The Checklist for the Risk Assessment for Tax Clearance process of Internal Revenue Commission, PNG

Preparation

  • Collect all relevant tax returns for the past years.
  • Obtain financial statements, including balance sheets and income statements.
  • Ensure all documents are current and accurately reflect the taxpayer's financial position.
  • Organize documents for easy access during the assessment.
  • Determine the nature of the taxpayer's business activities.
  • Identify the legal structure (e.g., sole proprietorship, partnership, corporation).
  • Gather information on business operations and revenue streams.
  • Document the relationships and roles of any partners or shareholders.
  • Collect records of past tax filings and payments.
  • Identify any prior audits, disputes, or penalties.
  • Assess the taxpayer's compliance with tax obligations over time.
  • Document any issues that may impact current assessment.

Risk Factors Identification

  • Research common risks associated with the industry.
  • Review economic conditions affecting the sector.
  • Analyze trends in compliance for similar businesses.
  • Consult with industry experts for insights.
  • Review past tax returns for accuracy.
  • Check for history of late filings or payments.
  • Identify any previous audits or disputes.
  • Assess responses to prior compliance issues.
  • Analyze financial practices indicative of avoidance.
  • Review transactions that lack commercial substance.
  • Investigate complex structures or offshore arrangements.
  • Monitor sudden changes in revenue patterns.
  • Examine discrepancies between reported income and lifestyle.
  • Look for unusually high deductions compared to peers.
  • Identify patterns of cash transactions.
  • Check for missing information in tax filings.

Risk Assessment Methodology

  • Define criteria for risk assessment.
  • Assign weight to each criterion.
  • Score taxpayers based on collected data.
  • Calculate total risk score for each taxpayer.
  • Classify taxpayers into risk categories.
  • Identify key taxpayer representatives.
  • Prepare a set of structured interview questions.
  • Schedule and conduct interviews.
  • Document responses and insights.
  • Analyze interview data for risk indicators.
  • Gather relevant financial and tax data.
  • Use statistical tools to identify trends.
  • Look for unusual transactions or patterns.
  • Cross-reference with industry benchmarks.
  • Summarize findings and highlight potential risks.

Documentation and Reporting

  • Summarize key findings from the assessment.
  • Include risk ratings and their justifications.
  • Organize information clearly for readability.
  • Ensure all relevant details are included.
  • Use bullet points for clarity and conciseness.
  • Gather all relevant data and documentation.
  • Attach supporting documents as appendices.
  • Ensure evidence is clearly referenced in the report.
  • Use charts or tables for data visualization.
  • Maintain a consistent format throughout.
  • Identify specific actions required based on findings.
  • Prioritize recommendations based on risk levels.
  • Provide clear justifications for each recommendation.
  • Outline potential outcomes of recommended actions.
  • Include timelines for implementation where applicable.

Review and Approval

  • Compile all necessary documents and findings.
  • Ensure all sections of the report are completed.
  • Distribute the report to relevant internal stakeholders.
  • Set a deadline for feedback and comments.
  • Gather and address all feedback received.
  • Present the finalized report to senior management.
  • Highlight key findings and recommendations.
  • Seek approval through a formal meeting.
  • Document any decisions or conditions set by management.
  • Follow up on any pending approvals.
  • Prepare a summary of the assessment findings.
  • Schedule a meeting or send a formal communication.
  • Explain the implications of the findings clearly.
  • Provide an opportunity for the taxpayer to ask questions.
  • Document the communication for future reference.

Follow-Up Actions

Continuous Improvement