate response required!

Better:

Eliminate error prone process and manual interventions

Tax sensitive process should be touchless

Controlled:

Measure and Monitor change and deviations

Full transparency

No Mistakes allowed.

Invoice and Document Management.

Integration management.

Tax Reporting and Automation

Data and Process Analytics.

Business Process and Activity monitoring.

Process orchestration, full end-to-end integration

How to prepare

Some Design thinking to your ERP

ERP systems will continue to remain a backbone solution, driven by a legacy of master data and process standardization. However needs connectivity and integration with a growing eco-system of applications both internal and external


Final Conclusions


Key Messages

Final Conclusions

Technology is the tool, Data is the FuelThe availability of digital tax data is not determined by the existence of a predefined format.It is a business process produce and an ERP system’s legacy.

Tax, Business and IT AlignmentIt assumes alignment, formalization and standardization in business processes far beyond your tax function.

Tax authorities are going Digital

in a response to combat fraud and to increase fairness and efficiency in revenue collections.SAF-T is one example but you need to respond fast.


Next Steps

Final Conclusions

Get a view on your process and data qualityWhere are the gaps?

2Get connected.take the lead and ensure external regulatory requirements are in line and with the internal organization. This includes the business and IT.

1


Liesbet Nevelsteen

Partner, Indirect Tax

[email protected]

Work : +32 2 600 66 53

Mobile : +32 496 57 48 79

Frederik Drappier

Senior Manager, Indirect Tax

[email protected]

Work: +32 2 749 54 77

Mobile: + 32 496 26 16 64

Pieter Van Dyck

Senior Manager, Tax Management Consulting

[email protected]

Work: +32 2 800 25 65

Mobile: +32 497 53 29 73

Contact Information

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© 2017 Deloitte Belgium


Annex


eAudit Process


• Review of the current compliance processes

• Statutory process

• Direct tax process

• Indirect tax process

• Review significant Business event for the period

• Review Accounting systems landscape

• Review tax audit history

• Define country by country approach or structured data model

Analysis of the technical Set up & Processes

Aanalysis


Extract the tax relevant data from the different source systems identified during the analysis

Data Extraction

• Which date should be extracted depends on whether are structured date model is put in place or a country by country approach is implemented

• Based on the outcome of the analysis, different data might need to be extracted from different source systems (main ERP, legacy systems, billing systems ….)

• Extracted data should be transferred to a data platform (data warehouse / data mining tool) for further handling in the next phases.

SAP DART

TJC

SNI

SAP OSS Notes

Data Warehouse

…


Extracted data should be validated prior to the assembly of the eAudit file

Data Validation

Records

Master Data

Company Code

Fiscal Year

Transactions

Lines

Vendors/Customers

Tax Codes

Data Mining Tools:

– Caseware IDEA

– ACL Analytics

Customized Data Warehouse Queries

…


The extracted data should reconcile official filings

Data Reconciliation

Automated

Not Automated:

Sample testingCriteria:- Fiscal Year- Business Events- Size- Etc.


Assemble the extracted data into an eAudit file according to the local requirements

Assembly

• Different file formats (csv, xml,…)

• Per jurisdiction the file structure varies

• Local required default values can be expected

• e.g. Portugal – movement type =

• GR = Delivery note

• GT = Transport guide

• GA = Transport document for own fixed assets

• GC = Consignment note

• GD = Return note

TJC

SNI

SAP OSS Notes

Data warehouse queries

Data Mining Tools:

– Caseware IDEA

– ACL Analytics


• The same process applies but in real time reporting there are additional challenges

• Less preparation time

• No manual intervention

• eAudit process should be linked as close as possible to where the correct data is stored

• Automated communication protocol/platform

• End-to-end automated processes

Real-time vs upon demand/periodical

Process

Documents

The presentation will begin shortly, thank you for waiting · PDF fileHeadline Verdana BoldDeloitte Academy Seminar From e-Audit files upon demand to real-time reporting. Are you ready