What mistakes of chief accountants will lead to inspections?

When will the cameral tax audits?

A cameral tax audit is carried out on the basis of an analysis of your tax and financial statements, 
as well as other documents and information about the activities of the company that the tax authorities
have. A cameral office on VAT refunds can be appointed in accordance with the Regulation on the Proce-
dure for Refunding the Value Added Tax (approved by the Resolution of the Cabinet of Ministers of 
14.08.2020 No. 489).

Cameral tax audits are carried out:

 

• if there is a risk that was established by the “risk analysis” system of the State Oil Company
  based on the results of violation of tax legislation:
• if you have identified discrepancies and errors in the tax reports that you submitted:
• the tax authority received an appeal from an individual or organization about the fact of
  violation of tax legislation by your company:
• when they have submitted revised tax statements that result in a decrease in the amount of tax
  or an increase in the amount of incurred losses compared to previously submitted tax statements.

 

For example, in the first and second quarters of 2021, the company submitted a calculation for 
accounting for the amount of VAT in the amount of 20 million soums and 25 million soums, respectively,
but in the third quarter it presented a calculation for 100 million soums. An employee of the tax 
authority has a question about this information revealed in the course of a desk audit. To obtain an 
explanation, he sends a letter to the company's management requesting data on the availability of 
goods for which the amount of VAT was taken into account in this amount.

For reference:

Field tax audits and tax audits are carried out with the notification of the Commissioner under the 
President of the Republic of Uzbekistan for the protection of the rights and legitimate interests of 
business entities through the Unified System of Electronic Registration of Audits. An exception is 
the verification of individuals who conduct business without state registration. The procedure for 
conducting tax audits is established in the Tax Code and the Resolution of the Cabinet of Ministers 
dated 07.01.2021 No. 1 "On tax risk management, identifying taxpayers (tax agents) with tax risks, 
as well as organizing and conducting tax audits."

What are the grounds for leaving the tax office for a check

The basis for conducting an on-site tax audit will be:

• the presence of a risk of committing a violation of tax legislation according to the data of
  the "risk analysis" system;
•  
  an appeal of an individual or organization on the facts of violation of tax or foreign exchange
  legislation, including the facts of unjustified overpricing of goods, services, illegal business
  activities for the carriage of passengers by light vehicles;
• publication in the media of information about tax and currency violations;
• the need to obtain additional information for objective cameral control;
• incomplete submission of information or documents to a tax request when monitoring foreign
  exchange transactions;
• information from judicial, law enforcement agencies, other government agencies and organizations,
  indicating tax and currency violations.

For example, in the third quarter, it presented a calculation for accounting for the amount of VAT, 
significantly exceeding similar calculations in the first half of the year. An employee of the tax 
authority had a question according to the information of the enterprise and he sent a letter to the 
management of the enterprise with a request for data on the availability of goods for which the 
amount of VAT was taken into account. After receiving a response letter, if the tax authorities are
not satisfied with the answer, the inspectorate appoints an on-site tax audit. The audit is carried 
out on only one issue - to establish the correctness of the information provided by the company on 
VAT accounting. At the same time, the presence of inventory items in the warehouse of the enterprise
is checked for the amount for which the VAT amount was credited.

When a tax audit cannot be avoided?

A tax audit is a verification of the correctness of the calculation and payment of taxes for a certain period. To 
do this, the tax office will examine the financial and tax reporting for reliability and compliance with all the 
norms of tax legislation, how tax liabilities are formed and reflected in accounting and accounting for tax 
purposes.

Tax audits are carried out for those taxpayers who:

• have a high likelihood of tax risk;
•  
  did not submit updated tax calculations in response to the request of the tax authority following the
  results of a desk audit (including after a clarified request), did not provide grounds for the identified
  inconsistencies, or the presented grounds were deemed insufficient;
•  
  voluntarily ceased their activities. The exception is those taxpayers who have the opinions of tax con-
  sultants on taxes;
•  
  against whom a criminal case has been initiated based on the results of the audit of financial and eco-
  nomic activities;
•  
  individual entrepreneurs who have ceased their activities. Exception - payers of personal income tax in
  a fixed amount or on the basis of a declaration;
• in which new circumstances are revealed that are not known to the tax authorities during the period of
  a previously conducted tax audit.

For example, during office and field inspections at the enterprise, violations were revealed. But the company 
continues to violate tax laws. In this case, wait for a visit from the tax office with a tax audit.

How not to get into a risk group: what are the criteria for being selected for a tax audit

The process of assessing tax risks and segmentation of taxpayers takes place on the basis of the Regulations
on the procedure for organizing and conducting tax audits (approved by the Resolution of the Cabinet of Minis-
ters dated 07.01.2021 No. 1). All indicators are determined through the automated program "Identification,
analysis and assessment of tax risk".
If it is revealed that there is a likelihood of tax risk, a desk audit will be scheduled. For on-site tax audits, the
reason will be the presence of the risk of committing a violation of the tax legislation established by the system.
For the appointment of a tax audit, the basis will be the presence of a high tax risk.

Sources of information for analyzing tax risk are:

• tax and financial reports submitted by taxpayers, as well as information reflected in the cards of personal
  accounts of taxpayers;
• information submitted to the tax authorities by state bodies, institutions and organizations in accordance
  with the requirements of the law (Tax Code, Decree of the President of the Republic of Uzbekistan dated
  October 30, 2020 No. UP-6098, Resolution of the President of the Republic of Uzbekistan dated October
  30, 2012 No. PP-1843);
•  
  information provided by the competent authorities of foreign countries within the framework of agree-
  ments on the mutual exchange of information;
• information obtained from the media;
• information from tax audit materials;
• information about tax offenses revealed by the court and law enforcement agencies (sentence, ruling,
  ruling, decision, etc.);
•  
  appeals of individuals and legal entities on the facts of tax offenses;
• data obtained from statistics authorities;
• information obtained from other sources not prohibited by law.

When analyzing tax risk based on these data, the following indicators are used:

• the amount of expenses and income, their dynamics, timely fulfillment of tax obligations, compliance of
  taxes charged in the current tax period with the amount of taxes accrued earlier for previous tax periods
  (decrease, increase);
•  
  compliance of data indicators provided by government agencies and organizations with tax authorities,
  indicators given in tax and financial reports of taxpayers;
• application of tax incentives by law;
• profitability indicator as the ratio of net profit to net revenue (income received from the sale of goods
  and services amounts excluding excise tax and VAT), as well as profitability indicator as the ratio of net
  profit to expenses.

The criteria for determining the level of tax risk are confidential information. However, there is an exception - 
all the criteria and indicators that are listed below also serve as an indicator of the occurrence of risk:

• tax burden, which is calculated using a formula depending on the type of activity;
• changes three or more times in one reporting period in previously submitted tax reports, additions to
  them;
• reporting losses for two or more tax periods;
• change during the tax period of its location two or more times, as well as its subsequent re-registration;
• transactions, operations concluded with persons whose certificate of VAT payer has been canceled or
  excluded from the list, as well as with liquidated, inactive persons, bankrupt persons;
• low level of profitability indicator as the ratio of net profit to expenses;
• inconsistency of information on VAT transactions submitted by a taxpayer with data in tax reports submitted by another taxpayer for these transactions;
• submission of tax returns for several years, in which the indicators of the taxpayer's turnover are less than 1 billion soums;
• results of tax audits.

The level of tax risk is determined on the basis of criteria with the assignment of points from 1 to 100: from
81% to 100% - high risk; from 30% to 80% - medium risk; from 1% to 29% - low risk.
Awards points for each criterion of the STC. The analysis is based on the segmentation of taxpayers by type of
economic activity and the amount of income received for the tax period.
The level of tax risk is assessed and classified according to the awarded points and potential risk through the
program according to the formula: R = Sr / Sp × 100%, where R is the level of risk (%); Sr is the amount of
tax risk points awarded to the taxpayer; Sp is the sum of points for potential tax risk that were used to deter-
mine the level of risk.
The tax risk level is determined once every 6 months. If your organization does not have a high level of tax
risk, but has not paid tax debt for more than 30 calendar days, then the level of tax risk will be determined
once a quarter.

Rustamjon Muminov - chief tax inspector of the Department for the provision of services to legal entities of the territorial State Tax Inspectorate for large taxpayers.

Source: Taxation and Accounting (Magazine)

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