Thedy & Partners analyses the draft amendment of the Tax Ordinance: Will tax audits become history
Tax audits may (almost) disappear from the tax system. They will be replaced by broader checking activities, according to the draft amendment to the Tax Ordinance, which is currently in pre-consultation.
The abolition of the competence of Heads of Tax Offices to conduct tax audits in favour of checking operations will naturally entail a broadening of the scope of the latter. Michał Wolański, manager at Thedy & Partners, draws attention to the fundamental change, i.e. the extension of the aim of checking operations to include “verification of fulfilment of obligations arising from the provisions of tax law”. In order to realise this objective, it would be possible to interview witnesses as part of checking operations. In addition, it will be possible to carry out an inspection (with the taxpayer’s consent) of the registered office, the place of business, the place where records are kept, and places that are related to the business conducted by the taxpayer and during business hours and movable property. In special cases, inspection will also be possible without the taxpayer’s consent. As a result, inspection activities would lose their hitherto “behind the desk” character.
– Assessing the planned changes, it appears that checking operations are becoming more serious. This, in turn, combined with the informal nature of checking operations, entails the risk of “covert inspections” of taxpayers. The protection of the taxpayer’s fundamental rights in the course of such extended activities is therefore reasonably questionable. Conducting verification activities, of which the taxpayer is not aware, restricts, inter alia, the possibility to take the evidentiary initiative, and thus to defend one’s position – assesses Michał Wolański.