In Ireland, the liability of corporations to pay tax is pretty steep. But that is hardly the source of worry for most organizations operating out of that country. Complying with the various legislations enforced to file the tax returns seems to be the area that companies find the most challenging. A couple of years ago, the government mandated that all tax returns are to be filed in a language called XBRL, eXtensible Business Reporting Language. This is considered to be the international standard for electronic sharing of business information. Information in financial statements is given a label and tagged correspondingly to identify it with standard accounting terms and tax concepts.
While XBRL uses a series of tags and numbers, Inline eXtensible Business Reporting Language (iXBRL) makes XBRL documents understandable by both computers and humans.
Using the IXBRL format to file financial statements is mandatory for almost all corporation tax payers in Ireland. Although, there are some exceptions to this rule. If all the three following criteria are met, the organization in question can be pardoned from filing returns in iXBRL:
- Total of balance sheet ≤ €4.4m;
- Turnover annually ≤ €8.8m an; and
- Average number of employees ≤ 50
The financial statements in iXBRL are submitted as a portion of the CT1 tax return via Revenue Online Service (ROS).
Why the insistence on iXBRL?
Assessing possible tax hazards forms an important part of Revenue’s goals. Financial Statements contain important data that can aid in the process. Having this data presented in a format that can be easily read by machines and humans alike makes it possible for Revenue to:
- Analyse accounting ratios for different companies
- Develop company profiles with ease
- Aid management by providing access to important statistics
- Carry out audits and reconciliations
- Design models that could predict potential tax hazards
Revenue has also expressed that having an electronic record of financial statements can be useful to companies who would need revenue compliance interventions during audits.
In light of the mandate to make all financial statements iXBRL compliant, it may be the right time for an organization to assess current functioning and readiness of preparing a government acceptable report. Data Tracks can help by providing the tagging service in a timely, cost effective and seamless manner. We have a licensed software that has helped over 17,000 clients convert their financial statements prepared in Word or Excel into iXBRL. Linking items in the financial statement to a standard list of labels in XBRL, known as “taxonomy” using a matching process is carried out by our specialist team. We select the most appropriate tags and apply them to the financial statement data. Each iXBRL tagged document is subjected to two levels of quality review to ensure that the document satisfies the Irish Revenue’s validation rules.
If you are on the lookout for help with your compliance needs, you’ve read the best blog in the business and landed on the most trusted and robust service provider. Get in touch with us today at email@example.com