What Is Tax Due Diligence?

Tax due diligence refers to accepting clients 'entrustment to provide tax due diligence services for clients' investment, mergers and acquisitions and other business affairs to reduce the tax risk of corporate mergers and acquisitions.

Tax due diligence

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Tax due diligence refers to accepting a client's mandate to invest in,

(1) Make up for the deficiencies of legal due diligence. During the listing process

(1) Inspection of tax compliance status.

Check the relevant tax regulations applicable to the company. Based on the analysis of the company's overall tax burden, check the applicable tax preferential policies of the company, and formulate the company's tax compliance management and risk prevention procedures.

(2) Tax health check before listing.

Examine the status of tax declaration and payment; investigate the status of tax arrears;

The Law of the People's Republic of China on Tax Collection and Management (1992) (hereinafter referred to as the "Tax Collection and Management Law") stipulates that taxpayers and withholding agents must fulfill their tax payment obligations or withholding and paying taxes, and collect and withhold taxes in accordance with the law. Provisions for tax registration and tax declaration, proper establishment and accounting, submission of financial statements and other relevant tax or deduction materials, and acceptance of supervision and inspection by tax authorities; tax authorities have the right to inspect taxpayers and withholding agents Production, operation and payment of taxes. If a taxpayer violates the above-mentioned tax management, which constitutes a tax violation, he shall be punished accordingly. For the punishment of tax violations, in the "Tax Collection Law" and "Supplementary Provisions on Punishing Tax Evasion and Anti-Tax Crimes" (1992), different tax violations have been provided with corresponding punishment provisions in different situations. General tax violations Taxpayers, withholding agents and other parties violate general tax administration. For example, if the taxpayer or withholding agent fails to handle tax registration, tax payment or tax payment declaration in accordance with regulations, or fails to set up and keep account books and vouchers in accordance with regulations, or does not print and use invoices in accordance with regulations, It is stipulated that the reporting of financial accounting systems, statements and other relevant tax or deduction materials to tax authorities is a general tax violation. If any of the above-mentioned violations have been ordered by the tax authorities but have not been corrected, the tax authorities may impose a fine of 2,000 to 10,000 yuan at their discretion.

Tax due diligence

Taxpayers intentionally violate tax laws and regulations to evade taxes due to deception or concealment. If you want to underreport or conceal taxable income, profits or other taxable items; intentionally inflate costs or arbitrarily reduce the taxable income; transfer property, income, and profits; forge, alter, or destroy accounts Books or accounting vouchers (notes), etc. The main characteristics of tax evasion are: the subject of the infringement is the state's tax laws, regulations and rules; the subject of the violation is the taxpayer; it is objectively manifested as deception, concealment and fraud; there is a direct and intentional avoidance of tax the goal of. If the actor fails to pay or underpays the tax due to unfamiliar tax laws, inadequate financial accounting systems, or negligence at work, it is not tax evasion. For taxpayers who have committed general tax evasion, in addition to recovering their tax payable taxes, the tax authorities may impose a fine of less than 5 times the tax evasion. If the amount of tax evasion is more than 10,000 yuan and accounts for more than 10% of its taxable amount, or if the tax evasion is repeated (more than 2 times), the circumstance of tax evasion is serious and constitutes the crime of tax evasion. In addition to this, in addition to recovering the tax evasion by the tax authorities, the judicial authorities shall impose a fine of less than 5 times the amount of tax evasion, and the person who is directly responsible for the tax evasion shall be sentenced to 3 years imprisonment or detention; If the amount is more than 100,000 yuan and accounts for more than 30% of its taxable amount, it shall be sentenced to 7 years in prison.

Tax due diligence

Taxpayers refuse to fulfill their tax obligations under the tax law through open confrontation such as violence and threats. The main manifestations are: refusal to implement the tax law to pay taxable taxes; refusal to accept tax notices from tax authorities with various excuses, refusal to pay taxes; refusal to handle tax declarations and provide tax information in accordance with legal procedures; refusal to accept tax authorities to carry out according to law Tax inspection; refusal to accept punishment by tax authorities for violations in accordance with the law, gathering trouble, threatening, attacking tax authorities, and beating, besieging, and insulting tax officials are all acts of tax resistance. The main characteristics of tax resistance are: (1) the form of open resistance; (2) the subject of infringement is the national tax laws, regulations and rules; (3) the subject of tax resistance is the taxpayer; (4) the subjective performance is directly intentional, and it is open The purpose of tax resistance. Against taxpayers, the tax authorities shall, in addition to recovering the tax they refuse to pay, impose a fine of less than 5 times the tax refund. Those who constitute a tax-resistant crime must also be transferred to the judicial organs, punished with a penalty of less than 5 times the tax refund, and individuals or units who are directly responsible for the tax shall be sentenced to imprisonment or detention of less than 3 years; if the circumstances are serious, they shall be punished. Imprisonment from 3 to 7 years.

Tax due diligence

Acts in which the taxpayer fails to pay or underpays the tax due beyond the prescribed tax period. Tax arrears directly affects the state's timely formation and control of fiscal revenue. For those who owe taxes, the tax authorities, in addition to ordering them to pay the taxes owed within a time limit, will add a late fee of 2 of the taxes owed on a daily basis from the date of the tax owed. However, if the taxpayer fails to recover the tax due to the transfer or concealment of the property, a fine of less than five times the tax owed shall be imposed. If the above measures are adopted to evade the tax arrears of more than 10,000 yuan, it constitutes a crime. Among them, the tax arrears of more than 10,000 yuan and less than 100,000 yuan, in addition to the tax authorities to recover the tax arrears and increase late fees, judicial The organ can also impose a fine of less than 5 times the tax owed, and impose a term of imprisonment of less than 3 years on the person in charge and other directly responsible persons who are directly responsible for the tax owed or the tax owed unit; the amount of tax owed is more than 100,000 yuan , They are sentenced to fixed-term imprisonment of 3 to 7 years.

Tax due diligence

Taxpayers or other parties defrauding the state of taxation by falsifying facts or falsification. The common features of tax fraud and tax evasion are both subjective and concealed. The infringing objects are the national tax laws, regulations and rules, and they are all acts that infringe national interests. The difference is that tax evasion occurs before the taxpayer pays the tax. The tax evasion is the unpaid tax payable by the taxpayer. The tax fraud generally refers to the tax scammer who defrauds the tax that has been paid into the state treasury. Own or collectively. Taxpayers also deceive tax deductions that should not be deducted by fictional facts and concealing the truth. The punishment for tax scammers is divided into three cases: First, if the unit that produces and operates export products falsely reports the export of its goods and defrauds the country's export tax rebate, the tax authority will in addition to recover the fraudulent tax refund, and impose the fraudulent tax. 5 times fine. If the amount of tax fraud is more than 10,000 yuan, it constitutes a crime. In addition to recovering the fraudulent tax by the tax authority, the judicial organ must also impose a fine of less than 5 times the tax fraud and pay the person directly responsible. Shall be sentenced to fixed-term imprisonment of not more than 3 years or detention; second, if other units or individuals defraud the state export tax rebate, in addition to the tax fraud recovered by the tax authorities, the judicial organ shall also impose a fine of less than five times the tax, Individuals or units who are directly responsible for tax fraud shall be investigated for criminal responsibility in accordance with the provisions of the Criminal Law of the People's Republic of China (1979) on the crime of fraud. Provisions, in accordance with tax evasion. In addition, if the taxpayer or withholding agent engaged in production and business fails to pay the tax payable or the tax payable within the prescribed period, if the tax authority has ordered the payment to be made within the time limit and the payment has not been made within the time limit, the tax authority may adopt the following: Mandatory enforcement measures: Notify the bank that opened the account or other financial institution to withhold taxes from its deposits; Seize, seize, or auction goods, goods, or other property whose value is equivalent to taxable taxes, and use the proceeds from the auction to set off .