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

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

According to Clause 1, Article 3 of Circular 31/2021/TT-BTC, applying risk management in tax administration involves the use of operational procedures, principles, methods, risk management techniques, and the results of tax law compliance evaluations, determining the taxpayer's risk level to decide on implementing operational measures in tax administration.

What is the application of risk management in tax administration in Vietnam? (Image from Internet)

What are the risk management rules in tax administration in Vietnam?

According to Article 4 of Circular 31/2021/TT-BTC, risk management rules in tax administration are as follows:

- Applying risk management ensures the effectiveness and efficiency of tax administration; encourages and facilitates taxpayers to voluntarily comply well with the tax laws and tax administration, while promptly preventing, detecting, and handling violations of tax laws and tax administration.

- Risk management information is collected from both internal and external information sources of the tax authority (including foreign information) as per the legal regulations; centralized management at the General Department of Taxation through information technology applications, and is processed, shared, and provided to tax authorities at all levels, and other state management agencies to serve tax administration purposes in accordance with the law.

- The evaluation and classification of the tax law compliance level and the taxpayer's risk level are carried out automatically, periodically, using one or a combination of methods stipulated in Circular 31/2021/TT-BTC, based on legal regulations, tax administration procedures, operational measures, taxpayer segmentation, criteria specified in this Circular, and the taxpayer database.

- Based on the evaluation results of tax law compliance, classification of taxpayer risk level, information on tax management support applications of the tax authority, violation signs, other risk indicators provided at the time of decision-making, the tax authority shall:

+ Decide on inspection, audit, supervision, or apply appropriate operational measures.

+ Develop a plan to enhance overall compliance suitable to the tax authority's resources based on an analysis of the behavior's nature, cause, and scale of each tax law compliance level, risk level.

- In case of compliance with the legal regulations, provisions in Circular 31/2021/TT-BTC, and risk management guidelines, tax officials are exempt from personal liability as per legal regulations.

- In case of risk management application failure or non-fulfillment of risk management requirements as stipulated in Circular 31/2021/TT-BTC, risk management is performed manually through proposal approval or documented issuance by an authorized person applying tax management operational measures as regulated by the Law on Tax Administration and guiding documents.

- If information changes result in changes in tax law compliance evaluation results and taxpayer risk level classification, and the risk management application does not automatically adjust compliance level and risk level, the update is done manually by the tax official, following approval from an authorized person.

- The results of applying operational measures corresponding to risk rankings must be fully and accurately updated in the tax authority's tax management support applications or risk management application for each specific case, serving to complete and conduct tax law compliance evaluations and taxpayer risk classification in the next period.

What is the application of risk management in tax administration? (Image from Internet)

What are regulations on application of risk management in tax administration in Vietnam?

The application of risk management in tax administration is regulated in Article 3 of Circular 31/2021/TT-BTC as follows:

(1) Based on the tax law compliance evaluation results in Article 10 of Circular 31/2021/TT-BTC, taxpayer risk classification results in Article 11 of Circular 31/2021/TT-BTC, Article 12 of Circular 31/2021/TT-BTC, and business information at the time of decision-making, the tax authority determines the list of taxpayers classified according to risk levels in each period and performs:

- Tax law compliance management;

- Risk management of taxpayer registration;

- Risk management in tax dossier inspection at the tax authority's headquarters;

- Risk management in tax refund management;

- Risk management in inspections and audits at the taxpayer's headquarters;

- Risk management in tax debt management and enforcement of tax administrative decisions;

- Risk management in invoice and document management;

- Risk management for taxpayers under special control and supervision;

- Risk management for individual taxpayers;

- Application of risk management in other operational activities in tax administration.

(2) The taxpayer risk list for cases mentioned in item (1) is updated on the tax management risk application. Tax authorities at all levels are responsible for summarizing, updating, and managing information on taxpayers at risk to serve tax management in the entire tax sector.

(3) The General Department of Taxation stipulates the periodic evaluation, establishment of the taxpayer risk list for the cases mentioned in item (1) to identify priorities in tax management to meet tax management requirements in each period.

(4) If there is suspected or detected information of tax law violation signs through inspection, audit, complaint letters, information from state management agencies, investigative authorities, the head of the tax authority decides to change inspection methods, levels, and other tax management measures according to authority and is responsible for their decision.