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Tax Disputes

Companies are facing the most challenging tax environment in history: a convergence of global forces has resulted in a substantial increase in the number and size of tax audits, assessments, and disputes with tax authorities.

Overview

Fiscal demands on developed and emerging countries have placed considerable pressure on governments to raise revenue and prevent the erosion of their tax bases. Governments worldwide are cooperating as never before to share taxpayer and industry information, assist other countries with document and information requests, and participate in separate multi-country audits (including “simultaneous” examinations). Some countries are even considering the concept of "joint audits" where a single audit team--comprised of government tax inspectors and auditors from two or more countries--examines a specific taxpayer. At the same time, entities are experiencing increasingly complex regulations, heavy penalties, transparency and disclosure issues.

These global forces have created an unprecedented surge in audits and disputes. Virtually no area of tax enforcement has escaped this phenomenon, which includes direct taxes (domestic and international) and indirect taxes (e.g. VAT). 

PwC’s Tax Controversy and Dispute Resolution network assists taxpayers in this emerging area. We can work with you to prevent, efficiently manage, and favorably resolve tax audits and disputes in every jurisdiction you operate. PwC has tax specialists to assist clients in virtually every area of dispute. We combine deep technical understanding, local knowledge, strong relationships with government officials, tax litigation experience, and a global perspective to provide you with unrivalled service

Situation in Lithuania

Seeking to strengthen tax collection, the Lithuanian tax authorities also have started performing more tax audits. The most common types of tax law infringements are related to the application of reduced or 0% VAT rate, input VAT deduction, the application of tax incentives on research and development, investment projects, transfer pricing and transactions without (or not sufficient) economic substance.

Tax authorities are putting bigger emphasis on the examination of holding and financing structures and application of thin capitalization rules. International transactions are being successfully tracked as the exchange of information between jurisdictions is being applied by the increasing amount of countries. Due to the mentioned implications, the tax payers are struggling to find the ways how to cope with these challenges using the least resources.

This new situation places a premium on audit and dispute prevention techniques because companies are under constant competitive pressure to structure their worldwide business operations effectively and efficiently. Entities need to develop coordinated approaches to audits and disputes in different jurisdictions where companies operate, adopt preventative measures (such as pre-filing rulings and enhanced relationships with certain tax authorities), and leverage both traditional and new alternative dispute resolution techniques in order to achieve the best possible results.

Our Tax Controversy and Dispute Resolution team can help you gain a better understanding of your tax risks and exposures and manage your tax disputes, audits, and examinations worldwide. We can help you to implement consistent and defensible practices and policies.

Disputes arise throughout the entire tax spectrum, including international taxation, local taxes, transfer pricing, indirect taxes (e.g. VAT), withholding taxes, permanent establishments, employment taxes. PwC has tax specialists to assist you in virtually every area of dispute. We combine deep technical knowledge across the tax spectrum, local knowledge, strong relationships with government officials, tax litigation experience, and a global perspective to provide you with unrivalled service.

Our Tax Controversy and Dispute Resolution services are delivered in the following key areas:

Tax dispute prevention techniques. We can help you develop sound policies and processes that can provide defensible models and help safeguard your organization against audits and disputes.
Tax audit management practices. By understanding your organization and its policies, we can help you effectively manage tax audits and examinations.
Tax dispute resolution alternatives. We can help you to implement practices that can reduce or eliminate prolonged disputes--or the likelihood of costly litigation, and leverage our expertise in virtually all forms of tax dispute resolution.
Tax risk management, analysis and disclosure. We can analyze your various tax positions that may require financial statement disclosures, and help you develop sound policies and practices, including appropriate documentation and disclosure approaches. These proactive practices should provide a defensible approach and rationale, to safeguard your organization against non-compliance penalties and other exposures.

 

Our Tax Controversy and Dispute Resolution team includes accountants, lawyers, tax experts, and industry sector specialists, all of whom possess in-depth knowledge and experience of individual sectors. Our aim is to help you prevent, efficiently manage, and favorably resolve tax audits and disputes.

Local knowledge and strong relationships with government officials

The successful management and resolution of audits and controversies relies heavily on having strong relationships with tax authorities, and a thorough understanding of their processes and procedures. Our network includes individuals who are members of local specialist groups, as well as former tax officials who have substantial experience working on audits and disputes, both from a client and tax authority perspective.

Global reach and tax perspective

PwC Lithuania being a part of global PwC network, can approach colleagues from other territories and jurisdictions and provide you with the appropriate support to help you resolve your tax audit or dispute, wherever you need it. We can offer this support on a unilateral, bilateral, or multilateral basis, depending on your needs.

Deep technical subject matter expertise
• Mergers and acquisitions
• Transfer pricing
• Direct Taxes
• Indirect Taxes
• International taxation
• ersonal/Individual taxation
• Legal services

How our Tax Controversy and Dispute Resolution team adds value? We have successfully assisted clients in each phase of the tax controversy life cycle:

Pre-audit prevention phase
Audit-examination phase
Post-audit settlement-resolution phase

We can work with you during the pre-audit prevention phase to achieve successful results by:
• building "defense strategies" into the structure and operations of an enterprise;
• pro-actively negotiating a non-binding ruling guidance with the tax authorities at the pre-audit stage to gain earlier certainty and achieve penalty protection;
• preparing binding rulings, Advance Pricing Agreements, and supporting you in Mutual Agreement Procedure negotiations;
• coordinating "course of conduct" reviews to ensure that post-structuring operations align with initial implementation plans;
• assisting in transactional due-diligence to identify tax risks and exposures; and once risks are identified, develop and implement other option to the current business model to mitigate your company's risk profile.

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