Core Risks

VAT paid (AP)	Examples
VAT paid to suppliers is not reported or is deducted.	VAT on expenses (e.g. hotel) or VAT booked under tax code upon import.
VAT paid to suppliers is reported on the incorrect VAT return.	Request for a German VAT repayment in a Dutch return.
Improper AP processes for which the wrong VAT treatment is selected.	Selection of the wrong tax code.
Additional VAT payment because the invoice does not satisfy the invoice requirements.	Wrong name, address, VAT identification number.
Additional VAT payment is deducted where no right to deduction exists.	Company outings, meals and drinks, facilities for personnel
VAT deduction is not supported by sufficient evidence.	Invoices are missing in the administration.
Improper reporting of pass-through VAT	Not reporting pass-through VAT or incorrect rate
VAT deduction could have taken place at an earlier moment.	Invoice gets booked late due to long approval process. Invoices not selected in filing return.
Late payment of VAT repayment requests.	Start ups, foreign VAT repayments or non-functioning internal processes.

VAT owed (AR)	Examples
VAT charged is not remitted.	No invoices are issued with respect to inter-company transactions (outside the physical unity).
(Credit) invoices issued do not satisfy legal requirements.	No/incorrect text on the invoice for 0% VAT or wrong VAT number.
Wrong VAT treatment applied to services performed.	Incorrect VAT rate, wrong qualification of service (exemption).
Insufficient evidence in administration for the VAT treatment applied.	No transport documentation for 0% rate VAT intra-EU community transactions and export.
VAT owed was corrected improperly based on uncollectible receivables.	Not all conditions are satisfied for the type of refund.
Incorrect pricing due to the application of lower VAT rate that can no longer be corrected.	When selling to individuals/consumers
VAT must be paid to the tax authority sooner than it is received from the customer.	Is cash flow optimization possible?
Refund of VAT owed on uncollectible receivables is not requested.	Uncollectible receivables are entered with the incorrect tax code.

Indirect tax functionality in systems	Examples
Tax code structure is improperly configured or too few tax codes are included.	Not all relevant tax codes are replaced upon a change of rate (e.g. for tax codes with pass-through VAT).
Relevant knowledge of VAT is missing when structuring master data and maintenance.	No approval by tax during the process of master data creation or maintenance.
Too little information relevant to VAT in customer and supplier master data.	No/incorrect VAT numbers
The system determines the wrong VAT treatment.	Incorrect logic in the VAT conditions tables; incorrect use of partner functions in ERP.
System does not support the VAT filing process, resulting in manual processes and the use of Excel.	Consolidation of the fiscal VAT unit in Excel with the risk of errors.

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Tax Authorities peeking at your data

Some background on ’new requirement for submission of tax report with transaction details in Portugal (SAFT-PT)’ from a tax controversy perspective.

SAP, indirect tax functionality and client needs

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How to be compliant with Portuguese SAF-T

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Portuguese impact on SAP

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Managing Reputational Risks

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Demonstrate the reliability of your tax administration

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Tax Engines – Questions to ask before you commit

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Auditors Anticipate Finding Fraud At Clients

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