Taxation represents a crucial factor in assessing every business’s profit margin. Regardless of whether they are state or local taxes, each category can profoundly affect a firm’s financial performance. Therefore, a comprehensive evaluation of a company’s tax profile is essential in financial due diligence. This due diligence becomes particularly vital during mergers and acquisitions, as the acquiring entity inherits any pre-existing tax obligations or compliance hurdles. Oracle NetSuite enhances this process through integrated features such as NetSuite Tax Management, which equips users and stakeholders with straightforward access to essential tax data, facilitating decision-making with minimal effort.
NetSuite Tax Due Diligence Checklist
1. NetSuite File Cabinet
The NetSuite File Cabinet serves as a repository for all pertinent business documents relevant to an organization. These files are secured and can only be accessed or modified by designated stakeholders based on configured permissions. Companies may be required to store the following documents for convenient retrieval:
- State and Local Tax Returns
- Foreign Income Tax Returns
- Excise Filings for 5 years
- Tax Exemption Certificates
2. Tax Codes
The NetSuite Advanced Taxes feature enables the management and calculation of taxes for multiple nexuses within one NetSuite account. This automation simplifies the assignment of the correct code to each transaction. The applied code and its rate can further be verified using the System Notes option to sample check user ethnicity and identify any potential issues.
3. Tax Reports
With real-time functioning, NetSuite offers built-in default detailed reports that provide insights into transactions up to the present without delays. This promotes accountability in figures and simplifies the analysis of the tax figures and the corresponding profits of a business.
4. Top-Drill Down Model
NetSuite employs a drill-down model that allows users to analyze reports to identify impacted key line-item transactions that led to the issue. Consequently, with NetSuite, we can ensure subsidiaries comply with global tax obligations.
5. Deferred Tax Assets and Liabilities
NetSuite maintains distinct accounts for both deferred tax assets and liabilities, further facilitating a quick overview of each account alongside its related transactions, thereby supporting tax due diligence.
6. Audit Capacities
NetSuite includes its audit features, closely monitoring logins and logouts. Streamlined transactions ensure that tax calculations made per line are accompanied by country-specific tax details, and only authorized users can implement overriding changes. Additionally, each alteration is automatically recorded by the system, preventing deletion, which aids further tax due diligence efforts. Consequently, NetSuite enables tracking, calculating, and remitting various tax types associated with the sale or purchase of goods and services, playing a critical role in tax due diligence. It encompasses all necessary features to back this due diligence, ensuring a seamless transitional process.
