Tax authorities in Argentina are getting ready to conduct thousands of tax audits.
Inconsistencies in the tax returns of 285,000 companies have made tax authorities suspicious that they've failed to declare assets, expenses or income, says Tax News
And tax audits are on the rise in South Africa too.
In fact, chances are your business will face a tax audit at some point, as SARS is doing all it can to increase taxpayers' compliance.
But there's nothing to worry about if all your tax affairs are in order.
Not sure that they are?
Here's what's most likely to have triggered your tax audit
A tax income is usually triggered if there's a discrepancy between your asset base and declared income, explains SARS
That's why SARS' main focus will be a review of the structure of your business' tax returns.
Because in a tax audit, SARS is ultimately assessing your compliance – whether it has reason to suspect you of tax evasion or not, says InspiringWomen.
First step: Check your tax returns are in order
That's why your tax returns are first in line.
It could be as simple as having put a 'zero' in a field you should have left blank, says FSP Business
If they hold up, SARS will also check your income statement and balance sheet for any discrepancies.
Second step: Check your income statement and balance sheet stack up
If your income statement and balance sheet don't add up, this is a sign that there's a problem with your accounting records.
That's why it's a great idea to back up and store your accounting records in a different location, says FSP Business
Because if you lose your accounting records, you can't simply correct this by recapturing the transactions – you're likely to miss something important if you do.
Third step: Assets and liabilities tests
The next step will be assets and liabilities tests, to check whether you're paying your capital gains tax
over correctly, so it's a good idea to have a detailed, up-to-date asset register on hand, says FSP Business
If SARS finds you've been underpaying your capital gains tax
, you'll face hefty penalties and interest, so it's a good idea to regularly check that all is in order with your asset register.
Fourth step: Taxable income calculations
Lastly, SARS will go through a calculation of your taxable income.
You can back up that you've all your calculations have been done correctly by making sure every calculation is recorded and that you keep these records for five years, in case SARS decides to do a tax audit of your business, explains FSP Business
See? No need to panic. Just plan ahead and you'll be able to pass your tax audit with flying colours.
If you need more information on surviving a tax audit, get your hands on the Practical Tax Loose Leaf. In the Practical Tax Loose Leaf we've got a dedicated chapter on Tax Audits. In it you'll discover:
What to expect from the audit
How the SARS auditor will assess your compliance
Strategies to beat the Vat audit
What to do when the assessment is issued 103
Analysis techniques SARS will use during the audit 119
Get the Practical Tax Loose Leaf here