Digitalization of Tax Compliance...adopted as an electronic delivery point where Financial...
Transcript of Digitalization of Tax Compliance...adopted as an electronic delivery point where Financial...
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Document Classification: KPMG Confidential
© 2018 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Agenda
1. The emergence of digital reporting
2. Trends across the EU
3. A view from ASPAC
4. How organisations are adapting
5. Q&A
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Document Classification: KPMG Confidential
© 2018 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. 3
Document Classification: KPMG Confidential
© 2018 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Why now?
Technological advances
Cost of tax evasion
Adapting to the changing
environment
Global momentum
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Document Classification: KPMG Confidential
© 2018 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. 4
Document Classification: KPMG Confidential
© 2018 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
2001 2002
Audit files (SAF-T, VAT books)
Real-time Reporting
E-invoicing
Periodic
On demand
B2G
B2B
2007 2008 2020201920182017201620142013201120102009…
Making Tax Digital
Digital requirements timeline
Other
UK – MTD (2019)What is it:
VAT registered businesses with a taxable turnover above the VAT threshold (£85,000) will be mandated to keep digital VAT records and send returns using Making Tax Digital (MTD) compatible software from April 2019.
Making Tax Digital is a key part of the government’s plans to make it easier for individuals and businesses to get their tax right and keep on top of their affairs -meaning the end of the annual tax return for millions.
Why:
Reduce amount of avoidable errors, efficient real time look into what taxes are owed and why
Impact:
— HMRC estimated total costs of £8 billion in lost revenues due to tax return mistakes
— 2014-2015 – over £3.5 billion was lost due to mistakes in VAT alone
USA- FATCA (2010)The Foreign Account Tax Compliance Act (FATCA) is an important development in U.S. efforts to combat tax evasion by U.S. persons holding accounts and other financial assets offshore. The Treasury Department and the IRS continue to develop guidance concerning FATCA.
The International Data Exchange Service (IDES) has been adopted as an electronic delivery point where Financial Institutions (FI) and Host Country Tax Authorities (HCTA) can transmit and exchange FATCA data with the United States
CBCR (2013) — The data required by the template is intended, along with
transfer pricing maser file and local files, to provide tax administrations with sufficient information to conduct transfer pricing risk assessments and examinations as an essential part of tackling BEPs issues.
— A dedicated XML Schema has been developed by OECD to provide structured feedback on received CbC information, this allows for fewer errors, and improving overall data quality.
SAF-T— SAF-T (Standard Audit File for Tax) is an international
standard for electronic exchange of reliable accounting data from organizations to a national tax authority or external auditors. The standard is defined by the OECD.
— The standard is now increasingly adopted within European countries as a means to file tax returns electronically (7 countries have adopted or will )
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6© 2018 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Document Classification: KPMG Confidential
Spanish SII & Hungarian Real Time reporting - Process
Client’s ERP/ Accounting Systems• AR/AP
1. Extraction 2. Data transfer
Converter Data warehouse
Data integrity & logical checks
Translate reply
3. Submission
4. ReplyWarning and errors communicated in an
XML
5. Exception report
7© 2018 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Document Classification: KPMG Confidential
Real Time Reporting vs. E-invoicing
InvoiceData
Portal
Invoice data
InvoiceData
Portal
Invoice data
1. Issue the invoice
1. Record invoice data 2. Send to the TA 3. TA sends to customer
Client
Client
2a. Send the invoice to the customer2b. Report the invoice data to the Tax Authority
8© 2018 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Document Classification: KPMG Confidential
Progression of E-Invoicing
Invoice issued Invoice received Goods sent Goods received Payment received
9© 2018 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Document Classification: KPMG Confidential
Implementation status of B2G Directive
RomaniaFinland
HungaryLithuaniaBelgium
SwedenItaly
UKLatviaAustria
Ireland
Netherlands
Cyprus
PolandDenmark
PortugalEstonia
SloveniaFrance
SpainGermany
SlovakiaLuxembourgCroatia
GreeceMaltaCZ
11© 2018 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Document Classification: KPMG Confidential
Regulators digitising globally – Asia Pacific
China
India
Australia
Singapore Philippines
New Zealand
South Korea
Japan
13© 2018 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Document Classification: KPMG Confidential
GSK’s experience with the changing tax environment
IT & Cost Resource& Capabilities
The futureFrequency & Visibility
15© 2018 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Document Classification: KPMG Confidential
Tax departments of the future
Tax functions devoting less resources to tax complianceand more to data management
Tax professionals will require a blend of new skills
Global taxfunctions will become ever more centralized
External service providers willdevelop new ways to deliver solutions
Document Classification: KPMG Confidential
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© 2018 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm third parties, nor does KPMG International haveany such authority to obligate or bind any member firm. All rights reserved.
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