Step 1: Check whether the tax officer is authorized to perform a tax audit and whether there are grounds for a tax audit
Prior to allowing the tax officer to perform a tax audit it is advisable to:
- Ask the tax officer to show the official ID
- Check whether the tax officer’s official ID has all details required by the Tax Code of Ukraine (TCU)
- Write down and save the tax officer’s official ID details
- Compare the tax officer’s job title stated in the official ID and in the tax audit assignment; the job titles should be the same
- Call the tax office and clarify whether the tax officer that arrived to the company’s premises was authorized to perform a tax audit
- Ask the tax officer to show the tax audit assignment
- Check whether the tax audit assignment has all details required by the TCU
- Check whether the tax audit assignment is duly signed and stamped
- Ask for a copy of the tax audit order
- Check whether the tax audit order has all details required by the TCU
- Check whether the tax audit order is duly signed and stamped
- Check whether there are grounds for a tax audit provided for in Articles 77, 78, and 80 of the TCU
- Fill in the company’s Audits Registry and ask the tax officer to put the signature in the Registry
Step 2: Decide on whether to allow the tax officer to perform a tax audit or not
Upon inspection of the above documents, it is advisable to decide on whether to allow the tax officer to perform a tax audit or not.
Disallow the tax officer to perform a tax audit
The company could disallow the tax officer to perform a tax audit on the following grounds:
- Tax officer refuses to show the official ID, tax audit assignment and/ or the tax audit order
- Tax officer refuses to provide a copy of the tax audit order (in case of a documentary non-scheduled field audit)
- The company did not receive the tax audit order and written notice regarding a tax audit at least 10 calendar prior to the estimated tax audit start date (in case of a documentary scheduled field audit)
- The above documents do not meet the requirements set forth in the TCU
- There are no grounds for a tax audit set forth in Articles 77, 78, and 80 of the TCU
- Tax officer refuses to put his signature in the Audits Registry
If the company decided to disallow the tax officer to perform a tax audit, it is advisable to document this decision in the respective protocol.
Please note that if the company unreasonably disallows the tax officer to perform a tax audit, the company’s property could be subject to administrative arrest.
Allow the tax officer to the premises
If there are no grounds to disallow the tax officer to perform a tax audit, the company’s official should sign the tax audit assignment and allow the tax officer to perform a tax audit.
Step 3: Take the right actions during a tax audit
Authorize a person (an accountant, a lawyer) to interact with the tax officer. If such people are not available, the company’s CEO should interact with the tax officer. Do not allow other company’s employees to interact with the tax officer.
Allocate an office room for the tax officer to perform an audit. It is advisable to install audio- and videotaping devices in such a room. Do not provide the access to the premises where documents and merchandise are stored to the tax officer, as well as to the management’s and accountants’ offices. Do not allow the tax officer to perform the tax audit during non-working hours and days off.
Provide the tax officer with documents and information considering the following recommendations:
- Provide documents and/or information upon the tax officer’s written request
- Try to understand why the tax officer requests certain documents and/or information. Plan a tax audit defense strategy and assess the risks of providing or refusing to provide certain documents to the tax officer in advance
- Provide the originals of the requested documents only for the tax officer’s review, as per checklist and against the tax officer’s signature of receipt
- Remember that the tax officer is not entitled to seize the original documents. The seizure should be performed only in course of criminal procedures or upon a court order
- Provide copies of primary documents, financial statements and other documents only if the tax officer has identified the violation of the tax legislation. Copies of documents should be page-numbered, stitched together, signed by an authorized company official and stamped by the company’s seal (if the company maintains a seal). Provide copies of documents as per checklist against the tax officer’s signature of receipt. Please note that large taxpayers should provide electronic copies in course of a tax audit
- If the tax officer requests documents, information and/or statements that are not related to the scope (subject matter) of the tax audit, or if the tax officer sets unreasonable deadlines for provision of documents, it is advisable to fix these circumstances in the respective document (letter). Such a document (letter) should be addressed to the head of the relevant tax office and should be filed with a tax office’s clerk
- If the tax officer refuses to receive copies of documents, file such documents with a tax office’s clerk as described above
- Submit the copies of documents with a cover letter within 5 (five) business days after receiving a tax audit report if the company could not reasonably provide such documents during a tax audit. Documents submitted in such a way are deemed produced during the tax audit and should be considered by the tax officer
Do not sign the tax audit report in a designated space if it is accompanied with the following statement:
“We confirm that primary documents, accounting and other documents that have been provided during a tax audit are true and authentic, are provided in full, and there are no additional (other) documents related to company’s activities (that refute the facts set forth in this tax audit report) for the audited period”
Please note that the company’s officials could sign the tax audit report in any place free of text. The signature should be accompanied with the following statement:
“We do not agree with the conclusions set forth in this tax audit report; objections to this tax audit report will be provided within the deadlines set by the tax legislation”
File objections to the tax audit report within 5 (five) business days starting from the day that the company received the tax audit report.