Taxation is the most evident element of every business profit margin valuation. Whether it’s state or local taxes, each type can significantly impact a company’s bottom line. This makes a thorough review of a company’s tax profile a critical component of financial due diligence.

Tax due diligence is especially important during mergers and acquisitions, as the acquiring company assumes responsibility for any existing tax liabilities or compliance issues.

Oracle NetSuite simplifies this process with built-in features like NetSuite Tax Management, designed to provide users and stakeholders easy access to key tax information, streamlining decision-making with just a few clicks.

NetSuite Tax Due Diligence Checklist  

1. NetSuite File Cabinet

NetSuite File Cabinet is a place where we can find all the relevant business documents applicable to a business.

These documents are locked and are accessible and editable only to few stakeholders as configured permission to.

Businesses can be asked to store in the following documents for an easy access: 

• State and Local Tax Returns
• Foreign Income Tax Returns
• Excise Filings for 5 years
• Tax Exemption Certificates

2. Tax Codes

NetSuite Advanced Taxes feature allows to manage and calculate taxes for multiple nexuses within the same NetSuite account.

This facilitation of automation of taxation by NetSuite helps in assigning the right code to each transaction. The code applied with the rate can be further verified using the System Notes option to sample check the ethnicity of users and to detect malfunction if any.

3. Tax Reports

NetSuite has built-in default detailed reports running in real-time, giving a sneak-peek into the transactions till date without lags. This fosters accountability with the figures and makes it easy to make analysis over the tax figures and resultant profits of a business.

4. Top-Drill Down Model

NetSuite uses a drill-down model which enables users to dig down reports to the impacted key line- item transactions which created the issue.

Thus, with NetSuite – we can ensure subsidiaries are in compliance with global tax requirements.

5. Deferred Tax Assets and Liabilities

NetSuite maintains a separate account for each of these, further facilitating quick overview of each account and its related transactions, thus supporting tax due diligence.

6. Audit Capabilities

NetSuite features its own auditing capabilities, with strict look into logins and logouts, streamlined transactions make sure tax calculations made per line are displayed with country-specific tax details applied and only authorized users can make overriding changes.

Plus, each change is auto captured by the system which cannot be deleted helping in further tax due diligence for the system.

Hence, NetSuite helps us track, calculate, and pay various types of taxes based on the sale or purchase of products and services and plays a major part in tax due diligence.

It has all the applicable features enabled to support this due diligence and result in a smooth transitional process.