ATK tax audits in Kosovo: how to prepare

The words "ATK is coming" worry every business owner. But a tax audit isn't necessarily a problem. For businesses with documents in order, it's mostly administrative work. Problems arise when documents are missing or don't match.

Types of audit#

Type	What it covers
Fiscal receipt check in the field	Inspectors watch whether a receipt is issued for every sale; usually unannounced
Desk audit	ATK asks for documents or explanations about a specific return
Partial audit	One tax or one period, for example VAT for a few months
Full audit	All taxes for one or several years
Pre-refund audit	Before refunding VAT or overpaid tax

Why a business gets selected#

ATK mainly uses risk analysis. Some common signals:

• sales that don't match purchases, headcount or the sector;
• zero returns month after month while the business is active;
• large VAT refund claims;
• employees on the minimum wage in sectors where pay is higher;
• invoices from deregistered or fictitious suppliers;
• information from banks, customs or complaints.

Your rights#

During an audit you have the right to:

• be told the purpose, period and taxes being checked;
• see the inspectors' identification;
• be represented by your accountant or tax adviser;
• provide explanations and additional documents;
• receive the audit report and comment before the decision;
• appeal the decision.

Documents usually requested#

• sales and purchase books, reconciled with VAT returns;
• invoices and fiscal receipts;
• bank statements;
• employment contracts and payroll (see The employment contract);
• leases and proof of withholding tax (see Rental income tax);
• inventory and the asset register;
• financial statements and the annual return.

How to prepare, before an audit comes#

1. Keep documents for the whole limitation period, filed by month.
2. Reconcile every month: sales, bank and returns.
3. Don't pay large amounts in cash; bank payments are evidence.
4. Check suppliers before large payments. An invoice from a deregistered business can cost you the VAT you deducted plus a fine. On Kerko you can see any business's status. See How to verify a business.
5. Issue a receipt for every sale. See Fiscalisation in Kosovo.
6. Classify expenses correctly. See Tax-deductible expenses.

During the audit#

• Appoint one contact person, usually your accountant.
• Provide what's requested in writing, with a handover list.
• Don't give verbal explanations you can't back up.
• Keep notes of every meeting and request.

After the audit#

ATK prepares a report and, if it finds differences, issues an assessment decision with additional tax, interest and penalties.

If you disagree:

1. appeal to ATK's appeals department, within the deadline stated in the decision;
2. if the appeal is rejected, take it to court.

Deadlines are short and strict. Read the decision as soon as you get it.

Voluntary correction#

If you find a mistake in past returns yourself, correcting it before you're notified of an audit usually means lower penalties. Talk to your accountant. See When you need an accountant.