VAT - Modernization

Deloitte Advokatfirma

The Norwegian Tax authorities is developing a new automated VAT register, a new solution for reporting of transactional data, and modernizes VAT reporting.

Fall 2019 the Tax authorities devoted resources to a project (MEMO) to modernize the VAT system. The project is scheduled to be completed by 2023. The aim is to improve compliance, neutralize competitive conditions, make it easier for businesses, and promote an effective and efficient tax administration.

Modernizing the VAT system allows the Tax authorities to utilize the opportunities the digitalization brings forward for effective processes and digital dialogue with the industry, hereunder system to system reporting, and partly automate case-handling processes.

The project has three components:

  • Automated VAT register. Deployment of a more complete automated registration solution expected from September 2020.
  • Settle new reporting obligations of transactional data (sales- and purchase list). Public hearing expected within 2020.
  • Modernize the current VAT reporting process. Planned to start a pilot of a new VAT return during 2021.

It is crucial that businesses are prepared for the strict requirements this entails for the ERP systems, and it emphasizes the importance of reliability of source data in the company’s accounting systems.

Automated VAT register

The first step in the modernization was to develop a new automized solution for registering in the VAT register. The current VAT application process is based on paper forms and manual processing with relatively long case handling time. The new solution is structured to automate the processing of VAT registration applications that meets the conditions without supplementary documentation.

The milestone plan for the new VAT register had its first deliverable in January 2020 but experienced some delays from the Corona-situation. A pilot of the registration solution was carried out in January for a limited number of users. The plan was to go on the air with an extended pilot late April, that would gradually be expanded with more functionality. The Corona-situation however caused delays, and the new plan is to deploy a more complete automated registration solution from September 2020.

Changes following the new automated registration solution:

  • The VAT register parts from the Norwegian Entity Registry (Norwegian: Enhetsregisteret) and The form “Coordinated Register Notification part 2” will be substituted
  • Automated processing of VAT registration
  • Applicants shall only provide supplementary documentation if particularly required 
  • Most applications will be processed within a few minutes, hence companies will not run into the current invoicing issues during application processing

Sales- and purchase list

The Tax authorities are also researching a new solution for periodical reporting of transaction data for sales and purchases between businesses. The system implies that companies must report accounting data related to invoiced sales, with information about invoice number, documentation date, counterparty name and organization number, and information of amount and VAT. Cash sales are not in scope for this new reporting obligation. Such periodic reporting requires to adapt the ERP systems and implies a significant expansion of the disclosure requirement.

The Tax authorities are reviewing whether this can be reported from the accounting system. As SAF-T Financial from January 1. 2020 is a standard format for the exchange of accounting data used for controls for most companies, and the information that will be requested is already part of the SAF-T format, the extract of data for this reporting could be the same as for SAF-T. It will be developed as an alternative for companies that are still doing manual accounting.

The reporting frequency will be connected to familiar deadlines, for example, synchronous with current VAT reporting deadlines for VAT liable businesses.

This new reporting obligation is an addition to the ordinary VAT reporting procedure and will only apply to B2B sales, similar to the same type of reporting in other EU countries. The public sector and non-VAT registered companies with a bookkeeping obligation in Norway may also be subject to this new obligation.

An essential part of expanding the disclosure requirement is to reduce tax evasion, provide better and more dedicated guidance, and carry out more accurate controls.

Legislation for the sales- and purchase list is still under review and a public hearing is expected within 2020.

Modernize the current VAT reporting process

It is also planned to modernize the current periodical VAT return. According to the information published so far, it is expected a digital solution based on technology that is suitable for the exchange of data from the companies accounting systems, for example, XML-files that are the basis for SAF-T format, to replace current reporting of aggregated values in the VAT return.

This initiative is also somewhat delayed, but it is signalized a plan to start a pilot of new VAT return during 2021.

According to the Tax authorities, more information is expected after the summer.

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