What is the definition of tax risk under Tax Administration Law 2019 in Vietnam?

What is the definition of tax risk under Tax Administration Law 2019 in Vietnam?

According to Clause 11, Article 3 of the Tax Administration Law 2019, the definition of the tax risk is as follows:

Interpretation of Terms

In this Law, the terms below are understood as follows:

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4. “premises " of the taxpayer means the location where the taxpayer partially or fully operate their business, including the headquarters, branches, stores, factories, goods storage, asset storage; residences or places where tax is incurred. 

5. “tax identification number” or “TIN” means a series of 10 or 13 digits and other characters assigned by tax authorities to taxpayers to serve tax administration.

6. “tax period” means a period of time used to determine tax liabilities that must be paid towards the state budget in accordance with provisions on taxation.

7. “tax return” means a document stipulated by the Minister of Finance and used by taxpayers to declare information for the purpose of determining tax liabilities.

8. “customs declaration” means a document stipulated by the Minister of Finance and used as a tax return for imported or exported goods.

9. “tax dossier” is either an application for taxpayer registration, tax declaration, tax refund, tax exemption, tax reduction, late payment interest exemption, late payment interest cancellation, extension of tax payment deadline, tax payment by installments, tax cancellation; customs dossier; application for tax debt freezing; application for cancellation of tax debts, late payment interest, penalties.

10. “Tax statement” means the calculation of tax accrued in a tax year or over the period from the beginning of a tax year to the termination of taxable activities, or over the period during which taxable activities occur as prescribed by law.

11. “Tax year” is determined based on the Gregorian calendar, from January 01 to December 31; in case the fiscal year is different from the Gregorian year, the tax year will be the fiscal year.

12. “Tax liability fulfillment” means full payment of tax liabilities, late payment interest, penalties of tax violations and other amounts payable to the state budget.

13. “tax enforcement” means the application of measures specified in this Law and other relevant provisions to enforce taxpayers’ fulfillment of their tax liabilities.

14. “tax risk” means the risk of non-compliance from taxpayers leading to loss of the state budget revenue.

15. “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.

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Thus, Article 3 of the Tax Administration Law 2019 explains that tax risk means the risk of non-compliance from taxpayers leading to loss of the state budget revenue.

What is the definition of tax risk under Tax Administration Law 2019 in Vietnam? (Image from the Internet)

What are the regulations on the application of information technology to risk management in Vietnam?

Under Article 9 of Circular 31/2021/TT-BTC, the application of information technology to risk management is stipulated as follows:

- The risk management application and taxpayer database are developed and managed by the General Department of Taxation in a manner ensuring that information used for risk assessment shall be fully, accurately and promptly updated by connecting to electronic tax data processing systems and relevant information systems.

In case the systems encounter connection errors, information shall be updated, integrated, processed and retained on the systems immediately after such errors are remedied.

- Management measures shall be adopted to ensure data safety and confidentiality, computer safety and cybersecurty in accordance with regulations of law.

- The General Department of Taxation shall stipulate the responsibilities of tax authorities and tax officials to develop, manage, operate, update and use the risk management application appropriate for tax operations.

What does information serving risk management of tax authorities in Vietnam include?

According to Clause 1, Article 7 of Circular 31/2021/TT-BTC, information serving risk management of tax authorities includes:

- Information about business registration and tax registration; information about identity of founding members, owners and legal representatives of taxpayers; registration and use of employees; information about taxpayers’ status; number of times of changes in business registration and tax registration information; capital contribution by members; main business lines;

- Information about tax declaration dossiers; tax payments; tax arrears; tax incentives, tax exemption and reduction; tax deferral; tax refund; registration, management and use of invoices and records; information about complaints and denunciations; information about inspection results and post-inspection actions; information about transfer pricing;

- Other information.