Understanding the Tax Audit process
- Notification letter
- Collating information
- Technical review of tax filings
- Interaction with tax authorities
- Resolving the dispute
Notification letter
A tax audit usually starts with a notification letter from the Verification and Audit Directorate, which is part of the Malta Tax and Customs Administration. This letter will inform you about the financial periods being assessed, the case officers assigned to your tax audit, the information required to be submitted and the expected timeline within which the tax audit is to be carried out and concluded. Upon receipt of a notification letter, you have the right to appoint a Tax Representative (and you should!).
Collating information
It is important to understand the scope of the tax audit and to gather all the necessary documents, such as bank statements and financial records.Cooperation is key, so be prepared to provide any information requested. If you think you should provide more information or documentation than what you were asked to provide to help with the review, please consider this.
Technical review of tax filings
The next step involves a detailed analysis of your documents, accounting records, and tax filings to check for any discrepancies or non-compliance. This analysis needs to be documented in an appropriate manner and submitted with the Verification and Audit Directorate.
Interaction with tax authorities
Regular communication with the Maltese tax authorities is part of the process. If you have a tax representative, they can handle these interactions on your behalf, including meetings and email correspondence, allowing you to focus on your business operations.
Resolving the dispute
Based on the findings, you may need to undertake corrective actions or disclosures. This could involve preparing and submitting revised tax returns or voluntary disclosures and paying any additional taxes, penalties and interest. Never revise past tax returns without proper consultation as this may have a significant bearing on proceedings, including potentially increasing years in scope and your exposure.
How can we help?
At PwC, we are well-positioned to provide comprehensive support, whether you are acorporate or individual taxpayer undergoing tax audits. Through our tax dispute resolutionteam we bring together a wealth of experience in managing tax audits across variousindustries. Our approach is tailored to your specific circumstances, ensuring that the supportprovided is both strategic and practical. Our lawyers, tax specialists, economists andaccountants are positioned to give you clear and solid tax advice to help you achieve the bestpossible outcome, including helping you avert tax audits from occurring in the first place.
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