What are the principal procedural obligations of a taxpayer, that is, the maintenance of records over what period and how regularly must it file a return or accounts?
Tax (2nd Edition)
Specific obligations are prescribed with regard to the various types of tax obligations incumbent on a taxpayer. As a general rule, bookkeeping obligations are set for all taxpayers performing economic activities, while the obligations related to filing tax returns depend on the type of taxpayer, its activity etc. Starting 2016 the new Tax Procedure Code introduced a new penalty imposed on taxpayers for not declaring the taxable base, which is 29% per annum and is computed until the payment of the assessed liability. In reality, this penalty is a sanction for all additional liabilities assessed through a tax audit because under the Romanian tax system any tax due has to be initially declared by the taxpayer. Thus, the beginning of a tax audit constitutes a very important deadline for making any final corrections in order to avoid such a penalty. Health checks for every tax period are becoming a real necessity for any taxpayer.
In respect of filling the accounts, according to the Romanian Accounting Law, depending on the threshold of the entity, the Romanian companies and the Romanian branches of foreign companies from countries other than those in the European Economic Area (SEE), are required to prepare semiannual accounting reports and annual Financial Statements. There are certain thresholds above which the annual financial statements shall be audited.
The branches opened in Romania by companies from countries members of European Economic Area (SEE), according to the Romanian accountancy law, are required to submit annual accounting reports.
In addition, the Ministry of Public Finance annually issues regulations requiring interim financial reporting as of 30 June. For the last years, this requirements applied to entities that reported in the previous financial year an annual turnover exceeding RON 220,000 (i.e., app. USD 56,000). Separately, the entities that opt for a financial year different from the calendar year under the conditions set out in Accounting Law, are required to file, in addition to the annual financial statements prepared for the selected financial year, annual accounting reports as of December 31st of each year.
We have limited our response to this question to obligations under Australia’s income tax laws.
Retention of records
Australia operates a self-assessment taxation regime which means that all taxpayers are obliged to retain their records for certain periods of time to substantiate their self-assessed tax positions. Statutory evidence records must be retained for five years after the records were prepared or obtained, or the completion of the transactions or acts to which those records relate, whichever is the later.
There are some exceptions to the time frames outlined above. For example:
- if an income tax assessment is amended, records must be kept for the later of five years after those records were prepared or obtained, or the completion of the transactions to which those records relate or the end of the assessment period as so extended by agreement or on the Commissioner’s application to the Federal Court to extend the period to amend an assessment;
- a taxpayer that makes a capital gain or loss from a CGT event is required to retain their records for five years after it becomes certain that no CGT event (or further event) can happen;
- a taxpayer that has incurred a tax loss should retain their records substantiating the loss until the later of the end of the statutory record retention period or the end of the period for reviewing assessments for the income year in which the loss is fully deducted or the net capital loss is fully applied; and
- in circumstances where the Commissioner of Taxation (Commissioner) can make a determination in respect of a taxpayer (e.g. under the transfer pricing regime in Division 815-B of the Income Tax Assessment Act 1997 (Cth) (ITAA97) or under the Diverted Profits Tax (DPT) regime, discussed further below at questions 9 and 10, respectively). Records ought to be kept for 7 years after the day on which the Commissioner issues a notice of an assessment.
In circumstances where a formal dispute arises, the taxpayer ought to retain relevant records until any objection or appeal is finally determined.
In addition, a breach of certain record keeping requirements set out in the Taxation Administration Act 1953 (Cth) (TAA) for a matter that is subject to an application of the transfer pricing rules in subdivisions 815-B or 815-C of the ITAA97, will result in the taxpayer being taken not to have a reasonably arguable position for the purposes of the application of the administrative penalties rules. The requirements under these record keeping rules include that the required records: (1) are prepared before the time by which the entity lodges its income tax return; (2) explain why the relevant subdivision does or does not apply, and (3) explain why the application of the subdivision to the matter in question best achieves consistency with the OECD’s transfer pricing guidance material.
Taxpayers are required to keep records in English so as to enable a person’s assessable income and allowable deductions and any credits to which the person is entitled, to be readily ascertained. The Commissioner’s Taxation Ruling “TR 96/7 - Record keeping” outlines the general principles concerning the retention of records.
To be filed
Corporate income tax return (Form 2065)
Within 3 months at the end of each tax year
For companies closing their accounts on December 31st, it is to be filed by the second working day following May 1st of the following year
Transfer pricing return (Form 2257) includes general information about the group’s activities and intangible assets of and more specific information about the French subsidiary transactions with related entities
Within 6 months of the filing of the corporate income tax return
Country by country report (Form 2258)
Within 12 months at the end of the tax year
Value added tax returns (Form 3310)
On a monthly basis
Contribution on added value of enterprises return – Contribution on companies added value (CVAE)
By the second working day following May 1st of the year following the year in which CVAE is due
Investment income ('Imprimé Fiscal Unique', Forms 2561) concerning entities paying investment income (dividend and interest)
By February 15th
General statute of limitation
Maintenance of records / booking
General tax statute of limitation
31 December of Y+6
Corporate income tax / value added tax VAT / Contribution on companies' added value CVAE
31 December of Y+3
31 December Y+1
Canadian-resident taxpayers, including individuals, corporations and trusts, are required to file income tax returns each year. Non-residents may also be required to file tax returns in Canada if they are employed or carry on business in Canada or dispose of certain types of Canadian property.
Most individuals are obliged to file tax return for the year by April 30 of the following year; the deadline for self-employed individuals and their spouses is June 15, but the interest on any balance of taxes owing for the year (after instalment payments) begins to accrue after April 30. For corporations, income tax returns must be filed within six months after the end of each fiscal year.
Taxpayers are generally required to maintain all books and records necessary to calculate and verify their taxes payable (and any other amounts required to be deducted, withheld or collected), for six years after the end of the tax year to which the records relate. In practice, this means that tax records may have to be kept for much longer than six years; a tax return may contain information that can only be verified with much older records.
Taxpayers typically bear the onus of proving that their tax returns are correct, and failure to maintain relevant records may result in the denial of their filing position. Records are generally required to be kept at the taxpayer’s place of business or residence in Canada, and most records may be retained in electronic form.
Belgian corporate entities must file their annual corporate income tax return electronically. Strict deadlines apply to these filings.
Upon request from the tax authorities, Belgian corporate entities also have the obligation to provide all documents that are necessary for establishing the amount of taxable income. They must conserve these documents for a period of 7 years commencing on 1 January of the year following the audited financial year.
The principal procedural obligations of a taxpayer depend on its kind, e.g. corporation or an individual. In general, all taxpayers should maintain records and submit tax returns.
The accounting and commercial information, as well as any other information and documents which are significant for the taxation and the obligatory insurance contributions, shall be kept by the liable person in the following terms:
- pay ledger – 50 years;
- accounting registers and financial reports – 10 years;
- documents for tax-insurance control – 5 years after the expiration of the prescription term of the tax due which they are related to;
- all other tax documents – 5 years.
All taxpayers are obliged to submit annual tax returns after the expiration of every calendar year. The deadline for corporations is 31st of March of the following year and for individuals is 30th of April.
VAT registered taxpayers are obliged to submit VAT tax returns and accounting registers until 14th of the month inclusive, following the month, to which they refer.
A number of other specific tax declarations should also be filed.
Taxpayers are required to file tax returns each year. Tax returns are generally due by April 15th of the following calendar year for individuals, and for corporations by the 15th day of the third month following the end of its fiscal year. Automatic 6 month extensions of time to file a return are available. Companies (and certain individuals, such as self-employed individuals) generally are required to make quarterly payments of their estimated tax liability.
Generally, taxpayers are required to maintain adequate records for at least three years. Records must be kept for as long as the statute of limitations is open for that item. Thus, in certain situations where the statute of limitations is longer than three years, records must be kept for 7 years or even indefinitely. In addition, many substantive provision of the tax code and regulations have their own separate record keeping requirements.
According to Ukrainian legislation, the main procedural obligations of a taxpayer are:
- to be registered with the tax authorities;
- to keep records of income and expenses on the basis of primary accounting documents, ledgers, and financial statements;
- to file a tax return;
- to ensure the storage of documents related to fulfilment of tax obligations for not less than 1095 days from the date of submission of the tax reports, for preparation of which these documents were used.
Tax returns are usually filed at the end of the tax reporting period. Tax reporting periods may vary depending on the type of tax, peculiarities of a taxpayer, etc.
There are three typical tax reporting periods: monthly, quarterly and yearly. Tax returns for the monthly reporting period shall be filed within 20 calendar days following the last calendar day of the reporting month. Tax returns for the quarterly reporting shall be filed within 40 calendar days following the last calendar day of the reporting quarter. Tax returns for the yearly reporting period shall be filed within 60 calendar days following the last calendar day of the reporting year. Notwithstanding the abovementioned, in some cases, tax returns may be filed at other intervals.
For income tax purposes, books and records and supporting documentation must be retained for six years after the end of the tax year to which they relate. However, the retention period for VAT purposes is seven years so this is the effective minimum.
Taxpayers are required to submit annual returns of income for income tax purposes, accompanied by audited financial statements complying with IFRS if the taxpayer is a company, or an individual with income above a certain threshold (currently EUR70,000). There is a self-assessment system for income tax, under which taxpayers must submit an estimated tax return part-way through the tax year accompanied by payment of half the estimated liability, and the balance of the estimated liability at the end of the tax year. The final tax return is submitted after the end of the tax year, together with payment of any final balance. See the answer to question 5 for details of due dates.
Employers are also required to submit returns of employees’ pay and tax deducted under PAYE.
Special Defence Contribution, commonly known as SDC tax, is payable on rents, interest and dividends. Subject to certain exemptions, companies making such payments must deduct SDC tax at source and account for it to the Tax Department. Taxpayers receiving rents, interest or dividends from which SDC tax has not been deducted must submit semi-annual returns together with payment of the amount due.
Taxpayers must report any capital gains as they arise. However, as capital gains tax only applies to a very limited range of assets this is not an issue that affects most taxpayers.
There is a separate tax system for qualifying businesses engaged in international shipping, which is outlined in the answer to question 15.
The principal tax procedural obligation in the UK is to file a tax return. Companies are required to provide self-assessments of their corporate tax liability on delivering the return. Returns must normally be filed within 12 months of the end of the accounting period for which the return is made.
Most employees pay their income tax through the employer company’s payroll system and are therefore not required to submit an individual tax return. However, where an employee’s tax affairs are complicated in some way (for example, by having a source of untaxed income) or where an individual is self-employed, that person is required to complete a tax return.
Income tax returns must be filed annually. VAT and withholding tax returns are filed monthly. Individuals generally file VAT returns every six months.
Taxpayers are required to maintain tax and accounting records for 7 years from the filing date of the income tax return.
Tax returns must be filed annually, nine months after the financial year end of a company. For accounting periods ending on or after 1st January 2016, all companies registered in Gibraltar (as well as any other company with income assessable to tax in Gibraltar) are required to file a tax return. Previously, only companies with income assessable to tax in Gibraltar were required to file a tax return.
Following its incorporation and upon commencement of operations in Israel, a corporate entity must register with the Israel Tax Authority (the “ITA”) and open income tax; value added tax (“VAT”) and withholding tax files as well as a file with the National Insurance Institute (the “NII”).
Taxpayers are required to file income tax returns annually and include a self-assessment of the tax liability. Absent extensions that may be applicable or granted, the tax return filing deadline is 5 months following the end of the tax year for which the tax return is filed. Audited financial statements and a tax–accounting reconciliation report are generally required to be submitted with the annual tax return. In addition, certain monthly reports are required to be filed with respect to income tax advances, VAT, withholding taxes, and National Insurance.
Taxpayers are required to retain documentation until the later of 7 years from the end of the tax year for which such documents relate or 6 years from the submission date of the tax return.
Taxpayers are required to file a tax return each year. Tax returns of individuals are generally due by March 31st of the following calendar year, and those of corporations, following the approval of the statutory financial statements but at the latest six months after the closing date of the financial statements. An extension of time to file the return can be requested. Taxpayers are generally required to pay their taxes through monthly instalments.
Typically, taxpayers are required to maintain adequate records for at least ten years.
Companies shall submit their annual tax return relevant to corporate income tax, Regional Tax on Productive Activities (IRAP) and VAT by the end of the nine month after the end of their tax year. The tax year of companies coincides with their financial year.
For tax purposes, companies shall keep and maintain daily accounts, inventory accounts, VAT register as well as any other necessary account until the statute of limitation for the assessment of the relevant taxes is expired.
Individuals shall file their tax return every year. The tax year of individuals is the calendar year. The deadline is usually the end of September of the year following the relevant calendar year.
According to the tax law, the records shall be maintained for the taxpayers for a period of ten years. As a rule, the income tax return, both by individuals and corporate entities, must be submitted yearly by the end of May, respecting to the tax period of the previous year.
The principal procedural obligation of a tax payer is to file accurate returns for all tax obligations and to pay tax on or before the due date. The due dates for filing tax returns depend on the return in question being filed, as set out below:
(a) Individuals are required to file a self-assessment tax returns not later that the last day of the sixth month following the end of a calendar year;
(b) Taxpayers, other than individuals, are required to file self-assessment tax returns not later than the last day of the sixth month following the end of the accounting period;
(c) An employer us required to file pay as you earn (PAYE) returns before the tenth (10th) day of the month following the end of each quarter;
(d) A taxpayer registered for value added tax (VAT) is required to file VAT returns not later than the twentieth (20th) day of the subsequent month.
A taxpayer is required under the Tax Procedures Act, 2015 to maintain all the documents required under a tax law for a period of five years from the end of the reporting period to which the documents relates.
There are a number of procedural obligations for Polish taxpayers relating to particular taxes.
Taxpayers of Corporate Income Tax are obliged to maintain accounting books that allow the determination of the taxable income and payable tax. They are obliged to file annual tax returns by the end of the third month of the following tax year. Together with the tax returns the annual financial statements and approving resolutions should also be filed. Although there are no monthly tax return filing obligations, taxpayers are obliged to make monthly advance payments. Upon the deadline for filing the annual tax return, taxpayers must also pay tax calculated on the annual income less the monthly advances paid during the tax year.
VAT taxpayers are also required to maintain a VAT sale and purchase register. In most cases, filing monthly VAT returns is required by the 25th of the month for the preceding month. Within the same deadline the VAT due for the month is payable. VAT taxpayers are also obliged to file the Standard Audit File for Tax on a monthly basis which provides information on VAT sales and purchases. VAT regulations impose certain other procedural obligations in the case of taxpayers carrying out intra-Community supplies, or intra-Community acquisitions of goods or services.
Specific tax compliance obligations are also imposed on taxpayers in the case of other specific taxes, such as the Tax on Real Estates, the Tax on Means of Transport, Excise Tax, Bank Tax, and the Tax on Civil Law Transactions, etc.
Taxpayers are obliged to keep their tax records and relevant documents connected with the tax records until the tax liability for a given year becomes time barred. The statute of limitation of tax liabilities in Poland is five years counted from the end of the year in which the tax was payable. Therefore, in practice, tax payers are obliged to keep their tax records for six years.
It is very common practice in Japan that corporate taxpayers adopt the so-called ‘blue-form’ tax return filing for their Japanese corporate income tax, which is a system of tax computation and return filing based upon double-entry bookkeeping system. Under this system, corporate taxpayers are required to keep their books and records for a fiscal year using double-entry bookkeeping system.
Then, based upon such books and records, corporate taxpayers prepare and file a corporation tax return, once a fiscal year, within three months (assuming one-month’s extension is secured per the prevailing practice) from the close of the relevant fiscal year. Similarly, for Japanese consumption taxes or VAT, corporate taxpayers keep books and records, and prepare and file a consumption tax return, once a fiscal year, within two months from the close of the relevant fiscal year. There are similar return filings for local taxes.
Corporate taxpayers are obligated to maintain such books and records for seven years, and have to provide them to the tax authority for inspection if tax audit is conducted.
In the Netherlands a corporate taxpayer is obliged to maintain its books and records for seven years following the end of a book year. In general, a book year is the calendar year.
A corporate tax payer is obliged to file a corporate income tax return electronically within five months after the end of a book year. This means for a tax payer using the calendar year for its book year, the corporate income tax return should be filed before June 1st. However, if the filing is handled by a professional tax adviser registered with the Dutch tax authorities, an extension for filing of the tax return of 11 months can be obtained. This implies that for instance the corporate income tax return for the year 2017 should be filed before May 1st, 2019.
Individuals and legal entities deemed as Mexican tax residents are required to register under the Federal Registry of Taxpayers, specifying a tax domicile within national territory.
Additionally, Mexican tax residents are bound to maintain accounting records that in general terms consist of books, ledger entries, account statements, inventories, notices to the Federal Registry of Taxpayers, tax returns, financial statements, information concerning shares or securities held, customs documentation and documentation supporting the materiality thereof.
Accounting records ought to be duly kept for a period of five years (some exceptions could apply) and digitally filed before tax authorities on a monthly basis.
Generally speaking, taxpayers are also required to file provisional income tax returns on a monthly basis and a definitive annual tax return. Concerning value added tax, taxpayers ought to file monthly returns, same that are considered as definitive.
Depending on the taxpayers’ activities or corporate structure, the filing of informative tax returns regarding their participation in offshore legal entities or income perceived in jurisdictions considered to be subject to preferential tax regimes in terms of Mexican law could be mandatory.
It is of paramount importance to point out that failing to comply with the abovementioned formal obligations, whether it be the registry under the Federal Registry of Taxpayers, properly maintaining accounting records or filing the corresponding returns, could result in infractions or even in the commission of tax crimes sanctioned with prison.
Entities and individuals that do business in Norway must file an income tax returns within 31 May the year following the income year. The return must be submitted electronically. An extension is possible to obtain.
Enterprises that are liable to VAT are obliged to submit VAT returns. As a main rule, the VAT returns must be submitted every two months.
Individuals receive a tax return from the Norwegian Tax Administration in March/April. The tax return gives an overview of the taxpayer’s income, deductions, assets and debts for the last income year. The taxpayers must check that the information in the tax return is correct and complete. If there are no changes to be made, there is no need to submit the tax return. If a taxpayer needs to make changes, the deadline for submitting them is 30 April.
The key regulatory authorities in Germany are the German Federal Ministry of Finance (Bundesfinanzministerium), the German Federal Central Tax Office (Bundeszentralamt für Steuern) and the Ministries of Finance of the 16 Federal States with their regional and local tax offices.
The German Federal Ministry of Finance is the main tax authority in terms of preparing draft tax bills and issuing (internal) guidelines for the interpretation of tax provisions and rules. It negotiates the German double taxation agreements and has wide ranging competences in international tax law matters.
The Federal Central Tax Office is the main tax authority dealing with international tax law matters under the control of the German Federal Ministry of Finance. For example, the refund of withholding tax on dividend payments or royalties by foreign entities is usually processed through the Federal Central Tax Office.
The Ministries of Finance of the German Federal States are the supervising authorities for the regional and local tax offices. The regional tax offices control and support the local tax offices in terms of general management and in certain tax law matters. The local tax offices are the main reference point for the day-to-day tax matters of the taxpayers like reviewing tax returns, issuing tax assessments and collecting taxes. Taxpayers may also apply for a binding tax ruling with respect to the tax consequences of a planned structure or transaction.
The time needed to resolve an issue with the local tax office depends on the scope and the complexity of the issue at hand. Regularly, standard issues can be directly resolved with the competent local tax office in a cooperative way. Many local tax offices have shown to follow a hands-on approach. However, more complex issues may require more extensive negotiations involving the regional tax offices and even the German Federal Ministry of Finance. Such negotiations may last several months.