To simplify tax compliance and audit, as well as to reduce
tax evasion and fraud, the Organisation for Economic Co-operation and
Development (OECD) in 2005 introduced an international
standard for exchanging data between companies and local tax
authorities. This file, designated as the Standard Audit File
for Tax Purposes (commonly known as SAF-T) was represented
using Extensible Markup Language (XML), a free and open format
commonly used to represent data structures. However, the OECD
did not make this file format compulsory.
The first version of the file defined by the OECD in 2005
was based on a reduced set of information, namely accounting,
sales, purchases, and payments. A second version was introduced
in 2010 with another set of information, namely inventory and
fixed assets. This revision also addressed improvements on the
previous data structure.
This file was designed to provide a normalised data
structure among all countries; however, in order to meet
specific needs, some changes were introduced locally in
countries that adopted this standard.
In 2008, Portugal became one of the first countries to
implement this standard in a XML file format, named as SAF-T
(PT), as a legal requirement for all taxpayers subject to
corporate income tax.
Until now, three additional data structures have been
published by the Portuguese tax authorities (PTA). These new
versions have brought sets of adjustments to ensure proper
alignment between the file structure and the realities of the
Portuguese fiscal, business, and information systems.
As expected, this has caused major disruption in the way
companies conduct their business and perform their internal
control and reporting processes. Even for the PTA, the days of
tax inspections with pen and paper have ended, and new
methodologies, tools, and IT infrastructures have been required
In 2018, 10 years later, it could be expected that all had
been done. However, in our experience, companies are still
facing many diverse challenges, namely:
- The generation of a compliant SAF-T (PT) file;
- Assurance that the file content corresponds to
- A lack of in-house confidence that ongoing changes and
the increment of complexity in the systems to comply with
business needs are in accordance with the file
- The degree of effort required to adjust the systems to
meet new changes to the file data structure;
- The high volume of data to be pulled from their systems
and proper mapping to the SAF-T (PT) file;
- The limited internal resources with sufficient know-how
on this matter;
- Addressing the multinational environment and associated
group policies versus local needs.
Additionally, these have been times of big decisions,
including: (i) rethinking the organisational structure of
companies to ensure better communication between all
stakeholders; (ii) deciding between major overhauling of legacy
systems and implementing flexible new systems;
(iii)reviewing business and support
processes; and (iv)critically
challenging the way of doing things. These facts bring another
layer of challenges to the SAF-T (PT) compliance landscape.
Considering all of the benefits that the tax authorities
obtain with these new ways of ensuring that companies
comply with all their fiscal obligations, it can be taken as
granted that in Europe and other regions, the SAF-T compliance
obligations are here to stay.
Portugal, with 10 years’ experience in this
matter, could be considered as a case study when implementing
SAF-T in other countries. Substantial efforts have been made,
and new ideas and breakthroughs have been achieved, such
- Billing software certification, issued by the PTA, with
the objective of reducing sales suppression techniques;
- Submission to the PTA of information regarding
transportation of goods prior to shipment;
- The PTA e-invoice web portal, which congregates all
monthly invoices issued by companies, enabling all individual
taxpayers, to verify the VAT to be deducted on their annual
individual income tax returns (a Portuguese tax benefit for
- Communication of the annual SAF-T (PT) accounting data
for the prefilling of the annual return, which includes
company financial statements.
These are all good examples of what has happened since 2008,
and indicate what is still to come.
Furthermore, blockchain and distributed ledger technologies
are emerging. Management teams around the world are considering
how these new concepts can be used in their business, while
governments are also considering new methods to ensure that due
taxes are collected.
Tax compliance is becoming increasingly data- and
This article was prepared by Ricardo Lourenço
(firstname.lastname@example.org), tax technology director at
Tax technology director, PwC