**1. Introduction**

The complexity of tax systems around the world, as well as their constant changes, has demanded increasing attention from companies and their managers to avoid undesirable cash disbursements for payment of infringement notices arising from questioning by tax authorities related to improper procedures of companies when paying taxes. Additionally, it has required them to be diligent in identifying lawful tax planning alternatives to optimize the tax burden on their operations [1].

In the case of Brazil the complexity and dynamism of the its tax system is growing in sophistication, especially after the implementation of the Public Digital Bookkeeping System (SPED) and has occasioned the need for companies to organize their business under appropriate tax governance for effective and efficient tax compliance, in order to maximize the legitimate economy of taxes and minimize the risk of possible questioning by the tax authorities, which may result in identification of tax contingencies and the consequent issuance of notices of violation (infringement notification), with a corresponding recovery of punitive fines and penalty interest [2].

SPED was established by Presidential Decree No. 6022/2007 and regulated by Normative Instruction of Internal Revenue Service of Brazil No. 787/2007, such as a smart tool that unifies the activities of receipt, validation, storage, and authentication of books and documents that comprise the commercial and fiscal bookkeeping companies through unique and computerized information flow.

The globalization, a typical feature of modern society, made the concept of risk society that, from the perspective of taxation and in relation to its aspects of ambivalence, indeterminacy, and uncertainty, affects taxpayers, creating juridical insecurity and confusion in meeting their tax obligations [3].

Risk can simply be defined as exposure to change. It is the probability that some future event or a set of events will occur. Therefore, risk analysis involves identifying potential adverse changes and the expected impact as a result in the organization [4].

The term 'risk' comes from the word *risicu* or *riscu*, in Latin (which means 'to dare', in English). It is customary to understand 'risk' as the possibility of 'something does not work,' but its current concept involves the quantification and qualification of uncertainty, both regarding 'loss' as the 'earnings,' in relation to the course of events planned, either by individuals or by organizations [5].

When investors buy stock, surgeons perform operations, engineers design bridges, entrepreneurs open their businesses, and politicians run for elected office, the risk is an unavoidable partner. However, their actions reveal that the risk need not be so feared today: managing it has become synonymous with challenge and opportunity [6].

The objective of the study contained in this chapter is to demonstrate the importance of tax risk management in mergers and acquisitions processes by conducting an investigative work called due diligence.

To achieve this objective, bibliographic and documentary research was used, as part of exploratory research, since information and previous knowledge were collected about the problem for which the answer was sought, as well as materials that have not yet received analytical treatment, such as laws, regulations, and official decrees [7].

So, in this topic 1 it is evidenced that the complexity of tax systems around the world has demanded increasing attention from companies to avoid undesirable cash disbursements for payment of infringement notices arising from questioning by tax authorities related to improper procedures of companies when paying taxes. Additionally, it has required them to be diligent in identifying lawful tax planning alternatives to optimize the tax burden on their operations.

In topic 2 the responsibility of company administrators in the management of tax risks is exposed. This topic initially demonstrates that good corporate

#### *The Management of Tax Risks in Mergers and Acquisitions - The Importance of Tax Due... DOI: http://dx.doi.org/10.5772/intechopen.96964*

governance practices attributed to the board of directors and, in its absence, the senior management of the organization, the fundamental task of identifying, prioritizing, and ensuring effective management of various risks that may affect its business and even its continuity. It points out that through tax governance, the company aims to identify the most beneficial tax incidence hypothesis, to allow their activities may be lawfully benefited by the reduction in tax burden or inserted in the context of no tax levy. The company should also minimize the generation of tax contingencies. Finally, it points out that managers—in compliance with the guidelines and limits set by the board—should choose the appropriate and specific techniques of risk management, especially those related to minimization, immunization, and transferring these risks.

Topic 3 explains the importance of accounting, tax and legal due diligence in merger and acquisition processes. He points out that the due diligence work has some important functions. Firstly, it serves to uncover risks of various natures and helps in the decision-making process in terms of shaping the agreement and finding a realistic price for the acquisition, because it allows for a better assessment of the target object. The slighting of asymmetries of information may be seen as a direct effect of due diligence. Then, he comments on the relationship between the parties involved, the need to hire a multidisciplinary team of specialists, the areas to be examined, the preparation of the pro forma balance sheet, the writing of the report and the sizing of the guarantees.

Topic 4 analyzes the main aspects of due diligence in the tax area. It highlights issues to be observed as measurement of liabilities and assets accounted for, identification of unaccounted assets and liabilities and disclosure of contingencies not quantified.
