Are you prepared? The tax inspection could come!
A week ago, ANAF has released the press a list of the companies where tax inspections started or are planned to be initiated. The concerned main area is the retail.
In this context, we remind you that there is a high risk for the tax inspections to establish supplementary amounts to be paid. For example, in the first semester of 2015, the fiscal inspection established additional obligations of 10.2 billion lei, growing more than 100 % compared to the same period of last year.
Also, we notice the tendency of the tax inspectors to notify more frequently the criminal authorities, after the inspections are carried out, on the basis of some suspicions of tax evasion. Regardless the result of these actions, take in consideration that a criminal complaint will create an additional pressure for the business.
Contexpert recommends you to have both a preventive behavior before the beginning of the verification and a professional approach during the control. Below we present a few tips from our team for the inspections that will be in progress, according to the current Fiscal Procedure Code.
Attention! One of the main areas of tax inspections is, lately, VAT deductibility.
What are the favorite areas for the tax inspections?
- the economic substance of the transactions (in accordance with art. 11 of the Tax code)
- intra group transactions
- transactions with offshore companies
- mismatches between the financial results and paid taxes
- services and licensing contracts
- benefits schemes for the personnel
- financial results fluctuations (significantly profit followed by loss etc.)
- losses in a period more than three years
- the lack of all tax statements from the past 12 months
- frequent corrections of the fiscal statements
- non required VAT refund, although there are amounts to be recovered
- the renunciation to VAT reimbursement after submitting the request
- transactions with inactive companies
- acquisitions from companies without a valid identification code
What are the stages of the tax inspection?
- The tax inspection notification containing the taxes which are the subject of the inspection and verified period is communicated
- After 15 or 30 days (in case of major contributors) the inspection is initiated. However, there are situations in which the tax inspection may start immediately after the communication of the notice
- The inspection lasts between 3 and 6 months (for the large taxpayers), but it may be extended due to suspensions that can be arranged in order to perform the cross-checks or to request additional information
- Written explanations can be requested
- A draft of the fiscal audit report is presented
- The final discussion takes place between the company and the inspectors
- In 3 working days the company presents its point of view on the report (it is a decisive moment which you must pay maximum attention because it can influence the result of the inspection!)
- The tax inspection report is finalized. It includes also the tax authorities opinion regarding the taxpayer’s point of view
- Within 30 working days after the inspection’s completion date the tax decision is issued
- The fiscal report prepared by the tax inspection authorities can be the basis of the referral documentation of the criminal prosecution authorities
- Within 30 days after issuing the decision, the contestation on the tax inspection report and the tax decision can be submitted
- In 45 days the contestation must be solved
- If the solution is not favorable, the taxpayer can appeal to court
Some tips for the companies during the inspection:
- Carefully go through the rights that come under the Fiscal Procedure Code
- Cooperate with tax inspectors, but without becoming familiar
- Answer strictly to the question in the legal limits, without providing more information than necessary
- Keep focused on the topic, do not offer other information about the company, other than those requested and which fall within the legal framework
- It is preferable to give written answers
- Consult a tax adviser to avoid unpleasant situations (such as providing information and formulating answers that could be interpreted against the company)
What documents should you provide during the inspection?
- All the financial and accounting documents
- Fiscal Evidence Register
- Supporting documentation for the services received
- Justifying documents for the expenditure
- Documents related to the inventory shortages, to the technological losses, documents related to fixed asset disposal, trade discounts and financial discounts etc.
- Transfer pricing file if it is required during the inspection
- Documents which attest deductibility right or attest VAT exemptions.
- Correlations between trial balances, VAT journals and VAT returns
- Documents which attest VAT payment
- Tax residency certificates for non-residents services suppliers.
