Tax audit risk analysis service

Prior to tax audit, we review and analyse key tax compliance documents such as tax returns and part of accounting documents. A taxpayer can then identify tax audit risks. If the taxpayer undertakes measures to mitigate these risks in advance, the taxpayer could reduce additional tax payment caused by tax audit as well as resources to be dedicated to tax audit, such as extensive discission with tax auditors.

In addition, these days the National Tax Agency(NTA) ’s focus is not only additional tax amount, but the NTA also takes a risk-based approach which assesses the governance standards of each taxpayer. The risk-based approach differentiates the frequency of tax audit. If a taxpayer enhances tax governance prior to tax audit, good tax governance will help to reduce the frequency of next tax audits.

Why Forvis Mazars

Our professional have rich experiences in handling tax audit particularly for the Japanese subsidiary of multinational enterprise groups of variety of industries. Former NTA officials familiar with tax audit from the NTA’s perspective will be in charge of tax audit risk analysis. 

Tax audit is becoming increasingly active

As the following chart indicated, annual underreporting income amount identified by tax audit tends to increase for the last couple of years.

Examples of issues targeted by the National Tax Agency

• Consumption taxes (e.g. errors on tax exempt sales and input tax credits)
• Cross-border transactions in general (e.g. error on import purchase price)
• Misapplication of controlled foreign company rules
• Transfer pricing on transactions with overseas associated enterprises
• Misapplication of withholding income tax on transactions with overseas entities
• Non tax filing
   

Tax audit risk management cycle

Our professionals can support clients for each stage of 1 - 3 above.

1. Tax audit: Represent a client and discuss with tax auditors.
2. Tax audit outcome analysis: Analyse the outcome of tax audit and propose appropriate measures to prevent recurring.
3. Check tax risks prior to tax audit: As a tax audit risk analysis service, mitigate tax audit risks for business years open for tax audit.
    

How tax audit risk analysis works