The tax auditing and detection of evasive behavior

Abstract

The tax planning is an area that has been developed in Portugal in recent years. However, the line between tax planning, also called fiscal management, and abusive tax planning, is sometimes tenuous, and collides with the freedom of choice of taxpayers.
The crisis environment in which we live today fosters and encourages evasive behavior of taxpayers; however, the abusive tax planning, for the reduction, mitigation or deferral of taxation, is most visible in the larger taxpayers, given the complexity of the operations involved.
Obviously, it is up to the legislator, to launch legislative instruments that allow counteract such practices. The application of specific antiabuse rules, the  general  antiabuse  clause,  and more  recently,  the  duty  of  disclosure  under  Decree-Law  n.  º 29/2008 of 25 February, are tools to combat tax planning abusive.Is a competence of the Tax Administration to detect the use of these abusive taxes planning schemes, leading to a decrease in taxes collected by the state. The development of the tax audit takes special importance, since only the correct definition of it can allow the detection of abusive tax planning schemes.
This dissertation has the objective to show how with a careful and strict tax audit procedure, essentially at the planning level, the Tax Authority can find complex  abusive tax planning schemes. Therefore a practical case is here presented based in real facts, in which the tax audit procedure was implemented through three phases: planning, execution and conclusion.