When are exports and imports classified as high risk for tax refunds inspected and supervised by the General Department of Taxation of Vietnam?

When are exports and imports classified as high risk for tax refunds inspected and supervised by the General Department of Taxation of Vietnam?

Based on Clause 2, Article 35 of Circular 80/2021/TT-BTC, which regulates the application of professional measures in tax refund dossier processing as follows:

Application of Professional Measures in Tax Refund Dossier Processing

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2. Based on the results of risk analysis and assessment, requirements for value-added tax refund management, or through inspections revealing signs of tax law or customs violations, tax authorities are responsible for providing information on the taxpayer's violations to customs authorities for inspection and supervision as per regulations.

The General Department of Taxation of Vietnam periodically on the 20th of the following month each quarter or ad hoc, when necessary, sends a written request to the General Department of Customs to apply criteria for channel categorization to perform inspection and supervision of exports and imports classified as high risk for tax refunds. The written request must clearly state the criteria for identification and inspection, supervision methods for enterprises; goods; geographical, and operational export-import fields consistent with the Customs Law.

Within 5 working days from receiving the request from the General Department of Taxation of Vietnam, the General Department of Customs must apply the channel categorization criteria and inspection, supervision measures for exports and imports. If not applied or if there are obstacles, the General Department of Customs must exchange documents with the General Department of Taxation of Vietnam within the mentioned timeframe and specify the reasons for not or not yet applying.

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Therefore, exports and imports classified as high risk for tax refunds will be inspected and supervised periodically every quarter by the General Department of Taxation of Vietnam on the 20th of the following month or ad hoc when necessary, via a written request to the General Department of Customs to apply channel categorization criteria.

When are exports and imports classified as high risk for tax refunds inspected and supervised by the General Department of Taxation of Vietnam? (Image from Internet)

Are tax refund claims classified as high risk for tax refunds inspected before or after the refund?

Based on Clause 2, Article 73 of the Tax Administration Law 2019 regulating the dossiers subject to pre-refund inspection as follows:

Classification of tax refund claims

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2. Dossiers subject to pre-refund inspection include:

a) Dossiers of taxpayers requesting tax refunds for the first time for each refund case under tax law. If the taxpayer submits a tax refund dossier to the tax authority for the first time but is not eligible for a tax refund, the next refund request is still considered the first tax refund request;

b) Dossiers of taxpayers requesting refunds within 2 years from the time of being sanctioned for tax evasion acts;

c) Dossiers of organizations in dissolution, bankruptcy, termination of operation, sale, transfer, or handover of state enterprises;

d) tax refund claims of high risk according to tax risk management classification;

e) tax refund claims in cases where refunds are made first, but the deadline stated in the tax authority's written notice expires and the taxpayer fails to explain or supplement the tax refund dossier or does not prove that the declared tax amount is correct;

f) tax refund claims for exported, imported goods not executed via payments through commercial banks or other credit institutions as per legal regulations;

g) tax refund claims for exports and imports subject to pre-refund inspection according to Government regulations.

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Hence, tax refund claims classified as high risk for taxes will be subject to pre-refund inspection.

How are tax refund claims classified as high risk for tax refunds processed?

Based on Point c, Clause 1, Article 34 of Circular 80/2021/TT-BTC that stipulates the processing of tax refund claims subject to pre-refund inspection as follows:

Tax Refund Dossier Processing

1. Determination of refundable tax amounts

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c) In cases where the tax refund dossier is subject to pre-refund inspection:

During the inspection of the tax refund dossier, if the tax authority identifies the tax amount eligible for a refund, the refund is processed for the tax amount that is confirmed eligible, without awaiting the verification results of the entire tax refund dossier; regarding tax amounts requiring verification or needing the taxpayer to explain or supplement the dossier, the refund is processed when conditions are met as per regulations.

In cases where the pre-refund inspection report identifies that the taxpayer has both taxable amounts eligible for a refund and amounts of tax, late payment, and fines to be recovered, the tax authority issues a decision to handle tax law violations and offset the refundable tax amount of the taxpayer against the state's budget offset refund decision using Form No. 02/QD-HT attached in Annex I of this Circular.

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Therefore, the processing of tax refund claims classified as high risk for taxes is conducted as follows:

- Refunds are processed for tax amounts confirmed eligible by the tax authority, without awaiting the verification of the entire tax refund dossier.

- Refunds are processed when all conditions are met as per regulations if the tax amount requires verification or if the taxpayer is required to explain or supplement the dossier.

- In cases where the pre-refund inspection report for a high-risk tax refund dossier identifies both eligible refundable tax amounts and amounts for recovered tax, late payments, and fines, the tax authority issues a decision to handle tax law violations and offset the refundable tax amount with the state budget offset refund decision.