How to Prepare Your Company for a Tax Audit?

A tax audit is always stressful for business owners, even when the company keeps its accounting “by the book.” Any mistake in documentation, delayed reporting, or miscommunication with partners can result in fines or additional tax assessments — and in some cases, frozen accounts or even criminal charges.

In the Republic of Moldova, tax audits are becoming increasingly systematic, and the selection criteria for companies — more precise. That’s why preparing in advance for a tax inspection is not just a smart precaution but also a key part of financial risk management.

In this article, we’ll show you how to properly and step-by-step prepare your company for a tax audit: from internal audits to employee behavior during an inspector’s visit. You’ll get a ready-to-use action plan, checklist, and expert recommendations to pass any inspection with confidence.

Tax Audit: Definition, Types and Legal Framework

What is a Tax Audit?

A tax audit is a form of government oversight conducted by the Moldovan State Tax Service to verify the accuracy of tax calculations, payments, and compliance with tax legislation.

According to Article 229 of the Fiscal Code of the Republic of Moldova, a tax audit may include:

• analysis of accounting and tax reports;
• review of primary documentation;
• analysis of business activity;
• interviews with employees and management.

It is important to understand: even if you haven’t received an official notice, your company may already be under scrutiny due to risk-based analysis.

Types of Tax Audits in Moldova

There are several types of tax audits:

• Desk (cameral) audit
  Conducted without visiting the taxpayer’s office, based on submitted reports and data. Example — verifying VAT declarations and income tax returns.

• Field audit
  The most comprehensive type of inspection. Tax officers visit the company’s office, request documents, interview staff, and analyze actual operations.

• Planned and unplanned audits
  Planned audits are scheduled based on risk criteria. Unplanned audits are initiated due to complaints, signals from banks or other authorities, or identified discrepancies.

• Comprehensive audit
  Covers multiple areas: taxes, fees, reporting, currency operations, etc.

Legal Framework

Tax audits are regulated by:

• Fiscal Code of the Republic of Moldova (particularly Chapter 14 and Articles 226–242);
• Regulations of the State Tax Service;
• Instructions and letters from the Ministry of Finance and the Tax Service.

Every audit must be based on an official notice, issued in the proper format, clearly indicating the date, grounds, period, type of audit, and the members of the inspection team.

Preparation Steps Before Receiving a Tax Audit Notice

Most companies only start taking action after receiving a tax audit notice. But that’s a strategic mistake. Proper preparation must be done in advance — systematically and not tied to any specific date. This greatly reduces the risk during any inspection and strengthens financial stability.

Conducting an Internal Audit

The first step is organizing an internal audit. It helps to:

• identify errors in accounting and reporting;
• spot weak points — underreported taxes, unclear transactions, gaps in documentation;
• make corrections before pressure from tax authorities arises.

The audit can be done internally or with external consultants. Make sure to verify:

• compliance of accounting with legislation;
• data accuracy in reports;
• supporting documents for income and expenses;
• correct VAT and income tax calculations.

Organizing Documentation

One of the most common causes of tax penalties is poor or missing documentation. Organize:

• contracts with partners (including old ones);
• invoices, acts of completed works, delivery notes;
• cash documents, payroll reports, advance reports;
• meeting minutes, powers of attorney, internal orders.

Ensure all documents are signed, bound (if required), stored in a logical system (physical and/or digital), and readily accessible.

Correcting Errors and Inconsistencies

If errors are identified during the audit — take immediate action:

• submit revised declarations;
• make additional tax payments, if needed;
• create internal memos and explanations to document actions taken;
• consult a lawyer if necessary.

Prompt and voluntary correction of mistakes significantly reduces the risk of penalties.

Developing a Document Management Policy

Implement a standardized document management system:

• templates for contracts and acts;
• approval and validation procedures;
• rules for storage and transfer to accounting.

This is especially important for companies with multiple departments or branches.

Training Employees

Inspections often go wrong due to unprepared staff. Prepare:

• instructions on communication with tax authorities;
• scripts for behavior during an inspection;
• a list of responsible persons.

Pay special attention to accounting staff, the director, office manager, and sales team.

Actions After Receiving a Tax Audit Notice

Receiving a notice from the Tax Service is not a reason to panic — it's a call for structured action. Mistakes at this stage can be costly, but if you've prepared in advance (see the section above), you're in a strong position.

Verify the Legitimacy of the Notice

Before gathering documents, make sure the notice complies with legal requirements. Check that it includes:

• the date, reference number, and stamp of the tax authority;
• the specified type of audit (desk, field, etc.);
• the period to be audited;
• the reason for the audit (planned/unplanned, complaint, risk analysis);
• the composition of the audit team — names, positions, contact details.

If something seems wrong or unclear — consult a legal expert. Some notices are issued with procedural errors and can be challenged or postponed.

Appointing a Responsible Person

Clearly designate who will:

• communicate with the tax inspectors;
• collect and submit documents;
• record all communication;
• monitor deadlines and follow-up actions.

This is usually the accountant or CFO, but it may also be a specially appointed employee (with a power of attorney). The key is that they understand internal processes and can communicate effectively.

Important: only one person should represent the company before the tax authority. All other staff must direct inspectors to this person.

Preparing for the First Visit

Ensure that by the time of the inspection:

• a proper workspace for the inspectors is ready (table, chairs, sockets, water);
• key documents are prepared (company charter, accounting, tax declarations, cash register book, contracts, invoices, etc.);
• staff are briefed on how to behave, what they may or may not say.

Also, have a tax audit logbook ready — the inspector must register the visit in it.

During the Audit: How to Act Properly

When inspectors are already on-site, it's crucial to remain calm and follow procedure. Employee behavior, quality of communication, and proper document handling determine not only the outcome of the current audit but also the likelihood of future inspections.

Communication with the Tax Inspector

Guidelines for communication:

• Be polite, formal, and avoid giving extra information.
• Direct all questions through the designated responsible person.
• Do not engage in unofficial discussions (phone, messengers).
• Document all inspector actions — in the audit log and internal reports.

The inspector is a government representative, but still bound by the law. Your role is to cooperate while protecting your business interests.

Providing Documents

• Provide only the documents officially requested.
• Request all demands in writing (or log verbal requests in protocol).
• Place a received stamp on a copy of each request.
• Do not allow original documents to be taken without proper paperwork.

If a document is temporarily unavailable or archived, write an explanation and specify when it will be provided.

Monitoring the Inspector's Actions

Ensure the inspector follows regulations:

• must not access employees' personal computers;
• may not request information unrelated to the audit scope;
• cannot seize documents without a legal order.

In case of violations — record them in the protocol and (if needed) call a lawyer.

Logging and Recording Violations

All inspector actions, especially questionable ones, should be documented:

• maintain an internal event log (date, time, who, what, why);
• copy all documents handed over to inspectors;
• record problematic interactions — pressure, unethical behavior, verbal threats — in a separate file.

This documentation can be useful when challenging the audit results or going to court.

After the Audit: What to Do Next

When the audit is complete, the inspectors issue a tax audit report — an official document that records identified violations, additional charges, recommendations, and conclusions. This report can lead to fines and administrative actions.

Receiving and Reviewing the Audit Report

After the audit, you should receive:

• the tax audit report;
• attached documents and calculations;
• any protocols created during the visit.

What you should do:

• carefully review each item — especially the figures;
• compare the data with your internal accounting records;
• consult your accountant, lawyer, or an external tax advisor;
• ensure that there is no overreach — audit must only cover the declared period and scope.

Preparing Objections

If you disagree with the findings — you have the right to file a written objection. In this document you should:

• specify the exact points, figures, or conclusions you dispute;
• provide arguments and supporting documents;
• submit a revised calculation if an error was found.

Deadline — 10 working days from the date of receiving the report (according to Moldova’s Tax Code).

Objections must be submitted to the tax office that conducted the audit and officially registered.

Making Corrections and Voluntary Compliance

If violations are valid — it's best to resolve them quickly:

• submit a corrected tax declaration;
• pay the tax shortfall;
• revise or re-issue relevant documents;
• document internal actions: memos, explanations, internal orders.

This can significantly reduce penalties and demonstrate the company’s good faith.

Appealing the Audit Results

If the tax authority rejects your objections — you have the right to appeal:

• to the higher tax authority;
• or to court — administrative or economic, depending on the issue.

Deadline — 30 calendar days from receiving the rejection or decision.

Prepare the following:

• copy of the audit report;
• your written objection;
• evidence supporting your case;
• legal arguments and references.

At this stage, it’s strongly recommended to work with a tax litigation specialist.

Next Steps: Prevention

Every audit is a learning experience. Implement the following in your company:

• a plan for regular internal audits;
• a system for tracking and correcting violations;
• templates for responses and staff behavior during future audits;
• periodic consultations with tax experts.

Checklist: Is Your Company Ready for a Tax Audit?

Take this quick test to see how well-prepared your business is in case of a tax inspection.

If you answered "No" to 2–3 or more — it’s time to start preparing today.

Conclusion

A tax audit is not a sentence, but a regular part of any company’s life. The key is not to panic but to prepare systematically in advance. The higher your level of internal discipline and transparency, the lower the risks and consequences.

Preparing for an audit is not a one-time action — it is a part of responsible business management culture.

If you want to conduct an internal audit, minimize risks, or receive support during an inspection — the Intelcont team is here to help. We speak the same language as the tax authorities, protect your business interests, and act strictly within the legal framework.

Request a consultation or audit today — it’s far more cost-effective than fines and losses.

If you want your accounting to run like clockwork — just leave it to us.