Many countries have determined their own tax and accounting reporting regulations and require companies to report this information digitally to local tax authorities. Due to widely varying accounting systems, standardization is needed to identify and prevent tax fraud. SAF-T, the Standard Audit File for Tax, is an international standard file for electronic transfer of accounting and tax data from businesses to tax authorities or external auditors that need to review this data.
In this blog post, I will explain how SAF-T works and which kind of SAP solutions exists to manage country-specific SAF-T requirements. Moreover, I will provide you with the functional and technical process of SAF-T, explain the differences between the SAP solutions covering SAF-T and E-invoicing and explain how SAP ACR can be used for SAF-T purposes.
The SAF-T roadmap and timeline
SAF-T is an electronic file type format based on the XML standard, that was created in 2005 by the OECD (Organization for Economic Cooperation and Development). The aim was to create guidance for the audit file itself as well as guidance on tax compliance. The SAF-T is standardized in terms of format and meaning, however, there can be some small country-specific elements that differ from country to country.
SAF-T is already mandatory for VAT compliance in quite some countries, in Europe and even outside of Europe. In other countries it can be used on a voluntary basis, but we expect it to become mandatory in more countries in the future.
Portugal was the first European country to implement SAF-T in 2008. Later countries such as Luxembourg, Poland, Norway and Angola followed. There are already some countries on the roadmap for mandatory SAF-T requirements such as Hungary (no fixed date) and Romania. Hungary is planned for late 2021 or early 2022, while Romania intends to introduce SAF-T in 2022.
It is important to note that France and the Netherlands have implemented other audit files, which cannot be categorized under the SAF-T format. France introduced the FEC file (Fichier d’Ecritures Comptables) and the Netherlands introduced an own financial audit file. Both formats are not based on the OECD standard.
The SAF-T file format
SAF-T was created to help companies by submitting only a single standard reporting file instead of having to file multiple reports in local formats. This way, businesses can minimize their compliance costs across multiple jurisdictions. SAF-T captures data from different areas found in a common business accounting system. Typical elements of a SAF-T file will include the following:
- General Ledger – Journals
- Accounts Receivable – Customer Master Files, Sales Invoices & Payments
- Accounts Payable – Supplier Master Files, Purchase Invoices & Payments
- Fixed Assets – Asset Master Files, Depreciation & Revaluation
- Inventory – Product Master Files & Inventory Movements
How ACR can provide the right solution for your SAF-T requirement
In order to ensure SAF-T compliance, I recommend the SAP Advanced Compliance Reporting (ACR) solution for SAP S/4HANA. SAP ACR is a SAP-integrated, global compliance reporting solution that helps you to create, generate, and submit compliance reports periodically (e.g. monthly/ quarterly/ annually) to the governments on time and in the correct file format. It is a strategic solution, not only for SAF-T purposes but also for other tax and legal requirements.
SAP ACR focuses on Statutory Compliance requirements and includes the following most important features to ensure long-term, global compliance:
- the preparation and submission of the required reports by:
- collecting the required SAP summary data,
- generating the different required tax reports,
- converting these reports into the legally required file format (XML, XBRL, TXT, JSON, PDF, …).
- SAP OSS notes to ensure 100% long-term compliance in case of legal updates.
SAF-T files are generated in a common readable and easily-exportable format regardless of the software used according to a defined set of accounting records.
Within Advanced Compliance Reporting (ACR), the tool collects all the required tax and invoice data automatically. It generates the required XML SAF-T file in accordance with the country-specific requirements. The Dashboard within ACR will connect via web services to the tax authorities and generate a direct interface if required by law. In this case, the system/dashboard will be then updated by status notifications straight from the tax authorities.
It is important to note that ACR is only available within S4HANA and not in ECC. In note 2480067 you can find a list of reports which are available in ECC, but which are not supported anymore since a specific date. This is because these reports are now delivered with ACR, and SAP does not maintain these old reports in ECC anymore. For you, this means that you can still use the reports in ECC, but they will not be maintained anymore in case of updates or changes in the required reports. Of course, this is a risky approach. Nevertheless, SAF-T reports were never available in ECC and will only be covered in ACR.
Key differences between ACR (SAF-T) and SAP Document Compliance (e-invoicing)
As described in the previous section, we recommend using Advanced Compliance Reporting (ACR) available in S4HANA to ensure compliance with the SAF-T requirements. Here, a difference must be made with SAP Document Compliance which is also a SAP standard solution for ensuring compliance with local legal requirements.
The table below briefly summarizes the key differences between ACR which is used for VAT reporting, EC Sales Lists, SAF-T, etc… and SAP Document Compliance which is used for requirements such as E-Invoicing, E-Payments and Transport Registration.
As you can derive from the table above, SAP ACR is especially for those reports which must be reported monthly, quarterly or even yearly. This is in contrast with SAP Document Compliance which is developed for legal requirements which must be reported in real-time such as e-invoicing. In this case, high volume of data must be submitted directly to the tax authorities and hence in this case we also need a direct interface with the tax authorities.
As SAF-T is a report which must be submitted periodically (not in real-time), this is covered with SAP ACR.
How PIKON could help you
At PIKON, we have developed a Competence Center for Legal Requirements, where our consultants investigate country-specific legal requirements all over the world and their impact on the SAP system. Our team consists of experts that combine in-depth knowledge with experience that was gathered through many projects all around the world.
Furthermore, we follow-up regularly on new and changing legal requirements that are relevant for our clients and inform them when action is needed. That way, clients can concentrate on their daily business and do not need to worry about not being compliant with necessary regulations.
If you have any questions on country-specific SAF-T regulations or if you are interested in a system-demo do not hesitate to request a web-meeting or leave a comment in the comment section below. We can also provide you with a strategy workshop for legal requirements where we discuss all the relevant legal requirements for the countries you operate in.
We are happy to help and will come back to you as soon as possible.