Request for explanation

What it means

A request for explanation is an act of the tax administrator seeking to remove doubts about the correctness, truthfulness or completeness of a filing - most often a return or the control statement.

It is not yet a tax audit, but it is not a formality either. The request states specific doubts and a deadline to reply, usually short and running from delivery.

A request for explanation differs from a request to remedy defects in a filing, which deals with formal errors such as a missing detail. This one is about substance: the tax administrator holds data that does not add up and wants to know why. If the answer is not enough, an on-site inquiry or an audit may follow.

How it works in practice

It is delivered to the official e-mailbox and counts as delivered even unopened, once the storage period lapses. That is exactly why the mailbox is checked regularly rather than quarterly.

The answer should be substantive and supported: copies of documents, an explanation of the circumstances, and a corrected filing where needed. Under a power of attorney the accounting firm handles the correspondence and prepares the file.

A typical case: a customer reported an invoice in its control statement that the client does not have on file, or has with a different amount. We first check the ledger balances to see which side made the error, reconcile with the partner and send the administrator an explanation with a copy of the document and, if needed, a corrected statement.

What to watch out for

Not replying lets the administrator assess the tax on estimates, and the burden of proof shifts to the taxpayer. Most requests, meanwhile, arise from a control statement mismatch that one sentence and a copy of the invoice would settle.

For the control statement the VAT Act imposes a separate penalty for failing to do what the request requires, even when the tax itself was correct. If the client cannot meet the deadline, it is better to ask in time for an extension with reasons than to stay silent.