Fictitious liabilities

Some companies try to conceal their income by manipulating their accounting, thinking that the Tax Inspection will not detect it. For example:

• They record funds from a sale as if it were a loan received from partners.
• Or they record an expense and leave the payment pending, attributing it to a non-existent supplier.
• Both cases involve maintaining non-existent debts in the liabilities, which are kept over time and distort the accounting and the company's image.

These practices can be easily discovered by the Tax Authority (for example, because the Inspection detects that the gross margin obtained by the company is much lower than that of its competitors or declared in previous years, or because general expenses have increased without a corresponding increase in income).

If the Tax Authority discovers this practice, the only defense is to demonstrate that the undeclared income corresponds to prescribed tax years (i. e., tax years that the Tax Authority can no longer review). But if this is not possible, the applicable penalties will be very significant.