A tax audit is an examination of the financial documents of an enterprise/organization or an individual entrepreneur in order to verify the correctness of tax payments.
Tax audits can be in-house or on-site .
A desk tax audit is conducted based on the relevant order of the tax authority and, taking into account the statute of limitations, it may cover the entire audited period or a specific issue, for example: determining the correctness of value added tax registration, the correctness of the VAT declaration of issued and/or received invoices/customs declarations, the correctness of the deduction of taxes withheld at the source of payment, etc.
When conducting an in-office tax audit, the tax authority has the right to request the submission of accounting documentation and/or information related to taxation, in accordance with the procedure established by the Tax Code.
A desk tax audit is conducted without visiting the person’s place of business, based on the information related to the person’s taxation available to the tax authority, as well as explanations and accounting documentation received from the taxpayer.
There is no deadline for conducting a desk tax audit.
An on-site tax audit is conducted based on a relevant decision of the tax authority, and the taxpayer is notified in writing or electronically (by sending a message to the taxpayer’s authorized page on RS) at least 10 business days before the audit begins. From the moment of receipt of the notification, the organization no longer has the right to clarify old declarations.
The audit must begin no later than 30 days after the notification is delivered to the taxpayer. If the audit fails to begin within this period, the notification is deemed invalid.
An on-site tax audit can be a full or thematic audit of a taxpayer’s activities. An on-site tax audit may also include ongoing control procedures of the taxpayer’s activities.
The term of an on-site tax inspection may be extended for no more than 3 months. If necessary, the term of the inspection may be extended for no more than 2 months by agreement with the Head of the Revenue Service. An on-site tax inspection is conducted at the place of economic activity of the taxpayer.
The authorized person of the tax authority has the right to request a duly certified copy of the accounting documentation related to the tax obligation and/or information related to taxation, and in case of failure of the taxpayer to comply with the said request, to seize the original of the said document, which shall be returned to the taxpayer upon completion of the on-site tax inspection. In case of seizure of the documentation, a seizure protocol shall be drawn up.
