Facilitating continuous and undisturbed access to accounting and tax data generated by computerised automatic data processing systems and the quality of this data is of significant interest to taxpayers that are obliged to submit Standard Tax Control Files (SAF-T).
While large taxpayers were already obliged in 2022 to configure their IT applications so that data could be extracted and translated into the standardised format required by SAF-T reporting, medium-sized taxpayers must also comply with this requirement from 2023. In addition, the possibility for authorities to access taxpayers' data in an electronic format has been provided for in the Accounting Act since 2011.
Background
2022 brought a revolution in the sphere of tax reporting requirements; namely, SAF-T reporting, with accounting data and certain detailed tax information becoming available to tax authorities in near real time.
However, the tax authority's access to accounting and tax records was regulated before the SAF-T reporting requirements came into force. Thus, according to the provisions of the Accounting Law and the Tax Procedure Code, taxpayers that use computer systems for automatic data processing are obliged to:
Keep the processed data on electronic media;
Ensure the access of the tax authorities to this data; and
Present the computer applications with which the data was generated.
The experience of the tax audits EY Romania has taken part in shows that, in the vast majority of cases, the authorities do not usually request access to the data and IT applications used by taxpayers to generate accounting and tax records. However, for the coming period, electronic verifications based on data reported through the SAF-T statements could extend this tax practice.
Equipping tax inspectors with the necessary means to carry out electronic audits could lead to requirements to access electronic data and applications used by taxpayers as part of a tax audit for periods when they were not required to submit the standard tax audit file.
Practical challenges
From EY Romania’s experience in implementing SAF-T reporting for large taxpayers, configuring IT systems according to the requirements of the accounting and tax legislation in force is a great challenge in many cases. Also, the real-time adaptation of companies' ERP systems to changes in accounting and tax legislation becomes imperative, because SAF-T reporting involves the production of detailed accounting information at the level of accounting entries, account balances, and tax codes for VAT and withholding taxes.
However, in practice, there are additional difficulties that will hinder a possible tax audit if the authorities request access to the data stored in an electronic format and to the computer applications used to generate this data. Among the most common are the following:
A change of IT applications and the discontinuation of access to IT licences used before the date of transition, with taxpayers having practically no access to previously used IT applications but, at best, only to certain data archived in an electronic format.
The use of data processed in accordance with the requirements of other financial reporting standards, different from the applicable Romanian regulations, for the preparation of statutory financial statements and statutory accounting and tax reports, through adjustments made outside the IT system. In many cases, the traceability and documentation of these adjustments is insufficient to meet the requirements of a tax audit.
For small taxpayers, changing accounting service providers may, in many cases, mean that they no longer have access to the IT applications used before the date of transition, even if the electronically archived data is provided at the time of transition.
How can taxpayers protect themselves?
Taxpayers can protect themselves through the following measures:
By configuring IT data processing systems to ensure that information is processed in accordance with the applicable regulations and mandatory reports are generated; in other words, implementing a complete ERP localisation package.
Through technical support services that will ensure real-time updating of IT applications in line with changes in accounting and tax legislation.
By including specific clauses in the contracts concluded with IT licence providers (when the accounting and tax function is provided in their own departments) or with accounting and tax service providers (when accounting and tax services are outsourced). These clauses should provide for conditions on access to IT accounting systems and to the data generated with these applications for the periods specified by law.
In addition, for taxpayers that are required to file SAF-T reports, EY Romania recommends the organisation of an archive of the filed statements and the possibility to generate from the relevant computer applications the corrective returns for different periods, while keeping traceability of the versions of the statements filed for each period.
Final thoughts
Until the benefits of SAF-T reporting are felt and interaction with the tax authority is simplified, taxpayers will continue to mobilise significant resources to support information requests in tax audits and to ensure the extraction from information systems of relevant data in the complex standardised structure required for the SAF-T statement.
