With effect from 1 march, the national collection of personal taxes and fees has been fully operational, while tax audits have begun in major enterprises。
So why does the firm audit? What are they examining? Today we learn what tax audits are, along with a letter with 10 years of experience in auditing。
I. Why a business responsibilities for a customs assessment
Financial reports or tax returns provided by enterprises abroad are done and provided by the enterprises themselves, whether there are errors or omissions, whether there are violations or not, whether or not there are deliberate manipulations of the data that are not reported, which are difficult to see by anyone but the enterprises themselves。
Thus, in order to avoid such a situation, the authorities require that financial data transmitted by enterprises abroad be reviewed by qualified third parties, who provide objective opinions and sign a stamp to assume third-party liability, thus ensuring to a greater extent the authenticity of the reported data。
One of the functions of tax audits is to identify potential tax issues in enterprises by analysing business processes and identifying gaps in the management of their operations and making recommendations for rationalization; and to provide early warning of taxes, which is a passive service as a proactive service。
Which enterprises are required to conduct tax audits
Enterprises with large losses during the year
If these enterprises need to make up for losses in subsequent years, a tax review report is required in the current year。
2. Businesses that may have problems with account processing
If an enterprise is not comfortable with its financial work, it may choose a professional agent to file a tax review report。
3. Enterprises with lower vat during the year
These enterprises may be of interest to tax authorities, at which point they may consider tax review reports。
4. Enterprises with 2-3 consecutive years of loss
For reasons such as tax assessment interviews, the tax authorities notify these enterprises of the issuance of tax review reports。
5. Enterprises with too low profit margins, which do not match income and assets
In the interest of tax security and for fear of being subject to tax scrutiny, these enterprises will choose to be taxed。
6. Enterprises to compensate for losses during the year
These enterprises are profitable in the current year and, if they need to cover losses from prior years, tax review reports are required for each year between the year in which the losses were made and the year in which the losses were made up to the previous year。
Iii. Benefits of tax auditing by enterprises
1. Reimbursable losses and reduced tax expenditures
The enterprise income tax act provides that in the event of a loss an enterprise can make up for the loss over five consecutive years, and in order for an enterprise to make up for the loss, the tax office will normally require a tax review report from the enterprise。
2. Proper declaration of corporate income tax
Tax collectors adjust the inappropriate accounting treatment of enterprises in their tax reviews and generally implement the enterprise income tax due throughout the year。
3. Reducing the risk of tax inspection
There are two types of tax checks:
1 tax professional inspection
2 management section desk inspection
The report of the tax-related service is sent to the internal revenue service, which receives downloads。
As a general rule, when a tax observes that an enterprise has a tax clearance report, it does not normally undergo inspection; when a desk check is made in the same management unit, when an enterprise has a tax clearance report issued by a tax-related service provider, it is generally not checked on the spot。
The issuance of tax review reports thus reduces the likelihood that enterprises will be inspected by the tax administration。
4. Use the capacity of a signed certified accountant or a registered tax collector to tax an enterprise
In carrying out tax reviews, certified accountants and registered tax collectors usually review the overall accounts of the enterprise, communicate with the enterprise, deal with improper accounting, request the enterprise to adjust its accounts and make proposals for rationalizing tax avoidance。
5. Advance detection of tax evasion by enterprises
At the tax review stage, it was detected that the enterprise had committed tax evasion, which required only the reimbursement of taxes and no fines。
