WHT – maintenance of due diligence • Xeltodigital.com

WHT – maintenance of due diligence

Issue

The withholding tax is deducted from legal entities and natural persons by payers registered or domiciled in Poland. It must be paid if you have specific incomes, such as dividends, interests or royalties.

It is most often associated with payment of dues by non-residents (cross-border transfers). It may occasionally apply to domestic payments, e.g. when paying a dividend to the domestic entity.

In 2019 the tax law was amended to include a new rule. Based on the aforesaid rule, the payer is obligated to maintain the so-called due diligence in establishing a WHT rate. He must check if a lower WHT rate is allowed or if the above-stated tax may not be withheld, as long as detailed regulations or double tax treaties permit so.

The business partner’s data which must be verified in this process are the following:

contact data,
registered office address,
financial statements,
organizational structure,
information on business nature,
bank account number,
VAT ID number.

Maintaining due diligence requires a number of time-consuming activities. In turn flows of big amounts of information may lead to mistakes if these tasks are performed manually.

XELTO DIGITAL’s task was to implement the solution aimed at automating due diligence maintenance in the process of calculating WHT.

Solution

XELTO DIGITAL’s experts have designed a robot that can automate the WHT calculation verification. Its operation has been programmed in accordance with the due diligence principle.

The robot’s first step is to load the input file that contains a list of business partners to be verified.
Next the robot collects basic data on the business partner from the Merit ERP system through a database inquiry.
Another step is to find the business partner in the base of the credit information agency (business intelligence agency) and download required information. The robot logs into the website through the user interface – just like a human would do. It uses the company name and its country of origin to search for the business partner in the base.
Two reports in a PDF format are downloaded. These are the so-called Verification Report and Global Family Tree Report. The files are saved in a relevant folder.
Information is scanned and required data extracted to a separate file in Excel.

Data obtained at this stage are as follows:

Basic data:

registration name,
all registers entered into the report together with their numbers,
registration address,
business address,
e-mail address,
telephone no.,
website;

Principal business activities:

business codes together with their descriptions

Financial data summary:

a detailed table containing financial reports from particular years, together with percent change with reference to each item

Employment-related data:

number of employees,
management staff table,
information on the company’s ownership structure;

Global Family Tree:

capital structure which the verified company belongs to.

Then the robot obtains data from such platforms as:

Google Street View,
Google search engine,
IBAN Checker site,
VIES system.

The collected information is as follows:

a screenshot after finding the address in Street View,
URL address of search results for the business partner’s address in Google,
confirmation of IBAN number and basic bank information,
confirmation of VAT number, together with a PDF file that approves the verification.

Once all above-stated steps have been taken, the following happens:

an interactive form is sent to the employee,
the complete form is received,
mailing with the business partner. The form is sent, so is the request for sending the Residence Certificate and transcript from the register of business activity.

The internal form (sent to the employee) includes mainly questions about contact data. They are asked in order to check credibility of the business partner.

Aside from the basic data that are partly entered by the robot, the external form also contains questions to the business partner. The are concerned with:

whether it is the final recipient of the payment for services,
how many business partner’s employees are involved in performing services,
whether it is the income tax payer or the fiscally transparent entity.

At the last stage, the robot collects all obtained information and draws up a final report. All auxiliary files are attached to the aforesaid report.

The human’s contribution in this process is limited only to creating an input file and verifying the final report. It is also possible to schedule the automatic robot activation, yet in this case the Client has opted for a manual service.

Robert Zymon

Area Leader for Finances Tax and Accounting, Chief Accountant, TRANS.EU GROUP S.A.

Customer’s feedback

As Trans-eu has many foreign business partners that are obligated to maintain due diligence, manual verification would be a serious challenge.

Since we have already cooperated with XELTO DIGITAL on some other project, the choice of the automation supplier was obvious.

I believe that the biggest added value was mutual creation of the robot concept. The project was led by two teams – starting from the idea and ending up with final testing of the ready-made solution. In effect we were provided with professional consultancy and very creative ideas throughout this period.

Eventually, what seemed to be a nightmare is now automatic. We are only responsible for checking the robot’s performance. Additionally, thanks to various registers kept by the robot, we know exactly what happened and when it happened