How long shall the duration of a tax audit at the taxpayer's premises in Vietnam be extended in case the inspection is complicated?

How long shall the duration of a tax audit at the taxpayer's premises in Vietnam be extended in case the inspection is complicated?

According to Clause 4, Article 110 of the 2019 Law on Tax Administration regarding tax audit at the taxpayer's premises, it is stipulated as follows:

tax audit at the taxpayer's premises

...

4. The procedure and process for tax audit are stipulated as follows:

a) Announce the tax audit decision at the commencement of the tax audit;

b) Compare the declared content with the accounting books, accounting documents, financial statements, risk analysis results on tax, and inspection information data at the tax office's premises, related documents, and the actual situation within the scope and content of the tax audit decision;

c) The inspection duration is determined in the inspection decision, but not exceeding 10 working days at the taxpayer's premises. The inspection duration is counted from the day the inspection decision is announced; in cases where the inspection scope is large and the content is complex, the person who decided on the inspection may extend it once, but not more than 10 working days at the taxpayer's premises;

d) Prepare the tax audit report within 5 working days following the end of the inspection period;

đ) Handle according to authority or propose competent authorities to handle based on the inspection results.

...

Thus, in cases where the inspection scope is large and the content is complex, the person who decided on the inspection may extend it once, but not more than 10 working days at the taxpayer's premises.

Note: The inspection duration is counted from the day the inspection decision is announced.

How long shall the duration of a tax audit at the taxpayer's premises in Vietnam be extended in case the inspection is complicated? (Image from the Internet)

How shall the tax audit results be handled in Vietnam?

According to Clause 4, Article 71 of Circular 80/2021/TT-BTC it is stipulated as follows:

Inspecting tax records at the tax office premises

1. Tax record classification:

Tax records are classified into 3 risk levels: Low risk, medium risk, high risk.

2. The tax authority proposes a plan to inspect tax records at the tax office premises or handle according to the provisions in Clauses 3 and 4 of this Article for high-risk files.

3. Inspecting tax records

The tax authority conducts inspections, comparisons, and analyses of tax records that have inaccurate, insufficient declarations or contain items requiring clarification regarding the tax payable, tax exemption amount, tax reduction amount, refundable tax amount, or remaining deductible amount carried forward. The tax authority issues a notification (1st time) using form No. 01/KTT requesting the taxpayer to explain and supplement information and documents.

Within 10 working days from the date the tax authority issues a notification requesting explanation or supplementary information and documents, the taxpayer must explain and supplement information and documents. This can be done directly at the tax office or through documentation (in paper form or electronically).

If the taxpayer provides explanations directly at the tax office, the tax office shall prepare a Work Minutes using form No. 02/KTT attached to Appendix I of this Circular.

4. Handling inspection results

a) In cases where the taxpayer has provided explanations and supplemented information and documents (1st or 2nd time) proving that the declared tax amount is correct, the tax record is accepted; the explanation and supplementary documentation is filed together with the tax records.

b) In cases where the taxpayer has provided explanations and supplemented information and documents but insufficiently proves the accuracy of the tax declaration contents or additional clarifications are needed, the tax authority issues a notification (2nd time) using form No. 03/KTT indicating that the taxpayer may continue to provide explanations, provide additional documents, or voluntarily amend the tax declaration documents. The taxpayer assumes responsibility for the content of the amended declaration. The deadline for explanation, provision of additional documents, or amendment of tax declaration documents is 10 working days from the date the tax authority issues the notification. The tax authority notifies the taxpayer to provide explanations and additional information not more than twice for each inspection at the tax office premises.

c) After the deadline stated in the tax authority's notification (2nd time), if the taxpayer does not explain, supplement information, documents, or amend the tax declaration documents; or if they do explain and amend the tax declaration documents but cannot prove the declared tax amount is correct, the tax authority shall determine the payable tax if there is sufficient basis to do so. If there is insufficient basis to determine the payable tax, the tax authority issues a decision to inspect at the taxpayer's premises or use it as a basis for developing an inspection and audit plan based on risk management principles.

d) In cases where the taxpayer has provided explanations or supplemented information and documents (2nd time) such that the tax authority has sufficient grounds to determine administrative violations related to tax, the tax authority prepares an administrative violation report and handles it according to regulations.

Thus, based on the aforementioned provisions, the handling of tax audit results is as follows:

- If the taxpayer has provided explanations and supplemented information and documents (1st or 2nd time) proving that the declared tax amount is correct, the tax record is accepted; the explanation and supplementary documentation is filed together with the tax records.

- In cases where the taxpayer has provided explanations and supplemented information and documents but insufficiently proves the accuracy of the tax declaration contents or additional clarifications are needed, the tax authority issues a notification (2nd time) using form No. 03/KTT indicating that the taxpayer may continue to provide explanations, provide additional documents, or voluntarily amend the tax declaration documents. The taxpayer assumes responsibility for the content of the amended declaration. The deadline for explanation, provision of additional documents, or amendment of tax declaration documents is 10 working days from the date the tax authority issues the notification. The tax authority notifies the taxpayer to provide explanations and additional information not more than twice for each inspection at the tax office premises.

- After the deadline stated in the tax authority's notification (2nd time), if the taxpayer does not explain, supplement information, documents, or amend the tax declaration documents; or if they do explain and amend the tax declaration documents but cannot prove the declared tax amount is correct, the tax authority shall determine the payable tax if there is sufficient basis to do so. If there is insufficient basis to determine the payable tax, the tax authority issues a decision to inspect at the taxpayer's premises or use it as a basis for developing an inspection and audit plan based on risk management principles.

- In cases where the taxpayer has provided explanations or supplemented information and documents (2nd time) such that the tax authority has sufficient grounds to determine administrative violations related to tax, the tax authority prepares an administrative violation report and handles it according to regulations.

What is the purpose of tax audits in Vietnam?

According to Section 1, Part 1 of the tax audit Process in Decision 970/QD-TCT in 2023, the purpose of tax audits is as follows:

- To strengthen tax audit work as per the provisions of the Law on Tax Administration, based on applying risk management mechanisms, using information technology in tax audits to promptly detect, prevent, and handle tax violations to avoid tax loss.

- To enhance the voluntary compliance of taxpayers with tax laws in implementing tax regulations.

- To implement administrative reforms in tax audits, facilitating the development of production, business of goods, and services by taxpayers.