When does a taxpayer refuse a tax audit in Vietnam? When is a taxpayer subjected to a tax audit at their premises in Vietnam?

When shall a taxpayer refuse a tax audit in Vietnam?

According to Point a Clause 1 Article 111 of the Law on Tax Administration 2019 which stipulates the rights of taxpayers in tax audits at the taxpayer's premises, it provides:

Rights and obligations of taxpayers in tax audits at the taxpayer's premises

1. Taxpayers have the following rights:

a) Refuse the inspection if there is no tax audit decision;

b) Refuse to provide information and documents not related to the content of the tax audit; information and documents classified as state secrets, except when otherwise stipulated by law;

c) Receive the tax audit report and request an explanation of its contents;

d) Reserve opinions in the tax audit report;

đ) File complaints, initiate lawsuits, and claim damages according to legal regulations;

e) Denounce violations of the law during the tax audit process.

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Thus, taxpayers have the right to refuse a tax audit if there is no tax audit decision.

When shall a taxpayer refuse a tax audit in Vietnam? (Image from the Internet)

When is a taxpayer subjected to a tax audit at their premises in Vietnam?

According to Clause 1 Article 110 of the Law on Tax Administration 2019, the cases for tax audits at taxpayer's premises are stipulated as follows:

(1) Cases where the dossier is subject to inspection before tax refunds; inspection after tax refunds for dossiers subject to pre-refund;

(2) Cases as stipulated in Point b Clause 2 Article 109 of the Law on Tax Administration 2019;

(3) Post-clearance inspection at the premises of the customs declarant according to customs law;

(4) Cases with signs of law violations;

(5) Cases selected according to plans or thematic topics;

(6) Based on recommendations from the State Audit, Government Inspectorate, and other competent authorities;

(7) Cases involving division, separation, merger, consolidation, change of business type, dissolution, termination of operations, equitization, termination of tax identification number validity, relocation of business premises, and other extraordinary inspections or inspections directed by competent authorities, except in cases of dissolution, termination of operations where tax settlement according to legal regulations is not required by taxation authorities.

What are the procedures and processes for tax audits at the taxpayer's premises in Vietnam?

According to Clause 5 Article 72 of Circular 80/2021/TT-BTC, the procedures and processes for tax audits at the taxpayer's premises are as follows:

(1) Issuance of a tax audit Decision

- The tax authority issues a tax audit decision for cases specified in Article 110 of the Law on Tax Administration 2019. tax audits at the taxpayer's premises can only be conducted when there is a tax audit decision at the premises.

- The tax authority issues a tax audit Decision regarding the contents and periods at risk, excluding tax refund inspections. The tax audit Decision shall be made according to form number 04/KTT attached in Appendix 1 of Circular 80/2021/TT-BTC.

- The inspection period is determined according to the regulations at Clause 4 Article 110 of the Law on Tax Administration 2019. In the case of an extension, the Head of the inspection team reports to the competent authority to issue an Extension Decision according to form number 05/KTT attached in Appendix 1 of Circular 80/2021/TT-BTC.

(2) The inspection according to the tax audit Decision must be conducted no later than 10 working days from the issuance of the tax audit Decision, except in cases where the tax audit Decision has to be annulled according to form number 06/KTT attached in Appendix 1 of Circular 80/2021/TT-BTC or inspection time is postponed.

At the beginning of the tax audit, the Head of the tax audit team is responsible for announcing the tax audit Decision, drafting the Announcement Record, and explaining the contents of the tax audit Decision to ensure the taxpayer understands and complies. The Announcement Record of the tax audit Decision is made according to form number 07/KTT attached in Appendix 1 of Circular 80/2021/TT-BTC.

(3) If the taxpayer proposes in writing to postpone the inspection time, the document must clearly state the reasons and the postponement period. If the tax authority has justified reasons to postpone the inspection, they must notify the taxpayer in writing before the deadline for announcing the tax audit decision according to form number 08/KTT attached in Appendix 1 of Circular 80/2021/TT-BTC.

During the inspection, if force majeure reasons arise that prevent the continuation of the inspection, the Head of the inspection team reports to the person who issued the tax audit Decision to suspend the inspection. The suspension period is not counted in the inspection period.

(4) During the tax audit, if adjustment to the tax audit Decision is required (such as changing the Head, members, or supplementing the inspection team, adding content, inspecting periods, or adjusting the reduction of team members, content, or inspecting periods), the Head of inspection must report to the competent authority to issue an Adjustment Decision to the tax audit Decision. The Adjustment Decision is made according to forms number 09/KTT, 10/KTT, and 11/KTT attached in Appendix 1 of Circular 80/2021/TT-BTC.

(5) tax audit Report

- Upon concluding the tax audit at the taxpayer's premises, the Inspection Team drafts a tax audit Report according to form number 12/KTT attached in Appendix 1 of Circular 80/2021/TT-BTC and announces it publicly before the Inspection Team and the taxpayer for comments and explanations. The taxpayer's comments and explanations must be filed with the draft report (if any). The Public Announcement Record of the draft tax audit Report is made according to form number 13/KTT attached in Appendix 1 of Circular 80/2021/TT-BTC.

The commentary, finalization, and signing of the tax audit Report between the Inspection Team and the taxpayer must be done within 05 working days from the end of the inspection.

If the taxpayer still has comments, they are recorded in the report or filed with the signed report. The tax audit Report must be signed on each page by the Head of the inspection team and the taxpayer (or the taxpayer's legal representative) and stamped with the taxpayer's seal if they have one (including both individual, interleaved seals between the pages of the report).

- In case of any mechanism, policy related issues requiring consultation, this is recorded in the report. Upon receiving a response, the Inspection Team or the inspection department is responsible for drafting an addendum with the taxpayer according to form number 14/KTT attached in Appendix 1 of Circular 80/2021/TT-BTC to deal with as per the law.

- If the taxpayer does not sign the tax audit Report at the end of the stipulated period, the Head of the inspection team must draft an administrative violation record regarding the non-signature and report to the competent authority to issue an administrative penalty decision according to the regulations, simultaneously requesting the taxpayer to sign the inspection report.

(6) Handling tax audit results

- No later than 03 working days from the date of signing the tax audit Report with the taxpayer, the Head of the inspection team must report the inspection results to the leading inspection section and the person who issued the inspection decision.

In cases where inspection results lead to tax-related handling or administrative penalties, the head of the tax authority issues a Decision on Tax Violation Handling or transfers the file to the authority with jurisdiction to sanction. If the inspection results do not lead to tax handling or administrative penalties, the issuer of the tax audit Decision issues an Inspection Conclusion according to form number 15/KTT attached in Appendix 1 of Circular 80/2021/TT-BTC.

- In cases where tax evasion or tax fraud signs are detected during the tax audit, within 05 working days from the conclusion of the inspection, the inspection team must report to the head of the tax authority to consider conducting an audit or transferring the inspection file to the investigative agency according to legal regulations.

The procedures, processes, and time limit for issuing a Decision on Handling Tax Violations or transferring the file to the authority with jurisdiction to sanction are conducted or transferring the inspection file to the investigative agency as per the regulations under the Law on Handling Administrative Violations 2012, Criminal Procedure Code 2015, associated guiding documents, and Decree No. 125/2020/ND-CP dated October 19, 2020, by the Government of Vietnam on sanctions for administrative violations regarding taxes and invoices.

(7) The inspections at the taxpayer’s premises are recorded electronically in a diary.