NAV is building an amazing system in the background – all processes will be seen

The European Commission estimates that the Hungarian VAT gap has narrowed to 9 percent in a few years from almost 20 percent. This improvement is largely related to digital measures, including the economic bleaching effect of the NAV online invoice reporting system introduced in the summer of 2018, which also covers invoices issued to individuals as of 2021. However, the NAV online account is not only suitable for curbing the black economy, the data received is a stable starting point for systematic and automatic checks and subsequently for the preparation of certain corporate tax returns together with data from other systems. With the latest recommendations, the tax authority can, over time, relieve even companies of administrative burdens, after individuals.

As we have already seen in the case of the PIT, the tax authority can already collect the basic information necessary for the declaration from employers, financial service providers and others, so important data on salaries, contributions and tax benefits can be organized in a draft PIT and recommend to the taxpayer.

There are shortcomings, but this system already works quite well for the average person.

He told Portfolio Gábor Fajcsák is responsible for RSM’s tax activity.

In addition, international tax conventions and information exchange opportunities increasingly encompass foreign participation by individuals. In addition to changes that affect people, international tax regulations provide increasingly powerful tools for tax authorities to monitor corporate income generation and taxes more effectively to improve tax collection.

According to Fajcs, there are initiatives in many countries to digitize management data, often under the name of Estonia, for example. However, here, digitization is moving in a direction that accelerates the life of economic operators, for example, from the creation of electronic companies to the opening of electronic banks. The Hungarian way is different, but it is also true that we do not find many international examples similar to the efforts of the tax authority.

Online account is just a middle station

“Through the NAV online billing system, Hungary is already in the position that almost 99 percent of commercial invoices will be transferred to NAV from July and, according to the most recent information, invoices issued to the public as well They will be available from next April. From now on, it is not a great challenge to see if what is a cost for one company, if it has appeared as income for the other, has been included in the VAT return, has been paid ”, added the tax specialist.

According to the expert, the Hungarian tax authority has clearly targeted companies. On the one hand, by analyzing the data collected, the first draft of the tax returns of the companies can be prepared soon, first in the VAT modality, and on the other hand, to make the audit more efficient.

Looking at the direction of developments, the collection of information required for VAT and tax returns is becoming more and more intensive.

The SAF-T data collection, which will be implemented in part on the recommendation of the OECD and will collect a mass of very detailed information, almost all accounting and management data, will be even more brutal.

Taxing without a digital solution is a bigger risk than you think

“Here we are going in the direction that the tax authority will be able to see many other data in addition to the declarations, and can even carry out cross-checks and tax audits that affect several companies using data received from companies,” adds the expert.

Under the SAF-T project, the tax authority plans to introduce more than a dozen different data collections that digitally include management data in a predefined XML format, in addition to invoice data, such as inventory information or customer information and suppliers.

As can be requested from any company,

NAV can then combine this data element by element with the help of software data analysis, thus eliminating a significant part of manual human control.

These efforts are public, so an open book on the corporate side indicates in which direction to move to ensure legal compliance. With automated digital analysis of the sea of ​​data, it is not possible to compete manually, only with a solution of similar caliber.

The advantage that has been emphatically communicated by both NAV and the Ministry of Finance is the reduction in administration, which they aim to achieve by recommending corporate tax returns (first VAT and then expected tao). Another advantage, of course, is to increase the efficiency of NAV controls and thus reduce tax evasion, as well as improve voluntary compliance and tax morale.

The development of digital taxation will also benefit companies

NAV has also provided companies with a tool by providing a query option for databases created from submitted data. Based on this, an automated connection with the NAV databases can also ensure for the corporate side that we can perform a preliminary verification before submitting the returns and compare the data to be submitted with that found in NAV.

Thanks to the online invoice data service, this is already possible in relation to the invoices issued by the company or the data of invoices issued and sent by the supplier partners and subcontractors, but this range of data will be further expanded with improvements. “However, in addition to ex ante controls, there are other benefits that can be achieved through the use of digital solutions. Our digital tax modules that run on the Connectax platform are an efficient tool for various tax and financial administration tasks, ”added Fajcsák.

The company also offers a solution for the provision of invoice data online with national and international companies, the archiving of invoices, the automated production of M sheets for all companies, including the verification of the NAV, or the preparation of a declaration of VAT pre-audited. In addition to the time advantage, with the built-in control functions, the elimination and correction of certain errors and deficiencies can also be solved more simply and systematically. “We see deadlines, data delivery, data checks, custom settings, error checking as a volume of work that is almost impossible to do without errors. Our Connectax VAT MSheets solution can verify hundreds or thousands of supplier invoices and create M sheets. in a short time below.

Said the tax expert, adding that the Connectax platform’s VAT Manager solution runs dozens of checks on the data, checking many correlations, using NAV databases for these as well.

“As we work with many multis as CFOs, their needs have also bolstered some enhancements, and as NAV moves forward with digitization, more and more data will be available, available, compilable and valuable,” he said.

Currently, both data content and stakeholders are being trained in connection with SAF-T, but according to the tax expert, it can already be seen that this digital NAV data service may require an even higher level from the industry. business. The consequence of SAF-T is a software in the hands of the tax inspector that sucks up all the data and analyzes it, so the tax inspection will already be based on precise recommendations.

I think that five years from now, after some serious data analysis, the tax authority will only go to problem companies. It is worth taking small steps, but also starting with taxation with digitech solutions, so that NAV does not hit us.

This article was supported by RSM.