General Department of Taxation of Vietnam: What are guidelines on taxpayer segmentation in Vietnam according to Decision 18/QD-TCT?

How many taxpayer segmentation options in Vietnam are there?

Pursuant to Article 6 of the Procedure promulgated together with Decision 18/QD-TCT of 2023 regarding taxpayer segmentation options as follows:

Taxpayer Segmentation

Before conducting the construction of the criteria index, assessing tax law compliance, classifying taxpayer risk levels, and applying tax management measures, the tax authority shall carry out taxpayer segmentation.

1. Options for taxpayer segmentation.

- Segmentation by entity: taxpayers who are individuals; taxpayers who are enterprises; taxpayers who are other organizations.

- Segmentation by taxpayer scale (large, medium, small) determined by: revenue or total income; capital scale or assets; the amount paid to the state budget; pre-tax accounting profit; the number of employees depending on the specific situation of each period and operating area.

- Segmentation by economic sector as issued together with Decision No. 27/2018/QD-TTg dated July 06, 2018 by the Prime Minister or according to current regulations.

- Segmentation by enterprise type according to the Enterprise Law.

- Segmentation by the area of production and business activities (by administrative hierarchy).

- Segmentation by economic sector: State capital area, foreign investment capital area, non-state (private) area.

- Segmentation by other criteria appropriate to tax management work requirements.

The segmentation of taxpayers is carried out by the tax authority before constructing criteria index, assessing tax law compliance, classifying taxpayer risk levels, and applying tax management measures. Taxpayer segmentation options are implemented according to the 07 listed methods.

General Department of Taxation of Vietnam: What are guidelines on taxpayer segmentation in Vietnam according to Decision 18/QD-TCT? (Image from the Internet)

General Department of Taxation of Vietnam Guides Taxpayer Segmentation According to Decision 18/QD-TCT?

According to the provisions of Article 6 of the Procedure promulgated together with Decision 18/QD-TCT of 2023, regarding taxpayer segmentation methods:

The taxpayer segmentation is carried out by the tax authority before constructing criteria index, assessing tax law compliance, classifying taxpayer risk levels, and applying tax management measures. Taxpayer segmentation options are implemented according to the 07 listed methods.

Subsequently, the Risk Management Department shall propose taxpayer segmentation plans suitable for assessing tax law compliance, classifying taxpayer risk levels, and building plans to enhance tax compliance to the General Department of Taxation of Vietnam.

At this time, tax authorities at all levels shall use taxpayer segmentation in implementing handling measures for tax law compliance levels and taxpayer risk levels.

The Information Technology Department cooperates with the Risk Management Department to establish and update group taxpayer segmentation options on data analysis and risk management applications.

How to assess and classify taxpayer risk levels in Vietnam?

Based on Clause 2, Article 8 of Decision 18/QD-TCT of 2023, the steps to assess and classify taxpayer risk levels are as follows:

Step 1: Assess Tax Law Compliance of Taxpayers.

Assessment time: Tax law compliance assessment of taxpayers is conducted periodically on the 25th of each month.

Conduct the assessment.

- The data analysis and risk management application automatically assesses the tax law compliance of taxpayers.

+ Assessment results:

- The data analysis and risk management application produces the tax law compliance assessment results of taxpayers according to form 02/QTr-QLRR and the assessment results of taxpayers who do not comply with tax laws according to form 02-1/QTr-QLRR issued together with this Procedure.

- The results of taxpayers' tax law compliance assessment are stored in the data analysis and risk management application for exploitation by tax authorities at all levels to serve tax management requirements.

- The assessment results of taxpayers who do not comply with tax laws are automatically transferred by the data analysis and risk management application to the focal monitoring and supervision function of taxpayers on the data analysis and risk management application.

Step 2: Classify Overall Risk Levels of Taxpayers.

Classification time.

The overall risk classification of taxpayers shall be conducted on April 15, June 30, and September 30 annually or as required by management work.

Conduct classification.

- The data analysis and risk management application automatically classifies the overall risk levels of taxpayers.

Classification results.

- The data analysis and risk management application produces the overall taxpayer risk classification results according to form 03/QTr-QLRR and the high and very high-risk taxpayer classification results according to form 03-1/QTr-QLRR issued together with this Procedure.

- The overall taxpayer risk classification results are stored in the data analysis and risk management application for exploitation by tax authorities at all levels to serve tax management requirements.

- The high and very high-risk taxpayer classification results are automatically transferred by the data analysis and risk management application to the focal monitoring and supervision function of taxpayers on the data analysis and risk management application.

Step 3: Classify Risk Levels in Tax Management Activities.

Conduct classification.

- For periodic classification activities: The data analysis and risk management application automatically conducts the risk classification in each tax management activity at the periodic times established as prescribed.

- For classification activities when files arise

As soon as files arise in each tax management activity, the data analysis and risk management application automatically conducts the risk classification of the tax management activity corresponding to the arising file.

Classification results.

- The data analysis and risk management application produces risk classification results in tax management activities of taxpayers according to form 04/QTr-QLRR issued together with this Procedure for periodic classification activities and classification activities when files arise.

- The risk classification results of taxpayers in tax management activities are stored in the data analysis and risk management application for exploitation by tax authorities at all levels to serve management requirements.