Audit and insurance contributions determination process

​The National Insurance Institute conducts deductions audits with employers, to control whether the employer reported all employees income subject to insurance contributions (according to section 344 of National Insurance Law), and if insurance contribution were deducted in accordance with the law.
Some audits are based on deductions assessment by Tax Authority (according to section 384a of National Insurance Law). In that case, the discovered items qualified by Income Tax Authority as work income are also subject to insurance contributions.

Audit process

The inspector will take contact with the employers or their representative, and let them know that an audit is conducted and the period controlled within the audit framework. The inspector has authority to require any information and document necessary for a ruling on insurance contributions, such as: financial statements, accounting cards, forms 126, work papers, test scales and so on.
It should be noted that a full cooperation with the deductions inspector in the course of the audit and in producing required material for the audit, will allow for fines reductions, if impairments are found and insurance contributions are determined.

After reviewing the documents, the inspector will send his findings to the employer and/or his representative, and give them the opportunity to submit a response to the findings.
When the audit is over, the inspector sends by registered mail a determination of insurance contributions (according to section 358 of National Insurance Law).

The inspector will impose the employer on remunerations not accounted to employees as work wage and for which no insurance contributions we paid, or rule payments related to balances between the right amount of insurance contributions in accordance with the law and the insurance contributions actually paid.

One may file a petition against the inspector's decision and appeal - to learn more, click here.