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Would you like to learn more about EY Tax Standards? Would you like to enrol your company in the Program? Would you like to meet the EY specialists? Feel free to contact us.
Whom does the EY Tax Certification Program address?
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Business owners
Business owners who wish to secure the correctness of their tax processes and settlements and enjoy the comfort stemming therefrom.
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Companies
Companies which wish to have a real warranty of reliability of tax settlements that is useful when cooperating with contractors and in control processes.
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Management Boards
Management Boards that wish to feel safer with regards to their responsibility for tax settlements.
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Benefits stemming from the participation in the EY Tax Certification Program
Reliability and trust in business transactions
- The information about the amount of tax obligations of the biggest taxpayers is now public. However, it is difficult to disclose to the public the complete information about the difference between the tax income and the financial results in a particular period – although in certain case it would be justified to do so.
- The international experience shows that the independent standardised tax audit may be the source of information that is of importance to tax authorities (as regards the determination of tax inspection priorities).
- The reliability of a business partner and their tax settlements has become the key factor deciding on whether to cooperate with that business partner or not. The EY Tax Certification Program enables business partners and financial institutions to confirm the reliability of operations also in the area of taxes.
Elimination of the penal and fiscal liability
- The ever-changing tax laws and their interpretation make it difficult to prove that company’s tax has been settled with the observance of the due diligence principle. However, an audit performed by a third-party entity based on an independently developed methodology does constitute an important proof in that regard.
- New financial and tax reporting tools mean that audit needs to be conducted on an on-going basis; this is because directors and persons in charge of tax settlements are directly subject to penal liability and in many cases, once an error has been detected, there is no possibility to manage the liability (adjustment or active regret).
- Besides the penal and fiscal liability of the Management Board and persons in charge of tax settlements, where irregularities have been detected in tax settlements, a penalty may also be imposed on the company, based on regulations on liability of collective entities.
Limitation of costs of tax errors
- Due to the application of punitive interest and tax rates, detection of irregularities in tax settlements (after the lapse of a certain period of time) results in the necessity to finance the arrears exceeding the very tax obligation. The on-going analysis of a tax obligation materially limits the risk of higher outflows on the part of the business.
Optimum tax obligation
- Despite the higher tax settlement-related risk, taxpayers are still obligated to determine tax obligations in the amount compliant with (and no greater than) what is legally permitted. Taxpayers may also choose the optimum tax settlement methods (depreciation/amortisation policy, exchange gains and losses). Moreover, the Ministry of Finance has been systematically extending the catalogue of possible and acceptable optimisation tools (e.g. R&D tax credits, positive spread investing (PSI), innovation box). Audits performed as part of the EY Tax Certification Program also aim at identifying the optimisation tools that may be used.
- Enhancement of effectiveness should probably also concern the very tax settlement process, particularly in view of the growing difficulties concerning the recruitment and maintenance of skilled personnel. Therefore, the audit indicates the possible simplifications of settlements made, ensuring at the same time correct calculation of the tax obligation.
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What is the EY Tax Standard?
The EY Tax Standard is a unified audit methodology for company tax settlements and tax procedures. The Standard was developed based on the international experience in certification programs and the long-term experience in analysis of tax settlements and financial audits of Polish businesses.
A characteristic feature of the Standard is its permanence. The audit is performed in accordance with the unified methodology, and the audit method is modified only with reference to the scale of operations of the given entity and its industry specificity (and not at the client’s individual request). The audit ends with an objective opinion on whether the company correctly settles its taxes, and whether its tax risk management methods respond to the present day challenges.
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What does the EY Tax Standard include?
Standard Audit File for Tax (SAF-T): Verification of the SAF-T for technical correctness, internal cohesion and substantial correctness, based on the EY test library.
Verification of contractors: Verification of contractors for confirmation of their potential involvement in fraudulent activities.
CIT: Analysis based on the sample adjusted to the scale of the business operations; cost categories deemed sensitive are audited using a complete method.
VAT: Analysis based on the sample adjusted to the scale of the business operations; cost categories deemed sensitive are audited using a complete method.
Transfer prices: Analysis of both formal correctness and completeness of documents, and the correctness of transaction pricing methods used.
Tax procedures: Analysis and verification of procedures used based on the survey or – in the broadest option – through the analysis of their completeness and the examination of their actual implementation.
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Certification Opinion
The work performed leads to the issuance of the Certification Opinion, which may either be positive, or indicate the areas and procedures that need to be verified. A business that underwent a complete audit and obtained a Certification Opinion may use the EY Tax Certification Program logo. Information about taxpayers that obtained a Certification Opinion will be published on the Program’s website. Should any irregularities be indicated at the time of audit, the Certification Opinion may include reservations, or it can be negative.
As not all business owners will be immediately ready to undergo a complete audit ending with the issuance of the Certification Opinion, we have provided them with the possibility to participate in the Program at different levels, each of which gradually covers a wider scope of analysis. Then, the analysis will end with the confirmation of participation in the Program. Upon completion of the audit performed as part of the EY Tax Certification Program, we will deliver complete documentation thereof.
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What is the audit schedule?
The detailed audit schedule is tailored to the client’s individual needs and the Certification Level they selected; it also takes into consideration the availability of the client’s staff and resources. Audit may be performed after or before the end of the settlement period and the submission of the tax return. In the latter case, the audit is split into two phases: the initial phase and the validation phase.
EY Tax Certification Levels
We offer an audit of the correctness of tax settlements in the given year that is performed in keeping with the methodology tailored to the scale and the specificity of business operations. The procedures dedicated to each Certification Level are implemented in keeping with the uniform audit methodology – the EY Tax Standard. Taxpayers that are not ready to undergo a complete audit that authorises them to obtain a Certification Opinion may participate in the EY Tax Certification Program by having the audit performed to a limited extent (Levels 1 and 2).
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Level 1
Standard Audit File for Tax (SAF-T)
Analysis of the SAF-T based on the set of tests designed by EY that verify the technical accuracy, internal cohesion and substantial correctness of the said files.
Tax identification number (NIP)
Verification of contractors in the official MF and VIES databases
Procedures
Analysis of procedures used for tax settlements based on the questionnaire.
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Level 2
Standard Audit File for Tax (SAF-T)
Analysis of the SAF-T based on the set of tests designed by EY that verify the technical accuracy, internal cohesion and substantial correctness of the said files.
Tax identification number (NIP)
Verification of contractors in the official MF and VIES databases
Procedures
Analysis of procedures used for tax settlements based on the questionnaire.
CIT/VAT
Analysis of correctness of tax settlements made based on tax questionnaires designed by EY that verify the correctness of procedures and methods used for CIT and VAT settlements.
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Level 3
Standard Audit File for Tax (SAF-T)
Analysis of the SAF-T based on the set of tests designed by EY that verify the technical accuracy, internal cohesion and substantial correctness of the said files.
Tax identification number (NIP)
Verification of contractors in the official MF and VIES databases.
Procedures
Analysis of procedures used for tax settlements based on the questionnaire.
CIT/VAT
Analysis of correctness of CIT and VAT settlements made based on:
- tax questionnaires designed by EY that verify the correctness of procedures and methods used for CIT (including TP settlements and settlements of businesses operating in the economic zone) and VAT settlements
- the analysis of source documents (defined in keeping with the EY Standard) confirming the costs incurred/revenue generated/discussion of the issues identified with the taxpayer’s representatives (the scope is defined in keeping with the EY Standard regarding the level of importance)
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Level 4
Standard Audit File for Tax (SAF-T)
Analysis of the SAF-T based on the set of tests designed by EY that verify the technical accuracy, internal cohesion and substantial correctness of the said files.
Tax identification number (NIP)
Verification of contractors in the official MF and VIES databases.
Procedures
Analysis of procedures used for tax settlements based on the questionnaire.
CIT/VAT
Analysis of correctness of CIT and VAT settlements made based on:
- tax questionnaires designed by EY that verify the correctness of procedures and methods used for CIT (including TP settlements and settlements of businesses operating in the economic zone) and VAT settlements
- the analysis of source documents (defined in keeping with the EY Standard) confirming the costs incurred/revenue generated/discussion of the issues identified with the taxpayer’s representatives (the scope is defined in keeping with the EY Standard regarding the level of importance)
TP
Verification of the correctness and completeness of documents regarding transactions with related entities in the given year.
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Level 5
Standard Audit File for Tax (SAF-T)
Analysis of the SAF-T based on the set of tests designed by EY that verify the technical accuracy, internal cohesion and substantial correctness of the said files.
Tax identification number (NIP)
Verification of contractors in the official MF and VIES databases.
Procedures
Analysis of procedures used for tax settlements based on the questionnaire.
CIT/VAT
Analysis of correctness of CIT and VAT settlements made based on:
- tax questionnaires designed by EY that verify the correctness of procedures and methods used for CIT (including TP settlements and settlements of businesses operating in the economic zone) and VAT settlements
- the analysis of source documents (defined in keeping with the EY Standard) confirming the costs incurred/revenue generated/discussion of the issues identified with the taxpayer’s representatives (the scope is defined in keeping with the EY Standard regarding the level of importance)
TP
Analysis of the correctness of settlements regarding transfer prices through the verification of the:
- completeness and substantial correctness of documents regarding transactions with related entities in the given year
- correctness of methods used to establish and document the arm’s length nature of prices
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Level 6
Standard Audit File for Tax (SAF-T)
Simulation of an e-inspection using SAF-T files: extended analysis of SAF-T files, tests created in the analytical tool tailored to individual taxpayers, analysis of other data sources.
Tax identification number (NIP)
Verification of contractors using the VAT Carousel Fraud Detector (set of tests and analysis to identify the risk of VAT frauds).
CIT/VAT
Analysis of correctness of CIT and VAT settlements made based on:
- tax questionnaires designed by EY that verify the correctness of procedures and methods used for CIT (including TP settlements and settlements of businesses operating in the economic zone) and VAT settlements
- the analysis of source documents (defined in keeping with the EY Standard) confirming the costs incurred/revenue generated/discussion of the issues identified with the taxpayer’s representatives (the scope is defined in keeping with the EY Standard regarding the level of importance)
TP
Analysis of the correctness of settlements regarding transfer prices through the verification of the:
- completeness and substantial correctness of documents regarding transactions with related entities in the given year
- correctness of methods used to establish and document the arm’s length nature of prices
Procedures
Verification of the procedure scope and implementation methods, including the analysis of the:
- correctness and completeness of tax procedures adopted by the taxpayer and the scope of their application
- manner and scope of fulfilling the obligation to disclose information about tax schemes
The information about participation in the EY Tax Certification Program is the confirmation that the company has passed Level 1 and Level 2 audits. Audits of tax settlements as part of Levels 3, 4, 5 and 6 are summarised with a Certification Opinion. Additionally, where the Certification Opinion includes no reservations, the Program participant receives a written Certificate (and is allowed to use the Program logo).
PLEASE NOTE: The audit of tax settlements as part of the EY Tax Certification Program generally includes the verification of the SAF-T, as well as CIT, VAT and transfer pricing settlements. The remaining levies are not included in the audit due to their limited application that is impossible to standardise.
EY Certification regarding the Withholding Tax
Due to a fundamental change in the settlement of the withholding tax (WHT), many business executives doubt whether they have met all the requirements regarding the application of new regulations, and exercised due diligence in the verification of the possibility to use tax exemption.
