We can expect a raft of new digital compliance processes to be introduced over the next few years, as regulators across Europe act swiftly to reduce the tax gap. Norway is the latest in a long line, with enhanced VAT return reporting based on SAF-T codes requiring detailed reporting.
Mandatory by 1 January 2022, here’s what to expect and how to prepare.
1. Check internal readiness and resource availability
Internal tax and IT teams should be working together to understand the current situation and plan for the future. New SAF-T Norway data reporting rules for VAT returns will create immediate compliance challenges.
Prepare by mapping existing resources, business processes and infrastructure against what will be needed from 1 Jan 2022. This includes completing three key checks:
- Ensure that SAF-T relevant data is available in your SAP system and can be converted into the required XML format;
- Assess the quality of tax master data and transactional data for sales and purchases;
- Map the accounts and vat codes to be included in future SAF-T reports.
2. Evaluate potential SAF-T solutions
Automating digital VAT returns processing with certified software enables real-time data transfer between your SAP solution and the Norwegian tax authority filing portal, Altinn. This saves time, resources and minimises the risks of human error. The benefits of automated synchronous systems are significant, but they require data submissions to be right first time and correctly formatted. Any flexibility to make manual corrections or consolidations before the submission is reduced when working in real-time.
If you are considering a SAF-T solution to automate data extraction and management processes, make sure it can independently integrate data from multiple source systems into a single report. Without needing your IT department to get involved.
SAF-T compliance rules are in force across Europe and multinational companies need solutions that are internationally scalable and extensible to meet industry-specific requirements.
It takes time to find the right tools, so start the process of evaluating different SAF-T solutions as soon as possible. Begin with a standard SAP solution and consider how well it fits your current business processes. Ask yourself these questions:
- How well adapted is it for your industry sector?
- Does it have any limitations?
- How readily customisable is it?
- Can further software development be handled in-house or will it be outsourced to a specialist?
If time is tight and resources constrained, consider how an alternative SAF-T solution, for example a ‘regulator ready’ solution like SAF-T Norway from TJC, will achieve your goals. It can help you extract the correct data quickly and accurately, saving both time and resources. This means more time available to dedicate to improving day-to-day operations and strategic tasks.
3. Don’t underestimate SAF-T file validation and reconciliation complexity
SAF-T compliance goes well beyond simply installing a software solution. There is much more to using SAF-T tools effectively than performing an automated data extraction. It involves having the right knowledge of local tax regimes, understanding the intricacies of the regulations and what information is needed, plus the skills to extract the right data.
Data consistency is essential for compliance purposes and that’s why SAF-T file validation and reconciliation are crucial. Performing technical validation against approved schema is a must to ensure data can be extracted in an acceptable format for submitting to the tax authorities. By working closely with an auditor and B2G specialist, you will be able to validate SAF-T content, control balances and reconcile SAF-T data against existing SAP reports such as General Ledger balance or customer/vendor balances.
Although SAF-T Norway reports and the new e-VAT return reporting are independent from other country’s regimes, they are based on the same standard VAT codes and must be consistent.
Collecting and reporting the right information for SAF-T compliance can be challenging and all organisations need to have controls in place for real-time transaction reporting from SAP. The latest VAT modernisation being introduced for Norway are just the start of the country’s wholesale adoption of digital tax compliance as regulators seek to weed out non-compliance and minimise tax receipt shortfalls. We can expect many more to follow suit.
Gain a detailed understanding of SAF-T requirements in Norway, watch this webinar on-demand “Get ready for SAF-T Norway mandate and Tax Compliance in Europe”, hosted by SBN Norge, the Norwegian SAP user group.