What are the regulations on risk management in tax administration in Vietnam?

What is the definition of risk management in tax administration in Vietnam?

According to Clause 15, Article 3 of the Law on Tax Administration 2019, “risk management in tax administration” means the systematic application of provisions and professional procedures to determine, evaluate and categorize the risks that may have negative impacts on the efficiency and validity of tax administration, providing a basis for tax authorities to reasonably allocate resources and apply effective management measures.

What are the regulations on risk management in tax administration in Vietnam?

According to Article 9 of the Law on Tax Administration 2019, risk management in tax administration is regulated as follows:

- Tax authorities shall implement risk management in taxpayer registration, tax declaration, tax payment, tax debts, tax enforcement, tax refund, tax audit, tax inspection, management and use of invoices, records and other tax administration tasks.

- Customs authorities shall implement risk management in tax declaration, tax refund, tax cancellation, tax audit, tax inspection and other tax administration tasks.

- Implementation of risk management mechanism in tax administration includes collecting, processing information, data related to taxpayers; formulating criteria of tax administration; evaluating regulatory compliance of taxpayers; categorizing levels of risk in tax administration and organizing the implementation of suitable tax administration measures.

- Evaluation of regulatory compliance of taxpayers and categorization of levels of risk in tax administration:

+ Assessment of regulatory compliance of taxpayers shall be conducted based on systems of criteria, information on work history of taxpayers, compliance processes and cooperating relationships with tax authorities in implementing tax provisions, and rate of tax violations;

+ Categorization of levels of risk in tax administration shall be conducted based on the regulatory compliance of taxpayers. During the categorization of risk levels, tax authorities shall consider relevant contents, including information on risk signs; signs, actions of tax administration violations; information from results of operations of tax authorities, other relevant authorities as prescribed in this Law; 

+ Tax authorities shall use the results of evaluation of taxpayers’ regulatory compliance and categorization of levels of risk in tax administration to implement suitable measures of tax administration.

- Tax authorities shall utilize information technology systems so as to automatically integrate and process data for the application of risk management in tax administration.

- The Minister of Finance shall stipulate criteria for evaluation of taxpayers' regulatory compliance, categorization of risk levels and application of risk management in tax administration.

What are the regulations on risk management in tax administration in Vietnam? (Image from the Internet)

What do tax refund claims subject to inspection before refund for risk management in tax administration in Vietnam include?

According to Article 73 of the Law on Tax Administration 2019, the classification of tax refund claims is as follows:

Classification of tax refund claims

1. A tax refund claim might be eligible for refund before inspection or subject to inspection before refund.

2. The following tax refund claims are subject to inspection before refund:

a) Tax refund claims submitted for the first time in the cases specified by tax laws. If a taxpayer’s first tax refund claim is rejected, the next claim will be considered the first.

b) Any claim submitted within 02 years from the day on which the penalties on the taxpayer’s tax evasion is imposed;

c) Claims submitted by organizations that are dissolved, bankrupt, shut down, sold or transferred to state-owned enterprises;

d) High-risk claims as classified by the risk management system;

dd) Any tax refund claim eligible for refund before inspection but the taxpayer fails to provide explanation or documents proving the declared tax, or the explanation or documents provided by the taxpayer is not convincing enough;

e) Claims for refund of taxes on exports or imports that are not paid for via a commercial bank or credit institution as prescribed by law;

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High-risk tax refund claims as classified by the risk management system are subject to inspection before refund according to risk management in tax administration.