In this month's write up, we will highlight the importance of reconciling your taxes with the revenue authority in PNG (IRC).
What is Tax reconciliation?
Tax reconciliation is a process which involves confirming tax compliance as per your accounts, with IRC records. Tax compliance refer to tax lodgment, payments, credits and refunds.
Why do I need to reconcile my taxes?
There is more than one benefit of reconciling your taxes such as (a) up-to-date tax compliance (b) timely identification of issues(c) timely resolution of issues (d) improving your taxpayer image (e) faster processing of tax applications such as tax clearances, certificate of compliance, etc. (f) avoiding tax audits/investigations (g) last but not the least, peace of mind.
How often I do my reconciliation?
Though there is no hard and fast rule and it is your choice, but going by experience, we would suggest at least once in a quarter for small to medium companies. monthly for large corporations and widely held entities like banks, insurance companies, listed entities etc.
What are steps involved in reconciliation?
Basic steps involved in a reconciliation are-
- Establish tax types applicable to your business.
- Obtain statements from IRC for selected period.
- Print tax ledgers from your accounting system for selected period
- Review and where discrepancies are found, include them as reconciling items.
- Prepare a reconciliation statement either commencing from accounts balance and ending in IRC balance, or vice versa.
- Communicate in writing with IRC and seek corrective action.
Why should you contact us?
At Shishya, we specialize in tax dispute and resolutions. Our consultants are experienced, have solid understanding of IRC processes, share excellent working relationship with IRC and suitably placed, to assist your business in obtaining resolutions in acceptable timeframes.