Transaction Advisory Services
Tax Due Diligence
Tax due diligence, a crucial part of the overall due diligence process in a merger, acquisition, or investment, entails a meticulous examination of a target company’s tax affairs. This in-depth scrutiny is aimed at uncovering potential tax risks and opportunities. The ultimate goal is to evaluate the transaction’s tax implications and mitigate potential tax liabilities.
Key areas of focus in Tax Due Diligence:
Tax Compliance History
- Review of tax returns, assessments, and correspondence with tax authorities.
- Identification of any outstanding tax liabilities or disputes.
- Assessment of the company’s tax compliance procedures and controls.
Tax Structure
- Evaluation of the company’s tax structure, including intercompany transactions and transfer pricing.
- Identification of potential transfer pricing risks.
- Assessment of the tax efficiency of the current structure.
Deferred Tax Assets and Liabilities
- Analysis of deferred tax assets and liabilities.
- Evaluation of the likelihood of realizing deferred tax assets.
- Assessment of the potential impact of tax law changes on deferred tax positions.
Tax Incentives and Benefits
- Identification of any tax incentives or benefits claimed by the company.
- Assessment of the eligibility for and sustainability of these benefits.
Tax Risks and Contingencies
- Identification of potential tax risks, such as transfer pricing, tax audits, and tax disputes.
- Quantification of potential tax liabilities.
- Development of strategies to mitigate tax risks.
Tax Planning Opportunities
- Identification of potential tax planning opportunities to optimize the tax position post-acquisition.
- Development of tax-efficient transaction structures.
