SAF-T (Standard Audit File for Tax) is a standard accounting data file that is required by the State Tax Inspectorate and other statutory services in xml. Such data collection format was created by the Organization for Economic Cooperation and Development, in the hope that SAF-T will make tax paying more effective and easier, also help identify key areas for tax evasion. So far, in Europe SAF-T is used by 6 countries: Portugal, Luxembourg, France, Poland, Lithuania, Austria and Norway (delayed until 2018). We can rejoice that we are one of the first and even more advanced than our neighbors when implementing this system, and our IT specialists will be able to offer their best practices to foreign markets by installing similar systems. However, at this point the joy currently ends. Various changes, even those that greatly dampen the daily routine of businesses are okay as long as they feel the value and meaning of those changes. So far, SAFT – T brings additional obligations only. Of course, the introduction of this system will make checks for tax and other institutions smoother and more efficient as all the initial data required for inspections will be made available through SAF-T. However, when providing data to SAF-T, VMI will receive a lot of confidential and company-sensitive information. For example, purchase data, prices, and customer information – you could say that all of the business know – how will be made available. And how will the tax administrator be able to use this data – still remains a rhetorical question. So it is up to us to work, and only hope that we are working for the good of everyone, that the goal will be achieved and we will bring more taxes in the state budget. After all, we are all patriots of our country and we want the state to be richer: teachers and doctors receive higher wages, seniors – higher pensions.
Who and when must submit data to SAF-T
The Government will continue with it’s 2015 Resolution No. 699 which decided that starting 2017 January 1st, largest companies will be required to submit accounting data in the SAF-T file. According to this resolution, upon request of the responsible authorities, all profit-making legal entities will be required to provide SAF-T, with the exception of SE “Deposit and Investment Insurance”, European economic interest groups and economic entities subject to insolvency proceedings or out-of-court bankruptcy proceedings.
Foreign companies that have registered as VAT payers in Lithuania, have branches and representative offices of foreign legal persons, permanent establishments, public sector entities and other non-profit legal entities will not need to file accounting data in the SAF-T file. It may be that foreign companies, in order to avoid providing data to SAF-T, will tend to not establish a private limited liability company in Lithuania, but open a branch.
Entrepreneurs must be prepared to submit a file according to the turnover of the previous year from:
– January 1st 2017 – if 2015 turnover exceeds 8 million EUR;
– January 1st 2018 – if 2016 the turnover exceeds 700 thousand. EUR;
– January 1st 2019 – if in 2017 the turnover exceeds 45 thousand. EUR;
– January 1st, 2020 and later – if the turnover of the previous year exceeds 45 thousand. EUR.
The information in the SAF-T system is provided only upon request of the tax administrator. Most likely, this will be companies suspected for tax evasion also transactions between companies might be monitored. At the request of the STI, the file must be submitted in 10 days – a shorter term is determined only at the request of the taxpayer or with their consent.
How to get ready
So far not all companies are ready to install this system. This is partly due to the fact that not all companies have an obligation to provide data from the Big Book. The lower the company’s turnover, the later they have to take care of it. However, if you do not need it today, it does not mean that you do not have to be prepared. Here are some steps that must be taken by an enterprise in preparation for the implementation of SAF-T.
– Check the net sales revenue for the past year (find out if and when you need to provide SAF-T);
– Contact your accounting manager to inquire whether they have developed a SAF-T solution;
– If the developers of the accounting software do not have a SAF-T solution, look for programmers who can install the SAF-T module in the program;
– Take into consideration future SAF-T costs in next year’s budget;
– It is now possible to reconcile the accounts of the Big Book with the chart of accounts specified in the classification, if it does not match;
– Cooperate with IT specialists and managers in implementing the SAF-T module.
Information is provided not only to the STI
By the way, business do not have much of a choice whether or not to provide data to the SAF-T – prosecution or fines might be imposed. Interestingly, not only the STI is entitled to data like full payroll, company bank account statements, payments, wage calculations, depreciation, etc. Upon request, the entity must provide the SAF-T file to:
– The customs of the Republic of Lithuania;
– Financial Crime Investigation Service (FNTT);
– State Social Insurance Fund (VSDF).
SAF-T is one of the subsystems of the smart administration i.MAS, installed a little more than a year ago. Implementation of the system in Lithuania is still in progress, so it is still difficult to retrospectively assess its benefits. And whether the anxiety about data security has a basis. However, we would like to believe that the State Tax Inspectorate will find good arguments and dispel the anxiety, and the information that companies provide will surely be fruitful in order to achieve effective collection of taxes into the state budget.