The utilization of standardized methods for the transfer of data has been practiced for decades. In particular, the financial industry adopted XBLR technology for the purpose of disclosing financial statement information to the authorities.
In the tax landscape, we have noticed a clear trend for the adoption of XML technology. XML – or Extensible Markup Language – is a markup language that defines a set of rules for encoding documents in a format that is both human-readable and machine-readable. XML is the standard for the disclosure of FATCA/CRS, DAC6 and CbCr data.
Recently, we have also observed a growing trend for disclosing transfer pricing local and master files via XML. XML enables the tax authorities to store the core data in a structured manner, in order to effectively audit the disclosed data. We expect this trend to continue and to gain relevance across more jurisdictions and tax types. Some early evidence for this trend can be observed with the introduction of the Standard Audit File for Tax (“SAF-T”). SAF-T is the OECD standard for disclosing tax data in an XML format. Currently, SAF-T is in force in Austria, France, Lithuania, Luxembourg, Poland, Portugal, and Norway.
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