Audits and Tax Due Diligence

The instability of and frequent changes in tax regulations and the growing demand for independent tax audit services (to provide greater business transparency, such audits are carried out by an auditor other than the auditor of financial statements) led to the formation of a team of experts specializing in tax audits and due diligence reviews.

Tax audits (due diligence reviews) form a special and exceptionally effective part of tax advice. Their main goal is to check taxpayer compliance with tax settlement obligations, to identify any potential irregularities and potential tax risks, as well as to present ways of curing the irregularities and actions leading to eliminating or minimizing the identified risk.

However, the purpose of tax audits is not only to check the correctness of current and future tax returns. Tax audits are also an efficient tool for optimizing the taxpayer’s operations and can have a direct bearing on its liabilities. In short, the end result of an audit (due diligence) is to offer new solutions that will be more tax efficient than those applied to date. This aids and informs the decision-making process. In consequence, tax audits can help you to improve your financial result.

Tax audits may result in two types of tax savings:

• savings (meaning the absence of additional “tax assessments” or tax sanctions) generated as a result of removing or correcting any irregularities identified in the course of an audit;
• savings created as a result of implementing new solutions ensuring maximization of profits and optimization of tax burdens.
  

Our due diligence team renders services including:

• verification and assessment of the correctness of calculation and payment of tax liabilities, as well as identification of possible dangers and development of cure programs;
• verification of current tax settlements and proposal and implementation of optimal structures to improve financial liquidity in terms of income taxes, excise tax and VAT;
• preparation of tax risk reports regarding merger or acquisition plans involving a business, entity or assets.
  

In response to the increasing professionalism of inland revenue services in checking the correctness of prices used in transactions between affiliates (connected by equity or personal links), we have developed the following two types of tax audit:

• an audit of the transfer pricing policy adopted by a capital group,
• an overview of tax documentation prepared in connection with transactions with affiliates.
  

These two tax audits are gaining in popularity with our clients.