Tax Due Diligence

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Tax Due Diligence


Experience of BDO in Ukraine has shown that the identification of potential tax risks can have a profound effect on the market value of the company to be acquired.  
 

Tax Due Diligence (DD) is an analysis of important tax aspects of business, performed prior to the acquisition of shares in a company or shares in the authorized capital.

Why is Tax Due Diligence needed? 

The objective of this Due Diligence type is to identify significant tax risks, including the company's tax liabilities and possible claims from the tax authorities, with their monetary assessment and the recommendations to minimize them. This procedure allows you to consider the identified tax risks in the transaction price. 

 

Read about when Due Diligence services are necessary 

 

Tax Due Diligence of BDO in Ukraine includes: 
  • Reviewing timeliness of filing tax returns and payment of tax liabilities
  • Reviewing correctness of the tax returns
  • Reviewing applicable tax rates, tax benefits and exemptions
  • Analysis of the results of complex and other inspections by the tax authorities
  • Analysis of existing disputes with the tax authorities
  • Evaluation of monetary value of detected tax risks and recommendations development for their elimination
  • Confirmation of tax losses and VAT credit 

 

The experts of BDO in Ukraine provide their report that includes a description and monetary value of the revealed tax risks.

Please contact the experts of BDO in Ukraine to order a consultation and to clarify the price of Tax Due Diligence service for business. 

Key Contact

Viktor Nevmerzhitsky

Viktor Nevmerzhitsky

Tax & BSO Partner
View bio

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FAQ (Frequently Asked Questions)

  • What is Tax Due Diligence?

Tax Due Diligence is an analysis of significant tax aspects of a business performed prior to the acquisition of shares or stakes in the company’s statutory capital.

  • Why is Tax Due Diligence performed?

Its purpose is to identify major tax risks, assess the company’s compliance with tax obligations, determine potential claims from tax authorities and provide recommendations for mitigating such risks. This enables potential tax exposures to be factored into the deal price.

  • What does Tax Due Diligence by BDO in Ukraine include?

It includes a review of returns for major taxes (typically corporate income tax, VAT, excise tax, and payroll taxes in some cases), the completeness and timeliness of tax payments, the accuracy of tax rates, the exemptions and reliefs, the analysis of tax audits and disputes with authorities, the identification and quantification of tax risks, and the confirmation of tax losses and unrecovered VAT credits.

  • What does the client receive after the completion of Tax Due Diligence?

Specialists of BDO in Ukraine provide a detailed report that identifies tax risks, their monetary assessment, as well as recommendations for addressing them.

  • When is Tax Due Diligence necessary?

The procedure is essential before acquiring a company or a stake, or when an investor wishes to assess a company’s tax risks. A company owner may also request a Vendor Tax Due Diligence to present the report to potential buyers.

Glossary

Tax Risk Analysis — the process of assessing potential claims from tax authorities and possible financial losses to the company.

Monetary Assessment of Risks — determining the amount of potential tax liabilities or losses resulting from identified violations.

Tax Obligations — the company’s obligations to pay taxes and submit tax reports in accordance with the law.

Tax Due Diligence — review of the tax aspects of a business before acquiring shares or stakes in a company, aimed at identifying tax risks and preparing recommendations for their elimination.

Tax Reporting — reports to state regulatory authorities reflecting the company’s performance to verify the correctness of tax calculation and payment.

Tax Exemptions and Reliefs — legislative mechanisms that allow for a reduction in the tax burden for certain categories of taxpayers or certain types of transactions.

Tax Disputes — disputes between the company and tax authorities related to the interpretation or application of tax legislation provisions.

VAT Credit — the amount of value added tax that the company is entitled to claim as a tax credit to reduce its liabilities.

Company Market Value — the price at which a company can be sold; it may decrease if significant tax risks are identified.

Tax Report (Due Diligence Result) — a document that contains a description, assessment and recommendations regarding tax risks identified during a tax audit.