Deloitte study: companies in Romania and the region estimate digital reporting to improve tax audits efficiency

The new digital fiscal reporting requirements, implemented by the Central European countries, will lead to more efficient tax audits over the next three to five years, 75% of companies estimate, but it will also provide authorities with more direct access to the taxpayers financial and accounting IT systems (62%), according to Deloitte Central Europe Tax Technology Report, conducted in 15 countries in the region, including Romania.

In this context, 69% of participants say the main driver of tax technology investment is the need to respond to increased tax authority demands for digital reporting of indirect taxes.

At the same time, 68% of participants claim that technology investments are also driven by the aim of improving automation of compliance processes and of streamlining the procedure, to free up human resources to focus on other activities. The percentage is much higher (over 80%) in countries currently undergoing major changes in compliance, such as Poland and Romania, but lower in Hungary or the Czech Republic that are not facing such transformations.

On the other hand, almost half of companies (45%) are concerned about their ability to adapt and upgrade their systems quickly enough to meet fast-evolving digital reporting requirements. In addition, the different local data requirements across the countries in Central Europe (related to real-time reporting and electronic invoicing in Hungary, Romania, Serbia, and Poland, to SAF-T reporting in Romania, Poland, and Lithuania, or those involving the local sales and purchases listings in the Czech Republic, Hungary, and Slovakia) are causing further complications.

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“The new reporting systems implementation requires a significant effort from both the authorities and the taxpayers which are facing, as evidenced by the study, multiple challenges related to the complexity of the procedures and the costs. However, the digitization of the relationship between taxpayers and tax authority could no longer be avoided, in the current global economic context, where the volume of data to be reported and then analyzed increases exponentially, and the ability to respond quickly is essential in detecting tax evasion cases and in limiting the state budget losses generated by this phenomenon. The process is ongoing, and it is very important to be successfully concluded, so that the data collected is efficiently analyzed, and the benefits – less frequent, faster, and less burdensome audits for the compliant taxpayers, respectively higher revenues to the state budget – justify the compliance effort. To this end, it is essential for the tax authority to also invest in advanced IT equipment to be able to retrieve and process the data fast enough in order to achieve the expected results,” said Vlad Boeriu, Tax and Legal Partner-in-Charge, Deloitte Romania.

According to the report, in order to enable more direct access to financial data, companies must integrate their internal systems with tax administrations’ digital interfaces. However, 60% of respondents are not planning (or at most are only considering) the implementation of next-generation ERP solutions (Enterprise Resource Planning).

Half of the companies participating in the study identify the lack of time and resources as the main challenge in transforming their organizations’ tax function. Under these circumstances, a third intend to outsource processes that are not core to their companies’ tax strategy.

Deloitte Central Europe Tax Technology Report was conducted in the first quarter of this year, based on a survey among 125 senior tax and finance executives in 15 jurisdictions in Central Europe – Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Kosovo, Latvia, Lithuania, Poland, Romania, Serbia, Slovenia and Slovakia.