Organization of Tax Audit Based in Tax Types

Tax audit, as a special tax administration function, has special attention to mentioning everyday actions and procedures in order to help increase effectiveness in everybody's exercise of their duties, guaranteeing, at the same time, taxpayers' rights according to the following characteristics:

- specification, in the sense that there be no reason for doubt or double meanings in the formulation of duties;

- coherence, so that workers can see a certain duty in a logical way and without overlapping;

- usefulness, in the sense of avoiding complex and lengthy procedures;

- effectiveness, so that functional duties will not affect the artificial growth of fiscal burden and administrative barriers;

- Comprehensiveness, in the sense of providing solutions for various situations that might arise in the relations between taxpayers and tax officials and resolving these situations in compliance with the code of professional ethics.

The organizational structure of audit (see organizational chart) meets the requirements for an effective and functional audit, based on the needs, which comply with strategic objectives established in the orientations of the Tax Audit Directorate in the General Tax Directorate. The tax audit is part of the structure of this office. Let's explain how they develop the function of tax audit according to tax types.

Audit Offices for VAT

In observance of national strategic plans and objectives for VAT audit, besides the requirements of Law the vat audit offices entirely focus on the application of requirements specified in Law "On VAT" from taxpayers. Concretely, inspectors in charge of this duty must check, audit, compare and correct taxpayers' declarations for:

- accuracy of changes related to name, address and economic activity, or any changes in information taxpayers provide to the tax authorities at the time of the request for registration;

- Legal accuracy in completing invoices for all incoming payments subject to taxable supplies;

- Visible exposure of prices in the premises where activity is exercised;

- VAT payment rates as compared to taxable sales and the average rate in the respective sector;

- Accuracy of VAT declarations in sales and purchases, compared to monthly declaration and payment forms;

- Requests for deregistration, cases of declared bankruptcy, activity transfer;

- Requests for assessment of sections in Declaration and Payment Form (DFP);

- Requests for audit by General Taxation Directorate (GTD);

- Justifying documents, accuracy of registration and self-declaration in purchase and sales books for taxable and exempt supplies, as well as VAT payment;

- Requests for VAT refund, based on Regulation "On VAT refund";

- Justifying documents, accuracy of registration and self-declaration in purchase and sales books for taxable and exempt supplies, according to Decision of Council of Ministers (DCM).

- Full cost calculation for every type of goods or service (purchase price according to the invoice, transportation costs, customs tax and other general costs) and its comparison with the sale price declared by the company, as well as its compliance with the Law "On tax procedures" and the instruction thereof, investigating the price and comparing prices according to price ascertainment-acts kept by Tax Office (investigation office). In cases of agreements that GTD has with business associations for certain types of goods and for the cost (price) per m² in construction, comparisons are made for every analytical case and tax obligated are calculated accordingly;

- Actions with the cash account (in national money and foreign currency), transactions in cash above a threshhold;

Audit Office for Income Tax (AO-IT)

In observance of duties for auditing self-declared indicators of DPF for profit tax and accounting balance sheet by companies,besides the requirements of Law "On tax procedures" and Law "On accounting" as, this audit office entirely focuses on the application of requirements from Law "On income tax" from taxpayers.

As regards audits of balance sheets and financial accounts, inspectors from this office can:

- compare values in balance sheet items to those in the general ledger (for manual diaries and IT ones);

- make arithmetic verification of synthetic accounts in the ledger;

- crosscheck sums in the balance sheet with sums in the ledger;

- compare current result account and other accounts relevant to this result;

- compare declared incomes in the accounting balance of the previous year with the ones declared in DPF and VAT in the center or in subsidiaries as well as with data received from other sectors in the Office and other offices or institutions;

- make overall and analytical checks on legality of expenses made, according to the requirements of Law "On Income tax".

- check inventories and production in process;

- check registration of fixed assets value, for both incoming and outgoing assets;

- Make a "balance of changes" created from comparing the accounting situation in the beginning and at the end of the exercise of activity.

Audit Office for Excise, Withheld Tax and Insurance Contributions (AO-EWT-IC)

This office audits taxpayers exercising their activity in the trade and production of excise goods, with or without fiscal label, according to the specifications of Law "On excise". At the same time, this office audits the observance of requirements in Law "On tax procedures", Law "On income tax", and Law "On VAT", for the taxpayers audited by this office.

In terms of excise audit, inspectors in this office can:

- Check the observance of legal procedures for authorizations issued to persons and approval of land parcels, buildings or other premises, as well revoke or change such authorizations or approvals;

- Regularity of transfers for excise authorizations and/or approval of customs storehouse;

- Accuracy and justifying documentation for payment of excise obligations and observance of relevant legislation in this respect;

- observance of audit procedures for use of raw materials and additional substances, mixtures or other actions with excise goods or relative to them;

- Observance of legal requirements for keeping records by excise authorized persons;

- Check the way domestic or imported excise goods are produced, packaged and stored;

- Observance of legal requirements for the transportation of excise goods;

- Observance of legal requirements in fuel deposits;

- Check of justifying documentation and calculate withheld taxes according to the requirements of the Law "On income tax";

- Observance of requirements for controlling the calculation and payment of employer's contributions.

This audit office administers the audit process bearing in mind the Excise Manual, which is a separate manual for the category of excise goods.

If exist a specific approved version of the Audit Manual for Social and Health Insurance Contributions for auditing such contributions he can be a guide in such cases.