Download XBRL and Tax Authority Adoption

XBRL Adoption by Tax
Administrations
Eric E. Cohen
Chair, XBRL US; Co-founder, XBRL; Chief Architect, XBRL GL
[email protected]
What is XBRL?
A consortium
An archival format
XBRL
A transfer syntax
Supply chains
working to develop
XML
for business reports
A standardised way to design XML Standards
(Not a specific XML standard)
Specification: syntax and semantics of taxonomies
and instances
Optimized for Business Reporting
XBRL GL Fills the GAPS between GAAPS
Tax
Regulators Investors
Creditors
Lenders Website
Aggregators
One
way
One
way
XBRL
BUSINESS
BUSINESS
REPORTING
Intra system
2-way
ERP
Detail
G/L Packages
XBRL GL
Journal
Taxonomy
Transaction
Creation
(e-)Business
CRM
Accounting
recognition/
classification
Customers
•Orders
•Orders
•A/P
•A/R
X12, UN/CEFACT
Forum,
UBL,
HR-XML,
•Delivery
•DeliveryACORD, MISMO,
and other XML INITIATIVES
Suppliers
Detail to summary
2-way
Why are Tax Authorities Looking at
XBRL?
 EFiling, eGovernment and other efforts
 Representing current eFiling in friendlier face
 Financial statements and information
 Same payload useful for many purposes, comparable
 Note: different jurisdictions and the “books”
 Universal audit trail
 From transactions through the business reporting
supply chain
 Other business information
 XBRL: Summarized, aggregated, filtered, (sorted)
 XBRL GL: Underlying detail
XML and Other Reusable Formats
Attributes of “standard”
formats
XML HTML
Variable length fields
Yes
No field size limitations
ASCII Fixed
CSV
Excel
DBF
EDI
Yes
No
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
No
No
Yes
Extensible
Yes
*
No
No
*
*
No
Includes context or field
names (“rip and read”)
Yes
No
No
No
Yes
Yes
No
Cross-platform, nonproprietary, “universal”
Yes
Yes
Yes
Yes
No
No
Yes
Validation of files
Yes
No
No
No
*
*
No
Groups collaborating on
definition and interoperability
Yes
No
No
No
No
No
Yes
Selective digital signatures
Yes
*
No
No
No
No
No
Selective encryption
Yes
*
No
No
No
No
No
Standard Office import/export
Yes
Yes
Yes
Yes
Yes
Yes
No
Not verbose, smaller file sizes
*
*
*
*
*
*
*
Note: PDF is a very popular document exchange format, but is primarily designed for
human, and not computer, consumption. Likewise, TIF, GIF, JPG, BMP and other binary
graphics formats.
Note 2: UNICODE is an “update” to ASCII more useful in the
international context.
weakness
workaround
strength
One Framework
 One format
 Optimized for business reporting information
 Attributes of business reporting information
 Needs of business reporting information
 Lowering preparation/compliance burden
 Smoother collection of data of all kinds
 Reduction of things published to reconcile and track
 More common adoption by software developers
 Web Services
XBRL




Internationally Developed
Royalty-free
Optimized for business reporting
Entirely XML-family based
 XML, XML Namespaces, XML Schema, XLink
 Holistic
 One family, one framework, collaborative, compromise
for greater common good
 Interoperability - validation, comparison across data
sources
Oxymoron: Customizable Standards
 Standardized Customization
 X - Extensibility
 Greater community gets commonality
 Local community gets flexibility, customization
 A new world that brings customization and compromise
together
 Standards
 Standardized customization
 “Bread trail” from customization to standards
XBRL
 Post processed reporting
 Financial statements
 US
 IFRS
 German
 Japan
 Many other countries
 Bank call reports, tax forms, other formats
 Detail (XBRL GL)
 Entries, agents, resources, documents
 Universal audit trail
 Who is using the same version of the same accounting system as
1999?
Reporting
Ledger Database
Operations
Ledger
Reporting
Ledger Database
Database
Operations
Reporting
Operations
Reporting
Ledger Database
Operations
Reporting
Ledger Database
Operations
Reporting
Operations
Ledger Database
Consolidated
Management
GAAP
Statutory
<>
Customer, vendor, employee
KEY
Core
Saxon
Business
Multicurrency
Invoice, voucher info
Inventory, ValueReporting
KEY
Core
Saxon
Business
Multicurrency
Congress
Treasury
Tax Policy Analysts
Regulator
filing format
CLIENT
Department Level
Supp Info
Data
Submits
Regulations
News
Instructions
Filing formats
Reference
Extract
Division Level
Submits
Merge
Data
Supp Info
Data
Receives
Participants
Collect
Data
Dept Detail
Prepare
Report
Receives
Send
Group Level
Find
Sources
Supp
SuppInfo
Info
Forms
Forms
Query
Maintain
Definitions
Requests
Supp Info
Forms
Guidance
Checklists
Practitioner Aids
Organizer
Distributes
Processes
Integrated
Non-integrated
Outsources
ASP
Trading
Partners
Lenders
Other
Regulators
The
Market
Service
Regulator
Service
Extranet
Software developers
3rd Parties
Regulator
Tax Regulators Involved in XBRL
Australian Tax Office
 ATO recently joined the XBRL Consortium
 Considering XBRL 2.1 as the standard for
electronic filings
 Phased implementation:

Activity Statements (12 M filings annually)

Phase I scheduled for the end of 2003
 Anticipated benefits:

Time and cost savings

Enhanced information processing
Canada Revenue Agency
 Active member of XBRL Canada
 Presentation to follow
 (Slide from last meeting attached - was CCRA)
Canadian Value Proposition
CCRA
CCRA Taxonomies
XML Exchange/Transformation
Employers
Tax
VAT
GST
Excise
Corp. Tax
T2
New and Legacy Systems
Externally
Internally
XML Exchange/Transformation
STF
BI/DS
Individ.Tax
T4
T2 Benefits GST Others
XML Exchange/Transformation
CCRA XBRL Taxonomy
snapshot
XBRL
Chart of Accounts
(GAAP)
Instance
Document
Other
Gov’ts
Other
Gov’t Depts
TBD
Other Levels
of Gov’ts
TBD
Externally
German Tax Agency
(Oberfinanzdirektion München)
 Workgroup "XBRL Taxonomie Steuern" (Taxonomy for Tax Filing)
 XBRL Deutschland e.V. workgroup establishing XBRL as a standard
for electronic tax filing in Germany.
 The workgroup's agenda comprises:
 Development of a taxonomy (or expansion of the existing
taxonomy GermanAP) in order to render all pertinent data
 Processing and operating (data delivery workflow, assurance,
certifying data quality)
 Information exchange with international workgroups and other
jurisdictions focusing on this issue
 Back end processing still an issue
 Staffing
 Staffed by Oberfinanzdirektion München (tax authority), DATEV, and
software providers.
 Date of last update: May 27, 2003 - see
http://www.ofd.bayern.de/ofdmuenchen/
Japan - National Tax Agency
 What: Portion of Electronic Tax Filing, i.e. Financial Statements
 Crucial Project for XBRL Japan
 NTA will nominate/endorse any XML-based FS submission if it proves to
work
 Currently only XBRL is on NTA’s radar screen.
 Large Scale Project
 Impact on virtually all companies
 When: NTA plans to make tools available in November 2003, to go live
in March, 2004 (corporate tax filing for the year 2003).
 How: Based on the latest XBRL Specification
 Based on XBRL Japan’s “sample” Taxonomy
 Effect: XBRL-enabled accounting software products emerging.
 When actually started, it will accelerate adoption at large scale.
 Updated news as of Dec-03 as follows:











Their “e-tax” project is positioned as a part of implementation of e-government plan (“e-Japan”) using digital
signature. Adoption of XBRL is admitted as a one of acceptable formats for the financial statements
attached to filing information.
The financial statements received in XBRL format are to be printed in paper to validate the contents. Direct
linking to the agency’s internal system is considered difficult at this point.
This system is giving clear priorities on interface to taxpayers. Implementation of STP in NTA is left
unfulfilled.
Filers create tax returns in XML format in this system, and adoption of XBRL is admitted for some documents
in accompanying materials (corporate financial statements, business summary report, etc.)
Verification of numerical consistency and accuracy, between tax returns in XML and attached financial
statements in XBRL, is not available yet in a systematic way. The NTA should perform those procedures in
manual fashion in the meanwhile.
The reason of selecting Nagoya as the first jurisdiction to launch e-tax system: 1) it has 10% of the nation
wide tax revenue and 2) it has well-assorted kinds of taxpayers.
NTA has a system to perform complex validation, analysis and statistical work, called “KSK system” (a back
office system).
Software application for creating tax return will be distributed to taxpayers in a CD-ROM.
NTA can issue certificates of tax payment (electronic certificate of tax payment) to taxpayers, however NTA
cannot show those certificates to a third party since law prohibits it. Certificates are only seeable within local
government agency.
When a taxpayer presents a tax return to the NTA, he also prepares a copy of the return. The NTA affixes a
reception stamp on the copy for the taxpayer; however, it only proves that the NTA has received his/her
return, not that the copy is identical to the submitted return. On the e-tax system, the NTA returns e-mail that
says they received a return.
< Upcoming schedule >




February 2, 2004 – e-tax filing for income tax and consumption tax filing (for personal business) will be available
for the taxpayers in the jurisdiction of Nagoya Regional Taxation Bureau (including the prefecture of Gifu,
Shizuoka, Aichi and Mie).
March 22, 2004 – other than the tax filing listed above, e-tax filing for corporate tax, consumption tax
(corporate), tax payment for all tax items and some of the submission process for tax applications and
notifications will be available for the taxpayers in the jurisdiction of Nagoya Regional Taxation Bureau.
June 1, 2004 – all e-tax procedures started in Nagoya jurisdiction will be available throughout the country.
From September 2004 – e-tax filings for other submission processes for tax applications and notifications will be
available for the taxpayers nationwide.
Netherlands
 Dutch Tax and Customs Administration
 Mandate for eFiling by 1/2005
 Corporate tax: >90% in XML
 Portal access for 100% of corporate tax users
 Today
 Corporate tax: 1% today in XML
 Personal tax, based on simple XML: 90%
 Customs: 80% using an EDI model
 Options
 Offline filing based on standard eMedia Jul-2004
 Online web-based forms starting Feb-2004
 Considering XBRL
 Government initiative to reduce compliance burden
 XBRL can be catalyst for reducing costs
UK Inland Revenue





Electronic filing processes
Persuasive business case
Office of e-envoy
2004 optional filings
All compliance software vendors in place
 Also evaluating role within audit and VAT
Other XBRL International Members
 Irish Revenue
 Inland Revenue Authority of Singapore
 Inland Revenue Department of New Zealand
 Encouraging development and adoption
 Collaborating on financial statement and other
taxonomy development
 Collaborating on common issues regarding
security, audit and other issues - WIN-WIN-WIN
Information
FINANCIAL
STATEMENT
TAX
INSTRUCTIONS
Paper
Support
TAX FORM
Corporate Data feeds
direct access or extracts
Operational Data
Streamlined Processing
XBRL for Financial
Statements
XBRL G/L
Common Audit Trail
Processes
Business
Operations
XBRL for Business
Event Reporting
Internal
Financial
Reporting
External
Financial
Reporting
XBRL for Audit
Schedules
XBRL for
Tax Filings
Trading
Partners
CFO’s
Investment
and Lending
Analysis
Financial
Publishers
and Data
Aggregators
Companies
Participants
XBRL for
Regulatory Filings
Auditors
Software Vendors
Investors
Regulators/Stock exchanges
The architecture of XBRL
Taxonomy
Labels
Instance
Document
Reference
Definition
Concept
Presentation
Fact
Calculation
Formulae
Context
Entity
Period
Segment
Unit
CWA
Scenario
Precision
Why XBRL?
Definitions
XBRL adds to XML:
 Multi dimensional data
AKA Liquid Assets
contexts
 Mathematical relationships
between concepts
 Flexibility about how to
References
Presentation
GAAS I.2.(a)
USSGL 1100.00
Cash & Cash Equivalents
present items to users
XBRL
Item
 Aliases and other definition
relationships
 Links to authoritative
literature and guidance
 Financial reporting
vocabularies (taxonomies)
Reporting apps need these
even when using XML.
Calculations
Formulas
Cash = Currency + Deposits
Cash ≥ 0
Contexts
USD
FY2003
Budgeted
How XBRL Compares to Proprietary XML
Attributes of formats
XBRL
Proprietary
XML
Uses W3C standards for XML and related
technologies
Yes
Yes
Holistic framework (can, of course, have non-XBRL
framework)
Yes
*
Documented and proven agreement on syntax and
semantics of schema design and instance design
Yes
No
Groups collaborating on definition and
interoperability
Yes
No
Agreed upon tools for extensibility
Yes
*
Software vendor community developing tools that
help with specifics of syntax
Yes
*
Reuse of IP
Yes
*
weakness
workaround
strength
Why XBRL Linkbases Over “Standard” XML Schema
Attributes of formats
XBRL
Schema
alone
*
Yes
Human readable labels provided in various languages and
for specific purposes as part of deliverable
Yes
No
Guidance on hierarchy and presentation order for
applications
Yes
No
Guidance on hierarchy and (sub-)totals for applications
Yes
No
Standardized rules for extensibility of all of the hierarchies
Yes
No
Standard tools for identifying relationships across
taxonomies, such as “Same-as” relationships
Yes
No
Standard tools for relating concepts to underlying
authoritative literature and explanatory guidance
Yes
No
Prescribes and limits XML Schema for business reporting
Yes
No
A single hierarchy using complexTypes makes it easy to see
that hierarchy with standard tools like XML Spy
weakness
workaround
strength
Why XBRL for XML Reporting Standard?
 Community developed concepts with communication of
meaning, support, requirements
 Advantages to development community, users
 Greater picture
 More than just efficiencies as point-to-point, single use
filing
 Greater integration with internal systems
 Filing
 Definition, validation (PRE-validation)
 Extensibility
 Internal and then external sharing
XML Without Agreement …
 XML is “selfdefining?”
 Sure, this looks
simple:
… is just SYNTAX
 But how “self-defining” is this?
 To a computer (XML parser), they
are the same.
 The tags (element names)
provide no semantic knowledge
to the program.
 NEED TO COMMUNICATE
MEANING - across languages enter XBRL!
Some Options
 Ignore/disallow XBRL altogether
 XBRL as an option for filers
 Required statutory accounts in local XBRL format as payload
 XBRL based standards for one or more tax filings
 Mandate that XBRL be used for some or all reporting
 XBRL as an INTERNAL efficiency tool
 Compliance, audit, reporting to outsiders share common
language, tools
 Cooperate and collaborate for more global XBRL
adoption and usage
 Reduce everyone’s costs
Representative XBRL-enabled Products
 Shipping






Oracle FSG
PeopleSoft
SAP mySAP financials
Hyperion
Microsoft Business Solutions Navision, Axapta
Creative Solutions (et al.)
 Caseware
 About to ship
 Microsoft Office 2003 Add-in
XBRL Outreach
 XBRL in general
 Interoperability pledge
 Other efforts
 XBRL GL
 XBRL GL and audit/continuous audit community
 XBRL GL and electronic efforts
 XBRL and Tax XML
 We have common needs, interests and all fit in the
Business Reporting Supply Chain
 Not just technical needs
 Future development issues - including security/DigiSig
XBRL Issues
 XBRL is NOT point-to-point, proprietary schemas
 Ease of development and fast implementation
 Familiarity
 XBRL GL is MORE than tax authority needs
 Familiarity with Schemas and complexType
relationships
 XBRL Specification 2.1 and complexTypes
 Incentives
 Others