What are the procedures for tax audits at the taxpayers’ premises in Vietnam?

When is a tax audit conducted at the taxpayers’ premises in Vietnam?

According to Clause 1, Article 110 of the Law on Tax Administration 2019, the cases where tax audits are conducted at the taxpayers’ premises include:

- Cases where the records are subject to pre-tax refund inspection; post-tax refund inspection for records subject to pre-tax refund;

- Cases stipulated in Point b, Clause 2, Article 109 of the Law on Tax Administration 2019:

+ Cases where the tax file has contents that need clarification related to the tax amount to be paid, exempted, reduced, remaining deductible for the next period, refunded, or not collected, the tax authority shall notify the taxpayer to explain or supplement information and documents.

If the taxpayer has adequately explained and supplemented information and documents proving that the declared tax amount is correct, the tax file will be accepted; if there is insufficient basis to prove that the declared tax amount is correct, the tax authority shall require the taxpayer to submit an amended declaration.

+ If the taxpayer does not explain, supplement information and documents, or does not submit an amended tax declaration, or provides incorrect explanations according to the tax authority's notice, then:

The head of the tax authority shall decide to impose the payable tax amount or issue a decision for a tax audit at the taxpayer’s premises or use it as a basis for planning checks and inspections according to risk management principles in tax management.

- Cases of post-customs clearance inspection at the customs declarant's premises as stipulated by customs law;

- Cases showing signs of legal violations;

- Cases selected according to plans or specific topics;

- Cases based on suggestions from State Audit, State Inspectorate, or other competent authorities;

- Cases involving division, separation, merger, consolidation, conversion of enterprise type, dissolution, cessation of operation, equitization, ending of tax code effectiveness, change of business location, and other urgent inspections or inspections as directed by competent authorities, except in cases of dissolution or cessation of activities where the tax authority does not need to settle tax according to law.

What are procedures for tax audits at the taxpayers’ premises in Vietnam? (Image from the Internet)

What are the procedures for tax audits at the taxpayers’ premises in Vietnam?

Based on Clause 5, Article 72 of Circular 80/2021/TT-BTC, the procedures for tax audits at the taxpayers’ premises are as follows:

(1) Issuance of tax audit Decision

The tax authority issues a tax audit decision for cases prescribed in Article 110 of the Law on Tax Administration 2019. tax audits at the taxpayers’ premises are only conducted when a tax audit decision is issued.

The tax authority issues a tax audit Decision for risky issues and periods, excluding tax refund inspections. The tax audit Decision is made according to Form No. 04/KTT, issued with Appendix I of Circular 80/2021/TT-BTC.

The inspection duration is determined pursuant to Clause 4, Article 110 of the Law on Tax Administration. In case of an extension, the Head of the inspection team reports to the authorized person to issue an Extension Decision according to Form No. 05/KTT issued with Appendix I of Circular 80/2021/TT-BTC.

(2) The inspection must commence no later than 10 working days from the issuance date of the tax audit Decision, except if the decision is abolished according to Form No. 06/KTT issued with Appendix I of this Circular or if the inspection is postponed.

At the start of the tax audit, the leader of the tax audit team is responsible for announcing the tax audit Decision, preparing a Minutes of announcement, and explaining the contents of the tax audit Decision for the taxpayer to understand and comply. The Minutes of announcement of the tax audit Decision is prepared according to Form No. 07/KTT issued with Appendix I of Circular 80/2021/TT-BTC.

(3) If the taxpayer requests to postpone the inspection period with a reason and postponement duration, or if the tax authority has force majeure reasons for postponement, the tax authority must notify the taxpayer before expiration of the decision announcement period according to Form No. 08/KTT issued with Appendix I of Circular 80/2021/TT-BTC.

During the inspection, if unavoidable circumstances hinder its continuation, the head of the inspection team reports to the issuer of the Inspection Decision to temporarily suspend the inspection. The suspension period is not included in the inspection duration.

(4) If during the tax audit there arises a need to amend the Inspection Decision (change the team leader, members, or add members, adjust contents, periods of inspection, or reduce team members, contents, periods), the head of the inspection team must report to the authoritative figure to issue an Adjustment Decision. The Adjustment Decision follows forms No. 09/KTT, 10/KTT, 11/KTT issued with Appendix I of Circular 80/2021/TT-BTC.

(5) tax audit Minutes

- At the end of the tax audit at the taxpayers’ premises, the inspection team prepares a draft tax audit Minutes according to Form No. 12/KTT issued with Appendix I of this Circular, and publicly announces it before the inspection team and the taxpayer for comments and explanations. The taxpayer's comments and explanations must be stored with the draft minutes (if any). The publicly announced Minutes are prepared according to Form No. 13/KTT issued with Appendix I of Circular 80/2021/TT-BTC.

The opinion on explanations, finalization, and signing of the tax audit Minutes between the inspection team and the taxpayer must be done within 5 working days from the end of the inspection. If the taxpayer still has opinions, they are recorded in the Minutes or stored with the signed Minutes. The tax audit Minutes must be signed on each page by the head of the inspection team and the taxpayer (or the taxpayer's lawful representative) and bear the taxpayer's seal if an organization with an individual seal (including distinct seals, overlaps between pages).

- Cases where policy mechanism inquiries are recorded in the minutes. When receiving a response document, the inspection team or the inspecting division is responsible for drafting an attachment to the minutes with the taxpayer according to Form No. 14/KTT issued with Appendix I of Circular 80/2021/TT-BTC to address issues in accordance with the law.

- If the taxpayer does not sign the tax audit Minutes by the expiration of the stipulated period, the leader of the inspection team must prepare an administrative violation record for not signing the minutes, report to the authority to decide on administrative violation penalties in accordance with regulations, and simultaneously request the taxpayer to sign the tax audit Minutes.

(6) Handling tax audit results

- Within a maximum of 3 working days from signing the tax audit Minutes with the taxpayer, the leader of the inspection team must report the inspection results to the head of the inspecting division and the issuer of the Inspection Decision.

If tax handling or administrative violation penalties result from the inspection, the head of the tax authority must issue a Decision on handling tax violations or transfer files to the authority for penalties. If the inspection results do not involve tax handling or administrative violation penalties, the issuer of the Inspection Decision shall issue an Inspection Conclusion according to Form No. 15/KTT issued with Appendix I of Circular 80/2021/TT-BTC.

- If the tax audit reveals tax actions with signs of tax evasion or fraud, within 5 working days from the inspection's conclusion, the inspection team must report to the head of the tax authority to consider conducting an audit or transferring the inspection file to the investigation agency as prescribed by law.

The order, procedures, and timeline for issuing a Decision on tax violation handling or transferring a file to the authority for penalties or transferring the inspection file to the investigation agency are conducted in accordance with the Law on Handling Administrative Violations, the Criminal Procedure Code, guiding documents, and Decree 125/2020/ND-CP.

(7) tax audits at the taxpayers’ premises are to be recorded electronically.

What are the rights and obligations of taxpayers during tax audits at their premises in Vietnam?

The rights and obligations of taxpayers during tax audits at their premises are stipulated in Article 111 of the Law on Tax Administration 2019, including:

(1) Taxpayers have the following rights:

- Refuse inspection without a tax audit decision;

- Refuse to provide unrelated information, documents to the tax audit content; information and documents classified as state secrets, unless otherwise prescribed by law;

- Receive the tax audit minutes and request explanations of the inspection minute contents;

- Preserve opinions in the tax audit minutes;

- Lodge complaints, institute lawsuits, and claim damages as prescribed by law;

- Report violations committed during the tax audit process.

(2) Taxpayers have the following obligations:

- Comply with the tax audit decision of the tax authority;

- Provide promptly, fully, and accurately information and documents related to the inspection contents as requested by the tax audit team; be legally responsible for the accuracy and truthfulness of the provided information and documents;

- Sign the tax audit minutes within 5 working days from the conclusion of the inspection;

- Comply with recommendations in the tax audit minutes, conclusions, and decisions on handling tax audit results.