What Do You Share with the Tax Authorities?
The introduction of SAF-T will affect how your business communicates with the Tax Authorities. With SAF-T, the Tax Authorities will be able to perform data analysis on an unprecedented level.
By introducing SAF-T, the authorities get access to much larger data volumes than they do today. To perform controls and tax audits the SAF-T file is used, and is highly likely to be reconciled towards VAT forms, tax returns and financial statements.
The Tax Authorities’ long-term strategy for SAF-T is to replace other reporting activities, such as VAT forms, tax filings etc. As an example, the authorities will be able to identify potential errors in VAT treatment through an effective data analysis of all transactions in just minutes. Therefore, a well-functioning internal control is crucial.
«By introducing SAF-T, the authorities get access to much larger data volumes than previously. Manual and sample-based controls will not be sufficient in the future. Deloitte's SAF-T analysis tool ensures control of the information shared with the tax authorities»
– Per Evers, Nordic Leader Tax Management Consulting
The introduction of the SAF-T format provides new opportunities for businesses, authorities, auditors and others with an interest in accounting information.
The proposed SAF-T reporting standard will contain, among other things, all ledger transactions, customer and supplier account balances, balance sheets and master data. Additionally, it will be required to use standardized VAT codes and a standard chart of accounts. The amount of information shared with the authorities is significant, and the standardization requires that data analytics software be up-scaled and more sophisticated than ever before.
The Norwegian Tax Administration have stated that they will use data analytics software actively when performing tax audits and controls after the implementation of SAF-T. Their analytics engine, SESAM, will be able to both automate the selection of companies for tax audits and controls and perform the actual tax audits. Analyses will be tailored to different companies and industries.
Businesses should consider whether current internal controls are capable of identifying errors before submitting the SAF-T data to the Tax Authorities or other external parties. Manual and sample-based random controls will not be sufficient in the future.
Standardization makes it easier for the Tax Authorities, auditors or other stakeholders to review all transactions to detect errors (e.g. missing VAT entries, etc). Depending on the nature of the business, it could be relevant to introduce data analytics software within the business to perform analysis before submitting the accounting information.
Some companies choose to develop their own SAF-T analysis tools, while others choose to use third-party SAF-T analysis solutions. Click here to read more about Deloitte's SAF-T analysis tool.
Current services from Deloitte:
- Reconciliation of the SAF-T file