What is the business suspension ? Shall a tax audit be conducted during business suspension period in Vietnam?

What is business suspension in Vietnam?

Pursuant to Clause 1, Article 206 of the taxpayer Law 2020, the regulation on suspension of business is as follows:

Suspension, Termination of  Business

1. The taxpayer must notify in writing to the business registration authority no later than 03 working days before the date of suspension or resumption of business before the notified period.

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Simultaneously, pursuant to Clause 1, Article 41 of Decree 01/2021/ND-CP regulating the legal status of taxpayers as follows:

Legal Status of taxpayers

The legal statuses of taxpayers in the National Database of Business Registration include:

1. “suspension of Business” is the legal status of an taxpayer during the period of temporary business suspension as stipulated in Clause 1, Article 206 of the taxpayer Law. The date for transferring the legal status to “suspension of Business” is the date the taxpayer registers to commence suspension. The end date of the legal status “suspension of Business” is the termination date of the suspension period as notified by the taxpayer or the date the taxpayer registers to resume business before the notified period.

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Thus, "suspension of business" can be understood as the legal status of an taxpayer during the period of temporary business suspension after having submitted a written notice to the business registration authority no later than 03 working days before the date of suspension. The date of transferring the legal status to "suspension of Business" is the date the taxpayer registers to begin the suspension.

What is the business suspension ? Shall a tax audit be conducted during business suspension period in Vietnam?  (Image from the Internet)

Shall a tax audit be conducted during business suspension period in Vietnam? 

Pursuant to Clause 2, Article 4 of Decree 126/2020/ND-CP governing tax management for taxpayers during the suspension of business as follows:

Tax Management for Taxpayers during suspension of Activities, Business

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2. During the period the taxpayer suspends activities, business:

a) The taxpayer is not required to submit tax declaration dossiers unless the taxpayer suspends activities, business for less than the full month, quarter, calendar year, or financial year, then the monthly, quarterly tax declaration dossiers and annual settlement dossiers must still be submitted.

b) Household businesses and individual businesses paying tax following the lump-sum method suspending activities, business will have their lump-sum tax obligations reassessed by the tax authority as prescribed by the Minister of Finance.

c) The taxpayer is not allowed to use invoices and is not required to submit reports on the use of invoices. If the taxpayer is approved by the tax authority to use invoices according to regulations on invoices, they must submit tax declaration dossiers and reports on the use of invoices as prescribed.

d) The taxpayer must comply with the decisions, notices of the tax management authority regarding debt collection, enforcement of the administrative decision on tax management, inspection, examination of tax law compliance, and handling of administrative violations in tax management in accordance with the Law on Tax Administration.

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Therefore, a suspended taxpayer can still be subject to tax audit.

What are the principles of tax audit in Vietnam?

Pursuant to Article 107 of the Law on Tax Administration 2019 governing the principles of tax audit as follows:

- Apply risk management in tax administration and the application of information technology in tax audit and tax audit.

- Comply with the provisions of this Law, other relevant legal regulations, and the formats for inspection, audit, procedures, and examination dossiers regulated by the Minister of Finance.

- Do not obstruct the normal activities of the taxpayer.

- When inspecting, auditing taxes at the taxpayer's premises, the head of the tax administration agency must issue a decision for inspection, audit.

- The tax audit, audit aims to evaluate the adequacy, accuracy, and truthfulness of the content in records, information, dossiers that the taxpayer has declared, submitted, presented to the tax administration agency; evaluate compliance with tax law and other relevant legal provisions by the taxpayer for tax handling according to legal regulations.

When is a tax audit conducted at the taxpayer's premise in Vietnam?

Pursuant to Article 110 of the Law on Tax Administration 2019 regulating cases of tax audit at the taxpayer's premise as follows:

- Case of files subject to prior inspection before tax refund; inspection after a tax refund for files subject to prior tax refund;

- Cases stipulated at point b Clause 2 Article 109 of the Law on Tax Administration 2019;

- Case of post-clearance inspection at the premises of the customs declarant according to customs legislation;

- Case of signs of legal violations;

- Case selected according to plan, thematic investigation;

- Case according to proposals of State Audit, Government Inspectorate, other competent agencies;

- Case of division, separation, merger, consolidation, conversion of taxpayer form, dissolution, termination of activities, equitization, termination of tax code validity, relocation of business location, and surprise inspections, inspections directed by competent authority, except for cases of dissolution, termination of activities where the tax authority does not need to conduct tax finalization as prescribed by law.