Before an acquisition: the tax questions worth asking

Tax due diligence before an acquisition helps identify risks that may affect the price, contract and first steps after completion. The review should reflect the business and transaction structure, rather than rely on a tax clearance certificate alone.

1. Define the acquisition and review scope

Buying shares in a company and acquiring assets raise different questions. Start with a clear description of the transaction: entities, assets, contracts, activities and periods under review. A generic document list may overlook the issue most relevant to the business model.

Agree the priorities, information access and review limitations with the specialists involved. Record missing documents as uncertainties, rather than automatically treating their absence as evidence that a problem does or does not exist.

2. Read the records together

Compare tax returns with accounting records, payments and the documents explaining the transactions. Article 6 of the Accounting Law connects accounting entries with supporting documents; consistency between them matters during a review.

A tax clearance certificate provides information from the authority’s records under Article 158 of the Fiscal Procedure Code. It does not replace an examination of historical tax treatments or guarantee that no further findings will arise. Assess audits, disputes and management explanations in the same context.

3. A checklist before deciding

• Confirm the transaction scope, review periods and available documentation.
• Reconcile returns, accounting balances and payments; request explanations for differences.
• Identify transactions relevant to VAT, personnel, financing and related parties.
• List audits, disputes and questions that remain unanswered.
• Discuss with the legal team how identified risks should be addressed in the contract.
• Plan responsibilities and further checks following completion.

A useful report separates findings supported by documents from assumptions and explains what information could change the conclusion. This supports negotiation and planning without promising to remove every risk.

This article provides general information, not individual tax or legal advice. Applying the rules requires a review of the specific circumstances and legislation in force at the transaction date.