Corporate & Income Tax

First check the notice for the taxes, periods, grounds, and start date of the audit. Advance notice is required in principle (Framework Act on National Taxes art. 81-7), and postponement can be requested for legitimate business reasons. Then review your filings, books, and supporting documents for the covered periods to identify likely issues. Preparation before the audit begins shapes the entire process, so consult a professional as soon as the notice arrives.

In some cases, yes. Penalties are not imposed where there is justifiable cause for the failure (Framework Act on National Taxes art. 48), and filing an amended or late return within certain periods earns graduated reductions. Courts read "justifiable cause" narrowly, so concrete proof — such as erroneous official guidance or unavoidable circumstances — is key. Penalties sometimes exceed the principal tax, so review each penalty item separately for what to contest and what to seek relief on.

Inheriting a qualifying SME or mid-sized company long operated by the decedent can substantially reduce inheritance tax through the business succession deduction (Inheritance Tax and Gift Tax Act art. 18-2), but post-deduction management conditions — maintaining the business line, employment, and shareholding — apply for years, and violations trigger clawback with interest. Whether you can keep the conditions matters as much as whether you qualify; the timing and route (inheritance vs. gift special provisions) also change the outcome.

Where a company is found to have unduly reduced its tax through transactions with related parties, the tax office disregards the transaction and recomputes income at market price (Corporate Tax Act art. 52) — typical cases are low-price sales, high-price purchases, and free or low-interest loans. The dispute always turns on what the market price is and whether the transaction had economic rationality, so appraisal values and comparable transactions decide outcomes. Organize the transaction history and pricing basis first.

When omitted income or fictitious expenses are found and the money left the company without a clear recipient, it is deemed disposed to the representative as salary (Corporate Tax Act art. 67). This adds personal income tax for the CEO and a withholding obligation for the company on top of corporate tax. The defenses are proving the funds never left the company or identifying the actual recipient — money-flow records are decisive. A notice of change in income amount is itself independently appealable within the deadline.

Yes. Non-business loans from a company to its CEO or shareholders (provisional payments) generate deemed interest added to taxable income and restrict interest deductions (Corporate Tax Act arts. 28, 52). Conversely, funds taken without clear grounds are disposed as salary or dividends, creating personal tax issues and, at scale, potential embezzlement exposure. Loan agreements, interest payments, and repayment records are the baseline; if already flagged in an audit, the points of contest differ by disposition type.

Where prices between foreign related parties — parent and subsidiary, for example — differ from what independent enterprises would have charged (the arm’s length price), the tax office may recompute income on that basis (Adjustment of International Taxes Act). Royalties, management fees, and intermediary trade margins, where comparables are hard to find, are the usual battlegrounds, and transfer pricing documentation showing how the price was set is the first line of defense. Review it before the audit does.

A transfer pricing adjustment by one country can tax the same income twice. Remedies include the Mutual Agreement Procedure (MAP) under the applicable treaty, where the two tax authorities negotiate an adjustment, and corresponding adjustments to domestic tax (Adjustment of International Taxes Act). MAP runs separately from domestic appeals and can suspend collection while pending, but application deadlines and the choice of whether to run both tracks vary case by case — settle the combination of procedures first.