The business environment we operate in is increasingly global. With this multi-national growth, it’s important for organizations to remain on the pulse of different reporting standards and regulations in each country they operate in. Most multi-national enterprises have one or more subsidiaries operating in the European Union or one of the 35 countries that belong to the Organisation for Economic Co-operation and Development (OECD http://www.oecd.org). For these companies, Standard Audit File -Tax (SAF-T) (http://www.oecd.org/tax/administration/45045602.pdf) is top of mind as it is mandatory in many countries – and being rapidly adopted by others.
What is SAF-T?
The SAF-T report is an OECD-recommended electronic accounting file to use for tax audit. This standard is now mandatory in France, Poland, Spain, Norway, Lithuania, Portugal, Luxembourg and Austria.
As country tax administrations continue to apply pressure on corporations for better accounts transparency and internal control procedures, they are quickly following and/or adopting the SAF-T standards. The OECD, which is an intergovernmental economic organization comprised of 35 countries, developed the standard for tax compliance reporting and released the latest guidance notes in 2010. This unified standard provides a way for auditors to “compare apples to apples”, and look at the same tax data for any country that uses the standard.
However, each country that decides to impose the SAF-T reporting requirement can create a country-specific version of SAF-T reporting for their particular tax needs. Some countries, such as Portugal, use the complete SAF-T report while others, such as France, use only a sub-set of the data required by SAF-T. On the other hand, Poland requires a customized version of SAF-T reporting with additional information.
Even though SAF-T is a reporting standard from the OECD, there is still variation in how those reports are generated in each country.
How Does SAF-T Reporting Work in SAP Systems?
SAP provides built-in capabilities to support SAF-T reporting for Poland and Portugal. This functionality still requires companies to spend additional time and resources from both their IT and audit teams in order to successfully obtain a workable data set to generate their mandatory report.
Companies still need to ask an external auditor to validate the data, make changes to ensure it ties back to the results of their filed tax report, store the data into the extract tables and generate the XML report for submission.
Considering the short timeframe required to produce the SAF-T reports, companies need a more robust, automated reporting solution.
SAF-T Solutions and Getting Started with Reporting
Using a commercial off-the-shelf software solution is more advantageous than building a custom solution as it can:
- Work for all SAF-T country requirements
- Stay current with changing legislation
- Reduce the training and support requirements
Wondering how to get started with SAF-T reporting? Here are four tips to walk you through the beginning process:
- Include SAF-T report submission requirements into your business and IT strategy to ensure better resource planning and budgeting.
- Work closely with your auditors to ensure the SAF-T reports submitted can be reconciled to the results of the tax reports filed within the required timeframe.
- Use an available solution to help reduce the time, effort and expense of SAF-T reporting.
- Implement fiscal archiving using a consistent formula for easier tax audit reconciliation and longer term data access.