The Ukrainian Ministry of Finance introduced an optional standard audit file for tax (SAF-T) system on January 1, 2023. Here’s a comprehensive guide to understanding SAF-T and its implications for businesses in Ukraine:
1. When will SAF-T become mandatory and who Is obligated to submit it?
The Ukrainian tax authority has outlined a phased implementation timeline for SAF-T:
- January 1, 2023: SAF-T introduced on demand for large taxpayers.
- January 1, 2025: Large taxpayers, defined as entities with revenues exceeding 500 million hryvnias (approximately €11 million) over the last four consecutive quarters, will be required to comply with periodic mandatory submissions.
- On 1 January 2027: SAF-T will become mandatory for all taxpayers, including small and medium-sized enterprises and other entities that may require additional support to meet the requirements. This expanded scope will ensure comprehensive data collection for better oversight and transparency.
The phased approach will ensure a smoother transition by gradually onboarding taxpayers into the system, minimizing operational disruptions while achieving compliance.
2. What are the key benefits of the Ukraine SAF-T?
The implementation of SAF-T is of pivotal significance in the modernization of Ukraine’s tax system. The adoption of an international standard and a digital-first approach is intended to facilitate enhanced VAT collection and improved transparency, contributing to the creation of a more business-friendly environment. Key benefits include:
- Streamlined reporting: The structured format simplifies reporting processes, reducing administrative burdens on businesses.
- Reduced errors: Automated data entry and validation minimize inaccuracies in financial reporting.
- Facilitated audits: Comprehensive and easily accessible data enable smoother and faster audits, saving time for both taxpayers and authorities.
- Fraud prevention: Detailed reporting discourages fraudulent activities by increasing the visibility of business transactions.
Additionally, the most recent SAF-T UA 2.0 version, published in November 2024, includes an optimized XML structure with fewer mandatory fields and clearer data type requirements, aligned with national accounting standards.
The long-term objective of SAF-T is to encourage a culture of compliance, which will benefit both the government and businesses by improving trust and efficiency.
3. How to generate and submit Ukraine SAF-T?
Large taxpayers must be prepared to submit SAF-T files upon request by the Ukrainian tax authority.
The SAF-T UA, known as the OECD-format transactional level submission, will be requested in advance of regular tax audits. The taxpayer will have two days’ notice to produce the report. The schema for SAF-T includes:
- General ledger accounting entries
- Sales ledger
- Cash receipts
- Fixed asset register
- Intangible asset movements
- Tax reconciliation
Businesses should invest in systems that can create SAF-T files in the required format. This ensures compliance with minimal problems and makes preparing for audits easier. Regular internal reviews of SAF-T readiness can also help businesses stay prepared for requests.
4. What are the challenges for businesses?
Implementing SAF-T in Ukraine presents several challenges for businesses:
- Complex scenarios: Businesses may face difficulties in handling complex transactional scenarios that require extensive data preparation and reporting.
- Cost implications: Adapting to SAF-T regulations may involve significant costs, including updating or purchasing new accounting software, hiring consultants, and training employees.
- Technical errors: Transitioning to a digital reporting system introduces risks of technical issues, such as data mismatches or software incompatibilities, which could lead to compliance issues.
- Training and awareness: Businesses will need to invest in training programs to familiarize their staff with the new system, ensuring accurate and timely submissions.
Addressing these challenges will require proactive planning, adequate resource allocation, and a commitment to building robust digital tax compliance systems.
5. How can SNI help you?
SNI offers a tailored solution to help businesses comply with SAF-T requirements seamlessly. Key features of SNI’s solution include:
- Customization tables: These tables are specifically mapped to meet the Ukrainian Tax Authority’s requirements, ensuring compliance with all regulations.
- XML processing: The solution supports the creation of e-invoices and SAF-T files in the required XML format, making the reporting process faster and more accurate.
- User-friendly cockpit: SNI’s interface allows users to manage their SAF-T files efficiently, reducing the time spent on administrative tasks.
In addition to these features, SNI provides ongoing support and updates to ensure businesses remain compliant as regulations evolve. By using SNI’s expertise, businesses can ensure a smooth and efficient SAF-T implementation.
