Tax Disputes: How to Protect Your Company’s Interests?
For businesses, a tax dispute can become a serious challenge, leading not only to financial losses but also reputational damage. In Georgia and international practice, companies often face legal battles over tax sanctions and audits. This article will outline the steps businesses should take when dealing with a tax dispute and how they can best protect their interests.
I. What is a Tax Dispute?
A tax dispute arises when there is a disagreement between a business and the tax authorities regarding taxes, audit results, or imposed sanctions.
Main Types of Tax Disputes:
• Incorrect Tax Calculation – When the tax authority demands a higher tax payment than the company is legally obligated to pay.
• Fines and Penalties – A company may face additional charges due to incorrect declarations or late payments.
• Tax Audit Results – Disagreements may arise over the findings of an audit conducted by the tax authorities.
• Denial of Tax Benefits – When a company is refused legal tax benefits or existing benefits are revoked.
II. What Steps Should a Company Take in a Tax Dispute?
- Assess the Legal Basis of the Dispute
• Carefully review whether the tax authority’s claim is justified.
• Check if the audit report contains legal violations.
• Compare your financial records with the tax authority’s data. - File an Official Appeal
• Initially, disputes can be resolved through the tax authority’s internal administrative mechanisms.
• The official appeal must be submitted within the legally prescribed deadlines and be thoroughly substantiated.
• KH & PARTNERS’ tax lawyers can assist in navigating the appeals process correctly. - Negotiation and Settlement Options
• Businesses can request a meeting with the tax authority to present evidence and attempt to resolve the dispute through negotiation.
• In many cases, tax authorities are open to reviewing company arguments if they are backed by strong documentation. - Initiating a Legal Case
• If the issue is not resolved administratively, businesses have the right to take the matter to court.
• A well-prepared legal defense strategy is crucial for winning a tax dispute in court.
III. How to Protect a Company’s Interests During a Tax Dispute?
To increase the chances of winning a tax dispute, businesses should follow key principles:
• Ensure Complete Accuracy of Financial Records – Tax reporting must be transparent and detailed.
• Gather Strong Supporting Evidence – Businesses should maintain all contracts, invoices, bank transfers, and accounting records.
• Conduct Regular Tax Audits – Having the company’s tax policy reviewed periodically by experts reduces risks.
• Seek Legal Assistance – KH & PARTNERS’ tax lawyers provide legal protection for businesses in both administrative and court disputes.
IV. Real Case Study + European Court of Human Rights Precedent
📌 Case Study:
A company was fined by the tax authority due to an incorrect tax declaration. However, the company successfully provided documentation proving that payments were made in full compliance with the law. Eventually, the court ruled that the tax sanctions imposed were not legally justified.
📌 Similar Case from the European Court of Human Rights:
➡ Case of Business Corporation v. Latvia (Application no. 13025/15) – The court ruled that unlawful tax sanctions imposed by the tax authority may constitute a violation of property rights under Article 1 of Protocol No. 1 of the European Convention.
📍 Link: European Court of Human Rights Decision
V. Conclusion – How to Protect Your Business from Tax Disputes?
• Compliance with tax legislation is essential to avoid financial penalties.
• Proper preparation for tax audits reduces the risk of incorrect conclusions and fines.
• KH & PARTNERS’ legal support helps businesses resolve disputes with tax authorities legally and efficiently.
• KH & PARTNERS’ legal services are insured, providing additional security and reliability.
📞 Need legal protection in a tax dispute?
📩 Contact KH & PARTNERS’ legal and tax experts today!
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