What methods are used to create risk thresholds in the classification of taxpayers in Vietnam?
What methods are used to create risk thresholds in the classification of taxpayers in Vietnam?
Pursuant to Clause 2, Article 6 of the Procedure promulgated with Decision 575/QD-TCT 2023 on creating risk thresholds as follows:
- The classification of high risk thresholds is implemented according to 2 methods:
+ Absolute number method: the number of taxpayers with high-risk signs is specifically assigned to each tax authority according to the number of taxpayers or according to the total risk score.
+ Relative number method: the number of taxpayers with high-risk signs is determined as a percentage calculated on the number of active taxpayers included in the analysis within the scope of analysis.
- The percentage (number) of taxpayers ranked as low risk corresponds to 50% of the total number of taxpayers taken from the lowest total risk score upwards.
- The percentage (number) of taxpayers ranked as medium risk: is the percentage (number) of taxpayers remaining after subtracting the number of high-risk taxpayers and the number of low-risk taxpayers.
In cases where a taxpayer falls within the high-risk threshold but has common scores, the subsidiary criteria index is considered with the priority order as follows:
| No. | Criteria Index |
|---|---|
| 1. | Number of periods of late VAT declaration from high to low. |
| 2. | Number of changes in premises, business locations. |
| 3. | Taxpayer has changed the legal representative or transferred business location leading to a change in the managing tax authority. |
| 4. | Within one (01) year to the evaluation period, taxpayer repeatedly penalized by tax authorities for administrative violations related to tax, invoices. |
| 5. | Taxpayer has a low ratio of "Total VAT payable/Total turnover from goods and service provision during this period." |
| 6. | Taxpayer has a high ratio of "Turnover from goods and service provision during this period/Turnover from goods and service provision in the preceding period." |
What methods are used to create risk thresholds in the classification of taxpayers in Vietnam? (Image from the Internet)
What are regulations on creation and use of the criteria index for assessing and identifying taxpayers with signs of risk in the management and use of invoices in Vietnam?
Based on Article 5 of the Procedure promulgated with Decision 575/QD-TCT 2023 regulating the creation and use of the Criteria Index for assessing and identifying taxpayers with signs of risk in the management and use of invoices as follows:
The Criteria Index for assessing and identifying taxpayers with signs of risk in invoice management and use promulgated under Decision 78/QD-TCT 2023 of the Director-General of the General Department of Taxation is uniformly applied at tax agencies at all levels to classify the risk level of taxpayers in invoice management and use.
In the event that the above-mentioned Criteria Index is amended, supplemented, or replaced, it will be applied according to the amended, supplemented, or replaced Criteria Index.
To meet management requirements in each period, the General Department of Taxation issues documents amending and supplementing the criteria indices outside the published indices within the authorized scope. The Risk Management Board coordinates with departments/units/provinces' Tax Departments to research, advise, and submit to the Director-General of the General Department of Taxation for issuing additional or adjusted risk analysis indices.
In necessary cases, to suit the actual tax management work at the local level, provincial and municipal Tax Departments directly under the central government must propose documents to the General Department of Taxation to amend and supplement criteria, criteria indices for risk assessment. The proposal document must clearly state the reasons; the basis for establishing criteria, criteria indices; calculation formulas; scores; weightings of each criterion, criteria index. The proposal document from the Tax Departments should be sent to the General Department of Taxation (via the Risk Management Board) no later than June 30 annually.
What are cases where a tax audit is conducted at the taxpayer's premises in Vietnam?
According to Clause 1, Article 110 of the Law on Tax Administration 2019, the cases for tax audit at the taxpayer's premises include:
- Cases where the dossier is subject to a pre-refund inspection; post-refund inspection for dossiers eligible for refund before inspection;
- Cases specified at point b, Clause 2, Article 109 of the Law on Tax Administration 2019:
+ Tax dossier contains contents needing clarification related to payable taxes, tax exemptions, tax reductions, deductible tax amounts carried forward, refunded taxes, and non-collectible taxes; the tax authority notifies and requires the taxpayer to explain or supplement information, documentation.
If the taxpayer has explained and supplemented information, documentation proving the declared tax amount is correct, the tax dossier is accepted; if not enough basis to prove the declared tax amount is correct, the tax authority requests the taxpayer to make additional declarations.
+ If after the deadline pursuant to the tax authority's notification, the taxpayer does not explain, supplement information, documentation, or make additional tax declarations, or if the explanation and additional tax declarations are not correct, then:
The head of the tax administration agency decides to fix the payable tax amounts or issues a decision to inspect taxes at the taxpayer's premises or uses this as a basis to build inspection and audit plans according to the principles of risk management in tax administration.
- Cases of post-clearance inspection at the premises of the customs declarant as prescribed by customs law;
- Cases with signs of legal violations;
- Cases selected according to plans, special topics;
- Cases based on recommendations by the State Audit, State Inspectorate, other competent authorities;
- Cases of division, separation, merger, consolidation, business type conversion, dissolution, cessation of operations, equitization, termination of tax code effectiveness, business location transfer, and other unexpected inspections, inspections as directed by competent authorities, except dissolution and cessation of operations where the tax authority is not required to finalize taxes as prescribed by law.
