Real-Time Reporting in Indirect Tax...Submission of Indirect Tax filings (e.g. MTD, e-filing)...

Confidential and Proprietary

Sensitivity: Confidential 1

Real-Time Reporting in Indirect Tax

18 October 2018

Kim Hau, Thomson Reuters

Dorcas Mbwiti, Thomson Reuters



Agenda

• Introductions

• Digital Reporting for Indirect Tax Today

• Global

• Europe

• UK

• The impact so far

• Success / Failure for the taxpayer / tax authority

• The journey for future indirect tax compliance

• The health of your data

• The role of technology

• ONESOURCE coverage



Introductions



Your Presenters

Kim Hau

Senior Proposition Manager

ONESOURCE Indirect Tax

- Over twelve years experience in Indirect Tax

- Trained with Deloitte and graduated in Law

- Experience working with multinational corporations, FS industry in particular

Dorcas Mbwiti

Proposition Analyst

ONESOURCE Indirect Tax

- 2 years experience in digital tax

- Experience in working with large complex data sets



Digital Reporting for Indirect Tax Today



DIGITAL REPORTING

DIGITAL SUBMISSION

(API)

DIGITAL / E-AUDIT

(SAF-T, e-accounting)

E-INVOICING

SPED



Netherlands

➢ Customer, Vendor

and GL data

➢Upon request of

Authority

France ➢FEC

➢SAF-T, upon request

Sweden ➢SIE Audit File

upon request

Germany ➢DGPdU: direct access of

tax payers systems

➢XML data transmission

➢E-Audit, upon request

Singapore

➢ IRAS Audit File (IAF).

Upon request

Malaysia➢GST Audit file (GAF)

➢Purchase, Sales list and

GL data

➢Upon request

Portugal ➢SAF-T

➢Periodic filing and

upon request

Spain ➢Immediate Information

Sharing (SII)

➢Invoices received & issued

➢Daily filing

Hungary ➢Real time: Invoices issued,

➢ direct access with authorities

Czech Republic ➢VAT Control Statement

➢Periodic filing and upon request

Slovakia ➢ VAT Control

Statement

➢Periodic filing and

upon request

UK➢Making Tax Digital (MTD)

Poland ➢SAF-T country (JPK)

➢JPK_VAT: Transactional level

purchases and sales list

➢Multiple structures, x5

➢Monthly filing and upon request

Lithuania ➢SAF-T, (i.Mas)

➢i.SAF: invoices received

& issued, periodic filing

➢i.SAF-T: GL accounts ,

upon request

➢i.VAZ: Consignment

notes + other transport

docs

China ➢Golden Tax System

➢E-Invoicing : Full invoice disclosure,

➢Validation required from authority

before invoice no. Issued

➢Non-audit or SAF-T equivalent

Brazil ➢SPED

➢E-Invoicing: Full invoice

disclosure,

➢Validation required from

authority before invoice

no. Issued

➢Additional tax &

accounting e-bookkeeping

➢Non-audit or SAF-T

equivalent

Mexico ➢CFDI

➢E-Invoicing: Full invoice

disclosure

➢Validation of the system

United Arab

Emirates ➢FTA Audit File

➢VAT and Excise Tax

audit file

➢Simplified SAF-T,

upon request

➢Effective 1st Jan 2018

Italy ➢Quarterly

Returns

Norway

➢ SAF-T, upon

request from 2020

Chile ➢E-Invoicing

Columbia ➢E-Invoicing

Austria ➢SAF-T

upon request

Luxembourg➢SAF-T

upon request

Global View

India➢GSTN Reporting

Italy E-invoicing



HIGH RISK MEDIUM RISK LOW RISK

Audit Files

Making Tax Digital

E-invoicing

Real – time Reporting

LU PT

BR

UK

FR AU LTPL

DEMX CO

HU ES

GR IT

SG SE MY


Sensitivity: Confidential

April 2018

• Private Beta

– Started Small

• Public Beta

April 2019

• VAT Registered Business

• Turnover Above VAT Threshold

– Keep Digital Records

– Send VAT Return through Software

9

VAT Timeline



What is a Digital Link?

Electronic or Digital Transfer

• YES : txt, xml, csv

• NO : Copying and Pasting

• NO : Retyping Data

April 2020…soft landing

• YES : digital links

• NO : record keeping

• NO : submissions



Obligations

Direct Electronic

Transfer or

Download/Upload



The Impact So Far



EU

VAT = 7% EU GDP

€147.1B VAT Gap in the EU

equates to €100 per EU citizen

“I urge Member States to move forward on

the definitive VAT system before the

European Parliament elections in 2019” –

Pierre Moscovici, Commissioner for

Economic and Financial Affairs

Bring down administrative barriers for

companies that trade cross-border (EC Sales

Lists, Instrastats)

UK

£11.7B in 2016-17

Fallen from 12.5% to 8.9%

over 10 years

£3.5B of gap due to mistakes in VAT returns

(2015-16)

BREXIT…



Uptick of real-time reporting for Tax Authorities

105M PLN ?

Results since SAF-T introduction: Results since SII introduction:

Agencia Tributaria reports that real

results will not be known until

November

> VAT revenues UP 4.5-5% on

average month on month

12.4%

Results since SPED:

Average annual tax revenue increase

from 2010-2014

VAT found in JPK_VAT files from

36,000 different entities relating to

invoices since 2016



Implications of real-time reporting for the Taxpayer

Faster repayments

Embracing new technology

Journey towards cleaner source data

Opportunity to review country risk &

processes & work collaboratively with other

teams

No lead time to prepare

Increased risk of penalties

Cost to comply

May be reliant on new technologies / 3rd

parties to solve problem = risk control

How can you manage compliance when you don’t know what’s coming next?

Streamline your indirect tax processes



The Journey for Future Indirect Tax Compliance



1) Source Systems Map

ERP 1

ERP 2

OTHER VAT RELEVANT

DATA

➢ Map out the source systems and

other systems required for VAT

reporting per jurisdiction

➢ Assess available fields vs

required fields

➢ % of manual adjustment per filing

based on the health of your

source data


Sensitivity: Confidential

➢Risk assess country by country based on

readiness for real-time reporting

➢Taking into account:

➢ VATable turnover;

➢ level of transactions;

➢ availability of data;

➢ readiness for source system(s) extraction

19

2) Country Risk Map



3) Get it right first time!

- Ensure tax treatment is correct before the transaction happens

- Real-time calculation to attribute the correct tax code to supplies

- Use of a tax engine can help to clean up source data

Rules &

CalculationsERP



4) Embrace technology

THE TIME IS NOW:

- Tax authorities are going digital, tax functions need to follow suit

- Data mining and analysis tools are getting more sophisticated

IN A TIME OF POLITICAL UNCERTAINTY:

- Software / off-line validation

tools keep tax rules and changes

up to date so you don’t have to



ONESOURCE Coverage



ONESOURCE INDIRECT DETERMINATION

Highly accurate

Automation of

AP& AR

Automate all

tax decisions

Tax Research

Content for

180 countries

Support for

complex

transactions

Decouples rate

From tax code

Solve ERP

tax code

challenge



ONESOURCE INDIRECT COMPLIANCE

OECD recommended format for digital audit support

Submission frequency and mandatory \ on-demand varies

per country

Tax returns. Listings and other filings

Submission frequency and type varies per country

Poland (JPK_VAT) Q2 2018

UAE – Q3 2018

Over 50 countries Includes digital tax reporting – Spain

SII, GCC countries -Q4 2018 \ Q1 2019

Accelerated ‘lite’ content delivery –Q1 2019

Fully MTD compliant from Digital submission of VAT return under new API portal, digital linking of

data from source down to adjustments.

Fully MTD compliant – Q3 2018



ONESOURCE DIGITAL TAX

OECD recommended format for digital audit support

Submission frequency and mandatory \ on-demand varies

per country

Portugal – Q2 2018

Others based on customer demand \ market priorities –

Poland, Norway, Austria, Luxembourg, Lithuania have

SAF-T obligations



ONESOURCE Global Audit Manager

➢ Manage global controversies

➢ Drill-down jurisdiction by

jurisdiction

➢ Dashboard view

➢ Record of meetings,

information requests,

correspondence re appeals

➢ Attach relevant information

➢ FOYER - DEMO



Emerging Tech

1) Application of Machine Learning in Tax

- Learnings based on previous filings

- Learnings based on user steps

- Returning confidence levels based on ontologies

- Pilot for SAF-T PL

2) Knowledge Graphs

- New pilot for Digital Tax?

- Scan upcoming legislation / proposals

- Return application to your organisation



POLL?

Which of the following would you identify as being the highest priority issue for your organisation

(which is something that we can solve)?

E-invoicing obligations

Submission of Indirect Tax filings (e.g. MTD, e-filing)

Graphical analytics of indirect tax filings (Global heat map / Slice dice of data)

Country expansion of digital tax reporting (audit files, SAF-T)

Expansion into other indirect taxes (e.g. Land fill, excise tax)



SUMMARY

✓ Examine your upstream compliance &

Get it Right First Time

✓ Explore technology as an enabler

✓Employ a globalised solution where

possible

✓ Undertake an in-house review of your

global tax audit defence readiness



Thank You

Real-Time Reporting in Indirect Tax...Submission of Indirect Tax filings (e.g. MTD, e-filing)...

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Transcript of Real-Time Reporting in Indirect Tax...Submission of Indirect Tax filings (e.g. MTD, e-filing)...