Knowledge sharing

Wednesday, June 29, 2016

Monthly SAF-T VAT file in Poland (JPK-VAT)

According to new regulation Large Enterprises are obliged to submit mandatory VAT SAF-T file in legal XML format for the first time on 25 August 2016. It is a monthly obligation even if the VAT reporting period itself is quarterly.


I refer for complete overview to 'SAF-T for Poland and SAP'.

Most companies download the standard SAP VAT return reports from SAP to Excel and have an Excel working paper for review and adjustments. The data in the SAP reports are retrieved from various SAP tables.

The SAF-T VAT file need to reconcile with the submitted VAT return (monthly or quarterly). If this file does not reconcile to the submitted VAT return the risk that the PL tax authorities will ask questions - explain the differences - is high.

Our SAF-T VAT solution for Poland
  • First deadline to submit SAF-T file is August 25, 2016 (feasible)
  • Our solution ensures the completeness of the required data
  • Meets legal XML format
  • A control report exists that the total VAT amounts and data in the SAF-T VAT file reconcile
Read more

Monday, June 27, 2016

HMRC guidance: publish your tax strategy - June 24, 2016

Who needs to publish
If you’re a company, partnership, group or sub-group, you’ll need to publish a tax strategy if in your previous tax year you have either a:
  • turnover above £200 million 
  • balance sheet over £2 billion
For groups and sub-groups, it’s the combined totals of all the relevant bodies that you must use. This is separate to the 2014 Organisation for Economic Co-operation and Development’s (OECD’s) ‘Country-by-Country Reporting’ model (CBCR). A business not headed by a UK company not meeting the threshold in its own right may still qualify if they satisfy the OECD’s CBCR framework threshold of a global turnover of more than €750 million.

Who doesn’t need to publish
You don’t need to publish a tax strategy if you’re an:
  • open-ended investment company
  • investment trust

Your business is responsible for determining whether it meets the threshold and for publishing the tax strategy, unless it’s part of a group or sub-group. In these cases it’s the responsibly of the head of the group or sub-group. You can publish a strategy on behalf of a group or sub-group if your company is registered in the UK.

What to include in your strategy
Your tax strategy will explain your business’s tax arrangements. You don’t need to include amounts of tax paid or commercially sensitive information. If your group has a separate UK tax strategy you should publish the relevant parts.

HMRC wants to know how your partnership as a whole manages its tax affairs.

If your business is part of a multinational group, you should publish any strategy, or parts, relevant to UK tax.

How you manage tax risks
You should work out and include what tax risks are linked to your business’s size, complexity and any changes to your business. Other information on governance arrangements to include:
  • details on how you manage your business’s tax risk
  • a high level description of key roles and their responsibilities
  • information on the systems and controls in place to manage tax risk
  • details on the levels of oversight of your business’s board and its involvement

Your attitude to tax planning
If your business has a code of conduct you should include details of it. You should also include:
  • why you might seek external tax advice, if any
  • an outline of your tax planning motives
  • the importance of each to your tax strategy
Where your business forms part of either a group or sub-group, you should include the group’s overall approach to structuring tax planning.

Your tax risks
You should say if your business’s internal governance has rigid levels of acceptable tax risk. If so, you should explain how it is influenced by stakeholders.

Working with HMRC
While your business’s approach to working with HMRC will be understood by your Customer Relations Manager (CRM), you’ll still need to put it in your tax strategy. You should include:
  • how your business meets its requirement to work with us
  • how you work with us on:
    • current, future and past tax risks
    • tax events
    • interpreting the law
You can include further information to add value, understanding or context. CRMs won’t give you any clearances in relation to publishing details of your dealings with us.

How to publish
You must make your tax strategy available free of charge on the internet as either a:
  • separate document
  • self-contained part of a wider document
You must make it available to the public free of charge until the following year’s strategy has been published. It doesn’t need to be called a strategy.

When to publish
Your first strategy should be published before the end of your first financial year commencing after Royal Assent of Finance (No. 2) Bill 2016. Your strategy counts as ‘published’ when it is first put on the internet. After the first strategy, you must publish one each year, within 15 months of the last one being published. Although you don’t have to notify HMRC when you’ve published, it would be helpful for HMRC to assess compliance if you let your CRM know when you have done so.

Penalties You can get a penalty if you haven’t published your tax strategy correctly and in time. You may also receive a penalty if your strategy doesn’t remain accessible free of charge until publication of the next strategy. HMRC will send you a warning notice giving you 30 days to either publish your strategy or make it available again (free of charge).
Any penalty will run from the first day you didn’t publish your strategy properly. The penalties are for:
  • the first 6 months - up to £7,500
  • 6 to 12 months - a further penalty of up to £7,500
  • more than 12 months - £7,500 every additional month
If your business is part of a group or sub-group the head will get the penalty.

If you believe you shouldn’t have a penalty, you should speak with your CRM first. You can appeal any penalty.

HMRC - Large businesses: publish your tax strategy 
HMRC Guidance - historical background

Sunday, June 26, 2016

'Brexit': time to act?

Relax, the VAT law will probably not change in the next 2 years.

The UK must first give the European Council notice of its intention to withdraw and a 'Brexit' agreement has to be negotiated. The negotiations are about setting the new relation between the UK and the EU and include tax and tariffs. That is already delayed as Prime Minister David Cameron considers that all a task of his successor.
"Mr Cameron has said it should be up to his successor to decide when to activate Article 50 by notifying the European Council. Once this happens, the UK is cut out of EU decision-making at the highest level and there will be no way back unless by unanimous consent from all other member states. 
Quitting the EU is not an automatic process - it has to be negotiated with the remaining 27 members and ultimately approved by them by qualified majority. These negotiations are meant to be completed within two years although many believe it will take much longer. The European Parliament has a veto over any new agreement formalising the relationship between the UK and the EU." Brexit: What happens now?

'Brexit' will result that trade between the UK and the EU countries will be treated again as imports and exports and most likely - unless negotiations will have a different outcome - result that customs duty have to be paid when goods move between the UK and the EU (duty rates might change).

As EU law will no longer apply - 'be in force' - the UK regains the right and flexibility to introduce own VAT legislation (again). That can be done much quicker as EU approval is also no longer required:
  • VAT rates and the scope of zero-rating and exemption.
  • Reversed CJEU decisions (e.g. broader scope of exemptions)
  • Place of supply rules that could result in double taxation or non taxation
The interpretation of UK VAT law during litigation becomes a UK matter only at least for issues that took place after the secession. With other words the UK regains full control.

VAT reporting will change as well as EC Sales Lists and Intrastat reporting will no longer apply unless a similar concept is negotiated with the EU. UK businesses that operate in the EU the VAT compliance obligations are impacted and an analysis should be made:
  • Appoint a fiscal representative
  • Invoicing and reporting requirements
  • Simplified trangulations for chain transactions
  • Distance sales rules
  • Mini One Stop Shop
  • EU VAT refund rules
  • etc.
From an operational perspective a company's processes and controls have to be updated to the new situation at hand. ERP systems must reflect these changes and that means that tax determination logics, tax codes, invoice and reporting requirements have to be assessed and new rules implemented as well. IT time has to be scheduled in to make it happen.

That being said businesses will have sufficient time to oversee the consequences and be well prepared. It will probably take 2 years to come into force. 

Lots can also happen in the meantime. Maybe a next referendum reverses the 'Brexit'. Or United Kingdom will become less united as Scotland and the city of London (??? - LOL) decide to remain with the EU.

The future will tell.

Richard H. Cornelisse

Wednesday, June 15, 2016

MNC - Senior Tax Specialist wanted for 2 - 6 months

Provide indirect tax assistance on business and tax initiated projects, including supporting the finance group with strategic VAT guidance. Work will include identifying and analysing VAT risks and opportunities and assessing indirect tax impact of 3.0 angle, outsourcing/SSC, iBuy, Coupa and Operational Finance projects as these may come up. Analysing Trade Working Capital and VAT cycle impact and optimization of Free Cash Flow savings for  group companies. 

Working on implementation of Dutch Tax Control Framework in cooperation with the finance group. Also working with tax and finance on execution of various processes and controls and documentation thereof including testing of effectiveness. Working with members of Indirect Tax team on making Tax Ruling Inventory for Dutch Tax Authorities and updating existing VAT opinions and rulings where necessary. 

 Location nearby Amsterdam 
 Experience level: 8-12 years (senior level) 

Interested contact us

Wednesday, June 8, 2016

Moving beyond tax technical advisory only

Surveys are alarming

If indirect tax risks are truly that high, then shouldn’t it receive more attention from the CFO?

Richard H. Cornelisse: That’s exactly the reason I started the Global Indirect Tax Management initiative. It’s not that the problem is unknown among the multinationals, but they just don’t share information sufficiently. The Indirect Tax Function is aware of the fact that it is understaffed and that budget is too limited to optimally execute its tasks, but they often don’t know how to change this and get it on the agenda of the CFO.

How it all started

How I started simply by 'sharing my views' and 'take position'.

At Andersen around 2000, I discovered that my advice about VAT cash flow optimization was wrongly implemented in the ERP system resulting in a cash flow disadvantage for many years. That was my eye opener and was actually the reason that I set up as one of the first a team with a focus on ERP and indirect tax solutions.

Understanding the root cause and solving the real problem became from that moment on my mantra and I also started to write and share my views. Certain views - looking back - can now be argued, but that is exactly the reason why I am sharing these articles as it simply shows my way of thinking at that time and gives some insight about developments.

The Andersen team continued when we moved to EY. We branded the service offering in 2002: 'ISIS' (Indirect tax Solutions for Information Systems). In hindsight not really a good name.

VAT ERP remains still an important VAT critical process to manage, however it is only one of the building blocks of indirect tax function effectiveness. The launch of this website has taken it all a step further as all of its building blocks are addressed and discussed. I refer to the Tables of Contents.

How it all started: '2005 - 2012 - A selection of my publications': my own road trip.

Saturday, June 4, 2016

Tax rulings: how to approximate market prices

EU - State aid - DG Competition - Internal Working Paper - 3 June 2016

As a rule, fiscal measures of a general nature that apply to all undertakings without distinction fall within the remit of the Member States’ fiscal autonomy and cannot constitute State aid, since they do not selectively advantage certain undertakings over others.

By contrast, fiscal measures that discriminate between taxpayers in a similar factual and legal situation constitute, in principle, State aid.

The “arm’s length principle” aims to ensure that all economic operators are treated in the same manner when determining their taxable base for corporate income tax purposes, regardless of whether they form part of an integrated corporate group or operate as standalone companies on the market.

The Commission does not call into question the granting of tax rulings by the tax administrations of the Member States. It recognises the importance of advance rulings as a tool to provide legal certainty to taxpayers. Provided they do not grant a selective advantage to specific economic operators, tax rulings do not raise issues under EU State aid law.

The inquiry has focussed, in particular, on tax rulings which endorse transfer pricing arrangements proposed by the taxpayer for determining the taxable basis of an integrated group company.

The Commission has also analysed “confirmatory rulings”, which confirm the application, or the non-application, of a certain legislative provision to a specific situation.

At the end of 2015 and the beginning of 2016, the Commission adopted three negative decisions with recovery with respect to the tax ruling granted by the Netherlands to Starbucks, the tax ruling granted by Luxembourg to Fiat and the Excess Profit Scheme in Belgium.

The Commission is continuing its investigations concerning the tax treatment of Apple by Ireland, and Amazon and McDonald's by Luxembourg.

Read more: Preliminary findings of the ruling investigation with respect to transfer pricing rulings.

Other Tax Transparency chapters

Wednesday, June 1, 2016

Tax Assurance Research

The key to success in tax management is the ability to translate tax knowledge into a workable business process and adapt to change in time.

Become a Center of Excellence: a central entity coordinates the activities throughout the organization and builds a community to share knowledge and best practices: centralized team of well-trained tax professionals.

Table of Contents