What is emphasized supervision in tax administration in Vietnam?

What is emphasized supervision in tax administration in Vietnam?

Based on Article 3 of Circular 31/2021/TT-BTC, the provisions are as follows:

Definitions

1. Applying risk management in tax administration involves the application of procedural processes, principles, measures, risk management techniques, and results of legal compliance assessment and the taxpayer's risk level to decide on operational measures in tax management.

2. Risk management information refers to tax-related and pertaining information gathered to serve risk management applications in tax administration.

3. Compliance level is the classification assessment result by the tax authority on the taxpayer's adherence to tax law.

4. Compliance assessment criteria are standards used to evaluate the taxpayer’s legal compliance.

5. Compliance assessment index is specific value indicators of the criteria for assessing the taxpayer's legal compliance.

6. Evaluating tax compliance involves collecting, analyzing, verifying, and comparing information about the taxpayer's activity process and tax law compliance with the compliance criteria and assessment index to classify compliance level.

7. Tax law compliance management entails the tax authority evaluating tax law compliance, classifying risk levels, and analyzing taxpayer behavior, thereby allocating resources reasonably for management measures suitable for each level, to encourage compliance and prevent non-compliance behavior.

8. Taxpayer risk analysis is the analysis of taxpayer information to detect signs of tax law violations that could result in state budget loss due to tax.

9. Risk level is the seriousness of the risk determined based on the combination of frequency and consequence of the risk.

10. Risk level classification criteria are standards to evaluate and classify risk levels in tax management.

11. Risk level classification indicator is specific value information indicators of the risk level classification criteria.

12. Risk assessment involves classifying, considering, comparing risk levels with the classification criteria indicators and handling prior risks to prioritize them.

13. Risk indicators are elements containing informational values reflecting the potential of illegal behavior.

14. Signs of tax violations are elements with informational values, serving as a basis to identify actions violating tax law.

15. emphasized supervision is when the tax authority applies operational measures to taxpayers (assessed) at high risk of tax or non-compliance with tax law by activity field, locality, or within specific periods.

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Thus, according to the above regulation, emphasized supervision in tax administration is when the tax authority applies operational measures to taxpayers (assessed) at high risk of tax or non-compliance with tax law based on various activity fields, localities, or specific periods.

What is the order of emphasized supervision in risk management in Vietnam?

Based on Article 6 of Circular 31/2021/TT-BTC, the risk management conducted by the tax authority follows these steps:

Step 1. Evaluate the situation, determine objectives and risk management requirements

The tax authority reviews common risks and violations of taxpayers in implementing regulations under Article 17 of the Tax Administration Law 2019 or current regulations to identify the main risks needing handling, high-risk taxpayers, and direction for handling.

Step 2. Organize risk management information collection and processing

Risk management information is collected and processed under the provisions in Chapter II of this Circular.

If incorrect or incomplete information is discovered during the risk analysis, the taxpayer is responsible for providing, explaining, or supplementing information and documents according to the tax authority's notification time to ensure accurate tax compliance evaluation and taxpayer's risk level classification.

Step 3. Establish and update indicators to analyze and evaluate tax law compliance and taxpayer risk classification

Based on the situation evaluation results, stated risk management objectives, and requirements under Clause 1 of this Article, risk management information, and the application of IT to establish and update the criteria and weight used to evaluate, classify tax law compliance levels, and taxpayer's risk levels.

Step 4. Analyze, evaluate tax law compliance; identify taxpayer risk level; determine risk level in tax management operations; manage risk files for emphasized supervision cases

Taxpayers are segmented under identified conditions suitable for tax management requirements each period when conducting tax law compliance level analysis and taxpayer's risk level evaluation.

The analysis, classification of tax law compliance levels, and taxpayer's risk levels are carried out using methods specified in Article 5 of this Circular.

Step 5. Based on risk level identification results; evaluate taxpayer's legal compliance to apply tax management measures and develop a plan to overall enhance taxpayer compliance.

Step 6. Track, update, and evaluate feedback information on implementing tax management measures.

Step 7. Collect, process, use, store information; direct, guide adjustments, and supplement risk management applications to ensure effective tax management.

Thus, in the risk management, emphasized supervision occurs at Step 4.

What are regulations on the application of emphasized supervision to taxpayers in Vietnam?

According to Article 22 of Circular 31/2021/TT-BTC, emphasized supervision for taxpayers is conducted as follows:

- Taxpayers subject to emphasized supervision in terms of tax are those showing any of the following signs:

+ Taxpayers conducting bank transactions with suspicious signs under anti-money laundering laws related to tax evasion or fraud.

+ Taxpayers or their legal representatives prosecuted for tax, invoice, document violations.

+ Taxpayers showing high-risk tax signs under key subjects or through information gathered from tax authority management requiring tax management supervision.

+ Taxpayers selected from the list of non-compliant taxpayers as prescribed in Article 10 and those at very high, high-risk levels under Clause 1 Article 11 of Circular 31/2021/TT-BTC, and taxpayers who fail to explain, supplement information or provide insufficient explanations, supplement information per the tax authority's written notification and timeframe.

- Tax authorities at all levels are responsible for monitoring, supervising, and applying appropriate tax management operations for each case under Clause 1, Article 22 of Circular 31/2021/TT-BTC.

- The General Department of Taxation stipulates specific procedures for collecting, analyzing information, identifying emphasized supervision focal points, and supervising measures suitable with legal provisions over different periods.