Tax Audit

Compliance audit (Also known as tax audit)

A tax compliance audit is a special audit carried out by CPA firm in Taiwan to check whether a Company has calculated and filed its corporate income tax correctly in accordance with Taiwan Income Tax regulations, Corporate Income Tax Audit Regulations, Tax Release on Tax Compliance Audit by CPA and other related regulations. A special tax compliance audit report will be issued and addressed to the Tax office upon completion of the tax compliance audit.

The audit procedures undertaken for a tax compliance audit differ from financial statement audits in that most of the work would be concentrated on reviewing expense vouchers and checking the Company's compliance with Income Tax Laws and Regulations.

As an incentive to Companies to hire CPA firm to carry out the tax compliance audit, the Taiwanese Government grants the following incentives to Companies:

1. If the corporate income tax return is filed with a tax compliance audit report, companies can use a more favorable formula to calculate the maximum tax-deductible amount for entertainment expenses.
2. On average less than 30% of the tax returns lodged with a CPA tax compliance audit report will be selected for detailed examination by the Tax Authority.
3. If a tax return has been filed with a CPA tax compliance audit report, the tax officer must address their questions to the CPA firm initially rather than the company. If there is any doubt over any matter, the tax officer must first call in the CPA firm's working papers before approaching the company for more information.

Grant Thornton Approach to Tax Compliance Audit

The Grant Thornton tax team conducts interim audit and tax reviews prior to the end of the year after confirmation of the engagement. The findings are discussed with the client's management and, if any violation of tax regulations is detected, we would advise the client to file for rectification prior to the year end. Upon completion of our tax compliance audit report, the Grant Thornton tax team will discuss our findings and recommendations with you.

Tax Compliance Audit Fee Charge

Our fee charge is computed based on the our estimated man hours required for the assignment taking into account the size of client's operation. A tax Audit is not compulsory by law and regulations for most companies in Taiwan.