Standard Audit File for Tax (SAF-T)
An international standard called SAF-T (Standard Audit File for Tax) governs the electronic transfer of trustworthy accounting information from firms to a national tax authority or outside auditors. The Organization for Economic Cooperation and Development (OECD) defines the standard (OECD). XML is used to convey the file requirements, but the OECD does not mandate any specific file formats, instead advising that (para 6.28)
It is entirely up to revenue organizations to determine their implementation procedures for SAF-T, including how it is represented in XML.
Yet, while implementing new, open global standards for business and financial data, such as XBRL and XBRL-GL in particular, revenue authorities should take into account data formats that allow audit automation today while minimizing possible costs to all stakeholders.
Based on the XML-based SAF-T standard developed by the OECD, the proposed Norwegian SAF-T reporting standard (March 2016) consists of the following components:
- Every post (General ledger, Customers, Suppliers and VAT)
- Receivables Accounts (Balances, master data, etc.)
- Invoices Payable (Balances, master data, etc.)
Moreover, a uniform chart of accounts and standardized VAT numbers must be used. The inclusion of comprehensive invoice details, source documents, assets, and inventories is envisaged for later versions of SAF-T.
The SAF-T file will be used by the Norwegian Tax Authority for controls and tax audits. Their long-term plan for SAF-T is to take the place of other reporting tasks including VAT forms and tax filings.
Only accounting periods beginning after the implementation date will require SAF-T. (i.e. January 1, 2020).
In Norway, businesses are not required to keep books:
- Businesses that retain manual or paper-based accounts, issue no more than 600 vouchers annually, or have yearly sales below NOK 5 million.
- VAT on e-Services (VOES) firms.
SAF-T's implementation will have an impact on how your company interacts with the tax authorities.
When performing tax audits, the Tax Authorities will be able to perform data analyses on an unprecedented level. An XML-based transmission of data allows the appliance of sophisticated and pre-defined controls for testing, thus increasing the probability of detecting misstatements. For instance, through these analyses the Tax Authorities could identify misstated VAT entries within a few minutes.
We advise businesses to start the following procedures right away:
- Assessing the degree to which your company is prepared to submit accounting data in the SAF-T format to the tax authorities. According to our experience, businesses who have accounting data dispersed across many source systems (for example, different invoicing systems), bespoke CoAs, complex VAT handling, and ambiguity over the quality of transactional and master data will face the most difficulties.
- Identify the steps that must be taken to ensure SAF-T compliance. Create a project plan and take into account alternatives. The project's impact on your company's systems, organization, and processes should be taken into account.
- When reporting the SAF-T data to the Tax Authorities, one should take into account if the internal controls in place are capable of detecting inaccuracies. More accounting data from the organization is made available to the Tax Authorities thanks to SAF-T. Introducing data analytics software might be pertinent, depending on the nature of your organization.