How to manage risks associated with tax refund in Vietnam?

How to manage risks associated with tax refund in Vietnam?

Pursuant to Article 18 of Circular 31/2021/TT-BTC stipulating the application of risk management associated with tax refund as follows:

The tax authority classifies tax refund dossiers according to the provisions of the Law on Tax Administration, related legal documents, or current regulations. Regarding the classification of tax refund dossiers based on risk, based on the risk classification results of the tax refund dossiers in Article 13 of this Circular, the tax authority applies appropriate measures in resolving and handling tax refund dossiers as follows:

- Classification of tax refund dossier resolution

+ Tax refund dossiers classified as high-risk: Conduct pre-audit, refund afterwards

In 12 consecutive months from the beginning of the financial year, if the taxpayer has consecutive tax refund dossiers evaluated as high-risk:  
++ If the current risk assessment differs from the immediate preceding assessment in terms of total risk points or risk points in each criterion, indicator: The tax refund dossier is subject to pre-audit, refund afterwards.  
++ If the current risk assessment is the same as the immediate preceding assessment in terms of total points and points in each criterion, indicator; or if the risk points in each indicator are lower leading to a corresponding lower total risk points from the immediate preceding assessment:    
- If the previous contiguous audit or post-refund inspection did not reveal any incorrect reporting resulting in insufficient taxes payable or increased taxes refunded, the subsequent tax refund dossier is not subject to pre-audit.    
- If the previous contiguous audit or post-refund inspection revealed incorrect reporting resulting in insufficient taxes payable or increased taxes refunded, the subsequent tax refund dossier is subject to pre-audit.

+ Tax refund dossiers classified as medium and low-risk: Conduct refund first, audit later.

+ If, after applying the classification for tax refund dossiers, during the resolution process, the tax authority discovers indications of tax law or customs law violations by the taxpayer, or the taxpayer fails to explain or supplement the tax refund dossier, or the explanation and supplementation do not prove the declared tax amount correct, the tax authority changes the application of the classification type from refund first, audit later to pre-audit, refund afterwards; The approval for changing the classification type must be updated into the business information system.

- Post-refund audit and inspection

+ The order of post-refund audit and inspection is determined by the tax authority based on the total risk points sorted from high to low within five (05) years from the date of the tax refund decision:

++ High risk (for tax refund dossiers not subject to pre-audit as prescribed in point a, clause 1 of this Article): Conduct audit and inspection within one (01) year from the tax refund decision date;
++ Medium risk: Conduct audit and inspection within three (03) years from the tax refund decision date;
+ Low risk: Conduct audit and inspection within five (05) years from the tax refund decision date;
+ Depending on practical situations, the tax authority may conduct post-refund audit and inspection sooner than the specified period.
+ The General Department of Taxation specifies the procedures for post-refund audit and inspection; combined with inspections and audits for tax law compliance as prescribed.

How to manage risks associated with tax refund in Vietnam? (Image from the Internet)

What are inspection measures for risk management in tax administration in Vietnam?

Pursuant to Article 23 of Circular 31/2021/TT-BTC stipulating as follows:

Inspection and assessment of application of risk management to tax administration

1. Conduct inspection and assessment of the following contents:

a) The quality of implementing risk management measures and techniques;

b) The effectiveness and efficiency of applying risk management in tax administration activities;

c) The organization and results of implementing inspection, audit decisions or other professional measures based on the application of risk management;

d) Evaluate the effectiveness of the criteria, indicators for tax law compliance assessment, and taxpayer risk classification.

2. Inspection and assessment measures

a) Collect information, data reports from tax authorities at all levels, Departments, and units under the General Department of Taxation regarding the implementation and application of risk management;

b) Collect, analyze, and aggregate information on the results of applying risk management in tax administration activities;

c) Organize working groups to inspect the implementation and application of risk management at tax authorities at all levels.

3. The General Director of the General Department of Taxation assigns responsibilities to risk management units to inspect and evaluate the implementation, application of risk management in tax administration as stipulated in clause 2 of this Article. The assessment is conducted regularly; Periodic reports (semi-annual and annual) and according to specific business requirements.

Thus, the inspection and assessment measures for risk management in tax administration include:

- Collect information, data reports from tax authorities at all levels, Departments, and units under the General Department of Taxation regarding the implementation and application of risk management;

- Collect, analyze, and aggregate information on the results of applying risk management in tax administration activities;

- Organize working groups to inspect the implementation and application of risk management at tax authorities at all levels.

What are regulations on supervision and assessment of plans for improving compliance in Vietnam?

Pursuant to Article 24 of Circular 31/2021/TT-BTC stipulating as follows:

- Supervise and evaluate the following contents:

+ The organization and implementation of compliance enhancement plans;

+ The results and effectiveness of the compliance enhancement plan. Specifically:

++ The effectiveness and efficiency of applying handling measures implemented by tax authorities at all levels based on the analysis and risk identification of each taxpayer segment;
++ The actual results and expected outcomes of implementing risk mitigation measures through compliance measurement.

- The application of transparent processes in developing and implementing compliance enhancement plans;

- Improve the overall compliance levels of taxpayer groups and different tax obligations;

- Organizational structure and human resources of tax authorities at all levels in implementing the plan to ensure its effectiveness and efficiency according to the set objectives.

* Supervision and assessment measures

- Collect information, data reports from tax authorities at all levels, Departments, and units under the General Department of Taxation regarding the implementation of compliance enhancement plans;

- Collect, analyze, and aggregate information on the results of the implementation;

- Organize working groups to inspect at tax authorities at all levels.

- The General Director of the General Department of Taxation assigns responsibilities to risk management units to supervise and evaluate the implementation of compliance enhancement plans.

The supervision and assessment are conducted regularly, with periodic reports (semi-annual and annual) and according to the progress requirements for implementing the compliance enhancement plan.