What is the tax due diligence?
Tax care is an investigation into the company's current and future tax liabilities. It is one of the aspects of the overall DUE diligence, which is carried out in corporate mergers and acquisitions (M&A) if one company plans to acquire additional or more companies plans to merge. This process requires the review of certain tax documents by experts with the expertise of the Tax Code of the relevant jurisdictions. The standard builds on the buyers to make a thorough investigation to ensure that it receives an advantage from a bargain agreement. In the corporate context, it meets the proper care of the obligation of officials and directors to make sure that any decision made maximizes the value to existing shareholders. Insufficient DUE diligence will reduce the legal possibilities of society, if something is later found to be in order with the transaction, because there will be an aspect of negligence.
Complex transactions of mergers and acquisitions will be requiredAT Separate financial, legal, operating, strategic and tax investigation properly on acquired companies or both companies in the case of merger. Each of these areas of investigation will be dealt with by a team of accountants or lawyers as well as the acquiring higher company management. Tax Due Diligence is a particularly exhaustive process and it may take months to complete, depending on the number of jurisdictions concerned.
The tax team checks all documents regarding any type of tax liability or evaluation, including income, sales, employment, capital and activity taxes. They will apply for access to tax returns, financial statements, audits, evaluation notifications, tax decisions and notes on tax matters created by employees and consultants over the years. After reviewing documents in connection with the relevant Tax Act, the team will submit a report on a written tax audit that contains a professional opinion on all material tax liabilities andpossible future impacts.
tax consequences can make or break sales. Even the simplest sale requires a substantial investigation that takes into account different levels of tax liability, such as national, regional and local. The scope of the investigation is becoming more exponentially more complicated, if the corporation involved is found in different countries or in the case of the company, it has several subsidiaries. Tax Due Diligence for multinational corporations includes professional evaluation and reconciliation of various accounting standards, handling domestic versus foreign income sources and tax returns to submit positions, in addition to issues associated with transfer of ownership.