Tax review and due diligence: keys to streamlining tax management and reducing risk

Strategic tools like tax reviews and due diligence are essential for identifying liabilities, preventing penalties, and uncovering tax-saving opportunities

 

By Marluci Azevedo

 

In challenging tax environment, where regulations are constantly shifting, companies face the ongoing challenge of staying compliant with numerous obligations. It is not just about preventing penalties; it is also about ensuring financial efficiency and identifying potential opportunities. 

Many businesses wonder if they are on the right path—whether they are meeting all the requirements, using the most suitable frameworks, or taking full advantage of available legal benefits.

From 2025, companies also need to start preparing their systems for the start of the tax reform in 2026.

 

Tax review and due diligence: what are they?

These are essential tools that help ensure companies comply with tax regulations while reducing their tax burden.

Tax Review: This process focuses on identifying inconsistencies or errors in the calculation and payment of taxes, as well as in the submission of returns. It also highlights opportunities for recovering tax credits. Typically, a tax review covers the past five years, the period within which the statute of limitations applies to primary and ancillary obligations.

Due diligence: A more comprehensive and structured procedure, due diligence is often conducted during transactions like mergers and acquisitions. It evaluates potential liabilities, past errors in tax obligations, and contingency risks.

 

 

Check out the benefits of these two practices:

 

Risk mapping

Hidden tax liabilities can pose significant risks to companies. Errors in tax calculations, improper record-keeping, and failure to comply with ancillary obligations may result in unexpected assessments and fines. Through tax review or due diligence, these issues can be identified early, before they escalate into more serious problems.  A revisão fiscal ou a due diligence permite detectar essas ocorrências antes que elas se tornem um problema mais grave. 

 

Avoiding fines

Brazil’s tax legislation is among the most complex in the world, with frequent regulatory changes. Regular tax reviews ensure that a company remains compliant with current laws, helping to avoid penalties that could jeopardize its cash flow and reputation.  

 

Tax optimization

The tax review also helps the company to find better ways forward, supporting the re-evaluation of processes, frameworks and taking advantage of opportunities offered by legislation, such as special regimes and tax incentives.

 

Credit recovery

MMany companies overpay taxes due to disorganization or lack of understanding of tax regulations. A thorough tax review can identify recoverable credits by analyzing tax documents such as invoices and payment receipts.

 

See also: Recovering unduly paid taxes via PER/DCOMP: rules and strategies 

 

Preparing for mergers and acquisitions

When a company is considering a merger, acquisition, or sale of a stake, tax due diligence becomes crucial. It helps identify potential tax risks associated with the transaction and prevents the transfer of hidden tax liabilities to the new owners.

 

Improving internal processes

These analyses also uncover inefficiencies in tax management, such as poor information flow between accounting, finance, and tax departments. By addressing these bottlenecks, companies can enhance operational agility and precision.

 

Choosing the right tax support

Now that the benefits are clear, it is crucial to consider a few key factors when selecting the right partner to conduct tax audits, due diligence, and other related services. Here are some important points to keep in mind:

 

Experience

Ensure that the provider has extensive experience in these procedures, particularly within your company’s specific industry. Some sectors have highly specialized tax regulations that require deep expertise to navigate effectively.

 

Technical capacity and tools

A reliable provider should have advanced technological resources for analyzing tax data, along with a highly qualified technical team that can offer expert guidance on how to correct tax management processes.

 

Tailor-based approach

Every business is unique, with its own structure and specific needs. Generic solutions are often insufficient. A provider that offers a personalized approach, tailored to your company’s particular requirements, makes all the difference.

 

Strategic tax solutions

By selecting the right partner, your company will be well-equipped to navigate Brazil's complex tax landscape with confidence, gaining both competitiveness and peace of mind to focus on growth.

With 40 years of experience, Domingues e Pinho Contadores has a team that stays up to date with the constant changes in legislation. To benefit from this expert support, reach out to us at: dpc@dpc.com.br.