|
The Hong Kong SAR Government has been deploying more resources in recent years to combat against tax evasion and tax avoidance. The tax investigation and field audit unit of the Inland Revenue Department ("IRD") has consistently been able to recover annually significant amount of back tax and penalties. The tax audit function typically enjoys a discrepancy identification rate in excess of 90% which serves as a clear warning signal to both the taxpayers and the IRD.
With the increased level of tax planning, where some of which could be regarded as being blatant and aggressive in nature, the IRD has been focusing on tax avoidance arrangements with a view to nullifying the tax benefits arising from such planning. As a related development, the IRD is also undertaking more prosecution cases relating to tax offences.
This positioning by the IRD will affect taxpayers from all walks of life - sole proprietors, small and medium size companies, listed companies and multi-national corporations. Taxpayers could be selected for audit as a result of the adoption of the "Assess First Audit Later" approach within the assessing section or simply whistle blowing by informers. In addition, the IRD has comprehensive industry specific financial and performance data which could be used to identify taxpayers for more in-depth review.
A taxpayer should not underestimate the impact that a tax audit could bring to its business. Apart from the financial ramification, the taxpayer has to divert appropriate resources from its normal business operation to deal with the tax audit. It is of paramount importance that the taxpayer is on top of the situation and takes the necessary steps to bring the tax audit to an early conclusion.
PricewaterhouseCoopers has one of the largest tax audit service teams in Hong Kong - with several key members having over 10 years of relevant professional experiences. Our aim is to provide quality services to our clients as we strive to achieve prompt and equitable settlements within an optimal timeframe. Our professional services are multifaceted. Apart from advising and assisting our clients on the handling of actual tax audits, we often conduct comprehensive tax review for clients prior to them being selected for tax audits. The health check is part of a prevention and mitigation approach so that problematic issues are identified early and remedial actions taken on a timely basis.
Our Services
| (A) |
Tax Investigation / Field Audit
- Advise client on the general procedures and implication of an IRD tax audit
- Minimise disruption to the client's business activities during the tax audit
- Conduct a pre-audit review to identify potential problem areas
- Formulate a strategy to handle the IRD tax audit
- Accompany the client to attend IRD interview and liaise with the case officer thereafter
- Assist in the preparation and submission of a settlement proposal for discussion with the IRD
- Assist in the preparation and submission of a representation on penalty to the IRD
|
| (B) |
Voluntary Disclosure (opportunity for reduced penalty)
- Review the client's taxation affairs
- Advise the client on the potential areas of concern
- Assist the client to compile an appropriate proposal to the IRD
- Assist in the preparation and submission of a representation on penalty to the IRD
|
| (C) |
Field Audit - Anti Tax Avoidance
- Advise client on the general procedures and implication of an IRD tax audit
- Minimise disruption to the client's business activities during the tax audit
- Conduct an independent review of the client's existing planning arrangements; evaluate the implementation status of such plans; identify potential issues and problem areas; assess the position including a review of the technical arguments and mitigating factors
- Formulate a strategy to handle the IRD tax audit
- Accompany the client to attend IRD interview and liaise with the case officer thereafter
- Prepare and submit the case for acceptance of the current arrangement or a settlement proposal
- Monitor and follow up on the resolution of the case
|
| (D) |
Other Services
|
| (i) |
Health Check - "Prevention is better than cure"
- Conduct review on the client's operation by reference to the prevailing tax legislation; interpretation and practice notes of the IRD
- Assist the client to establish a systematic approach towards determination of inter company pricing and other charges
- Assist the client to perform a follow up operation review
- Identify the possible tax exposures and the remedial actions to be adopted
|
| (ii) |
Advise on the set up and maintenance of a proper accounting system
|
| (iii) |
Advise on an appropriate and tax efficient structure (corporate and personal)
|
| (iv) |
Act as tax representative of the client |
Get Your Copy Here
Download our Tax Audit Services Brochure (pdf file, 139KB) for your reference. |
