Legality of partnership
Partnership is a form of joint venture between private individuals and legal entities, which is to know, implement and comply check Here with the requirements of “VAT” Act, “On Income Tax” Act, “On Collection” Act. Social. and health insurance cooperation”, and the law “on the local tax system” can practice temporary joint activity for benefit purposes.
The legal requirements for partnerships operate the same as for all other taxpayers under the aforementioned laws and partnerships cannot be exempted unless such exemption is the result of an intergovernmental agreement approved by their respective parliaments.
Participation of investors and owners in construction
Investors or construction project owners often find it difficult to finance their project due to lack of capital, human resources or technical equipment to implement their project. By forming a joint venture as an association of private individuals and legal entities to practice a temporary, joint and profitable activity, construction project investors and owners are often able to overcome difficulties and reach their goals. Although not separate legal entities, such joint ventures have their advantages and disadvantages. However, they are necessary for construction investors and their quality improvement.
Participation of construction contractors
Construction projects may be executed by joint ventures of contractors, which are treated as partnerships from the point of view of the “Income Tax” Act. Usually partnerships are formed for a specific purpose (project, contract, work) and for a limited period of time. Partnerships formed to implement similar construction projects are registered and subject to the same laws that apply to partnerships of investors and owners.
In cooperation with interest groups and other public administration bodies, the Ministry of Finance issues directives and regulations regarding changes in taxes administered by tax authorities at the end of each year.
In order to obtain legal capacity, a partnership between two or more private individuals or legal entities, which can be registered with the tax administration without a decision by the NRC, must complete the necessary steps described in the Law “On Tax Procedures”.
Partnerships are responsible for preparing financial balance sheets that present the financial indicators of their operations. Although not registered as entities with special legal capacity under the Finance Act, they are liable to declare the cessation of their activities and complete the relevant closure procedures with the Tax Office, as well as the NRC. Certificate for practice issued. their activity.
Auditing of Investor Partnerships
During the audit of partnerships formed to finance construction projects, it is important to consider issues related to the creation, operation and liquidation of the partnership. Each partner brings personal resources to the partnership and can be compensated in different ways. Auditors need to be aware of very specific information, especially information known to partners through the management council. Such information relates in particular to:
– the fairness of information provided to partners;
– management report;
– Contract construction projects;
– Respect for equality between partners based on their contribution;
– movement of partnership members;
– Amendment of partnership accounting presentation and evaluation;
– Irregularities, errors and violations are identified;
The fairness of information provided to partners is reviewed:
– On the one hand, by reviewing the Management Board’s management report and schedule, whether they are mandatory, and;
– On the other hand, by examining all the documents of the financial position of the partnership and the accounts referred to the partners.
The balance sheet of the partnership is audited as described above.
Auditing of contractor participation
Tax auditors auditing partnerships formed to implement construction projects need to be aware of specific issues related to their composition, operations and liquidity. Each partner brings personal resources to the partnership and can be compensated in different ways. The parties must be treated independently.
Such a perspective often leads to potential questions and problems, such as:
– What resources (fixed assets, capital, services, etc.) did each party contribute to the partnership?
– What is the property value and basis provided by each?
– Which members of the partnership have more active cooperation?
– What are the profits, losses and distribution rates of partnerships?
– Are there changes in the property structure of the partnership?
– Did the partnership distribute liquidations?
– What kind of property is distributed and who are the beneficiaries?