What are regulations on 03 levels of risk in tax record classification in Vietnam?

What are regulations on 03 levels of risk in tax record classification in Vietnam?

Based on Article 71 of Circular 80/2021/TT-BTC, regulations concerning the tax record inspection at the tax authorities are as follows:

Tax record inspection at tax authorities

1. Tax record classification:

Tax records are categorized into 03 levels of risk: Low risk, medium risk, high risk.

...

Hence, the classification into 03 levels of risk in tax record classification is:

[1] Low risk,

[2] Medium risk,

[3] High risk.

What are regulations on 03 levels of risk in tax record classification in Vietnam? (Image from the Internet)

When does the tax authority propose to inspect tax records at the tax authority in Vietnam?

Based on Article 71 of Circular 80/2021/TT-BTC, regulations concerning the Tax record inspection at the tax authorities are as follows:

- Tax authorities propose plans to examine tax records at their headquarters or take actions according to provisions in clause 3, clause 4, Article 71 of Circular 80/2021/TT-BTC for files with high risk.

- Tax record inspection

Tax authorities conduct inspections, comparisons, and analyses of tax records containing inaccurate declarations, omissions, or any elements needing clarification related to the payable tax amount, tax exemptions, tax reductions, tax refunds, and the tax amount remaining for credit carryover to the next period. The tax authorities issue a notification (first time) in accordance with form number 01/KTT Download requiring taxpayers to explain and supplement additional information and documents.

Within 10 working days from the date the tax authority issues a notification for explanation or document supplementation, the taxpayer must provide explanations and additional information/documents. This can be done directly at the tax authority or in writing (hard copy or electronically).

If the taxpayer explains directly at the tax authority, the tax authority will draft a Minutes of Working according to form number 02/KTT Download attached as Annex I of this Circular.

- Handling inspection results

+ If the taxpayer has explained and supplemented information, documents (first or second time) proving that the declared tax amount is correct, the tax file will be accepted; the explanation and supplemented documents will be filed with the tax records.

+ If the taxpayer has explained and supplemented information, documents but there is insufficient evidence to prove the tax declaration is accurate or further clarification is required, the tax authority will issue a notification (second time) according to form number 03/KTT Download stating that the taxpayer may continue to provide explanations, supply additional documentation, or voluntarily file an amended tax declaration. The taxpayer is responsible for the content of the amended declaration. The explanation, provision of additional documentation, or amendment must be completed within 10 working days from the date the tax authority issues the notification. The tax authority can request explanations/additional information, documentation no more than 02 times per inspection at the tax authorities.

+ If the deadline according to the tax authority's notification (second time) passes and the taxpayer does not provide explanations, additional information, documents; or does not file an amended tax declaration; or provides explanations, amended declarations but cannot prove that the declared tax amount is correct, the tax authority will determine the tax payable if there are sufficient grounds for determination; if not, they will issue a decision to examine at the taxpayer's premises or use it as a basis to develop an audit, inspection plan according to risk management principles.

+ If the taxpayer has provided explanations or additional information, documents (second time) and it is sufficient for the tax authority to determine administrative violations regarding taxes, the tax authority will draw up a record of administrative violations and handle them according to regulations.

What are procedures for tax inspection at tax authorities in Vietnam for taxpayers under the emphasized supervision?

When examining at tax authorities for key supervision cases under the provisions of Article 22 of Circular 31/2021/TT-BTC, the Inspection Team collects information, documents, and data about the taxpayer from the tax industry's information system, such as registration documents, tax declaration, payment reports, invoice usage reports, financial statements, and information collected from third parties...complemented with direct tax management in the area to conduct in-depth analysis for taxpayers on the key supervision list. Specifically:

The basic in-depth analytical contents for taxpayers under the emphasized supervision at the tax authorities are conducted as follows:

- Analyze and determine the risk level according to the key supervision content.

- Analyze various indicators on financial statements, tax declarations.

+ Based on the Financial Statements report accessed from applications (BCTC report, search applications like TPH, DWH or other relevant applications), tax officials assigned tax inspection duties evaluate and analyze according to the fluctuations of indicators on financial statements in accordance with accounting policy regulations issued by the Ministry of Finance. Through analyzing fluctuating indicators to determine the taxpayer's risk level.

Compare indicators on financial statements with indicators on yearly tax returns, tax settlement declarations to compare, evaluate certain indicators like: revenue, expenses, profits to detect tax risk levels.

+ For VAT: Utilize monthly/quarterly VAT declarations on various applications TMS, DWH, eTax and risk scoring results on the TPR application for monthly/quarterly analysis to compare data to determine VAT tax risk level of the taxpayer.

+ For personal income tax: Use data on specific tax management applications like TMS, DWH, eTax,... to review and compare information, documents to determine the personal income tax risk level of the taxpayer.

+ For Resource Tax, Environmental Protection Tax: Use annual settlement declarations, monthly tax declarations on applications like TMS, eTax,...to analyze, inspect compare with legal provisions to assess the adequacy and accuracy of tax file information, taxpayer compliance, detect risks and violations in tax files.

- Analyze the level of tax payment compliance, implementation status, and violations in recent years:

Use data on tax management applications (TMS, TPH, DWH, and other related applications) to determine tax payment (tax debt) status of the taxpayer; compliance with tax obligations through various inspections, audits to determine taxpayer risk level.

- Analyze information collected from third parties: Compare data collected from third parties to analyze information, assess the taxpayer's risk level.

- The results of in-depth analysis to accurately determine specific content, risk level related to key supervision content for focus inspection.

- The inspection for taxpayers under the emphasized supervision follows the steps like tax record inspection at tax authorities, based on the in-depth analysis results to identify high-risk factors requiring explanation or additional information, documentation, or apply tax management measures for specific cases according to legal provisions.

- Taxpayers under the emphasized supervision who have been examined concerning key supervision contents and have completed tax file processing according to regulations shall be removed from the key supervision list unless the tax authority has grounds for continued key supervision to serve management needs.

- Monthly, tax authorities at various levels submit processing results for taxpayers under the emphasized supervision who have been examined back to the Tax General Department by entering results into the inspection, audit support system.

In cases where taxpayers are scheduled for inspection at their premises, but due to force majeure reasons like natural disasters, epidemics, ... (excluding overlap with audit, inspection, audit plans of superior agencies) cannot execute the inspection plan at the taxpayer's premise, the tax authority shall analyze and reassess the risks.

If the assessment result indicates high risk, apply in-depth analysis measures as guided in this section to conduct inspection at the tax authorities; if medium or low risk, report to the head of the tax inspection department to propose adjustments reducing on-site inspection plans at the taxpayer's premises.