Distinguishing Tax Inspection and Tax Examination Activities? In What Cases is Tax Inspection Conducted?
Distinguishing between Tax Audit and Tax Inspection Activities?
| Distinguishing Criteria | Tax Audit | Tax Inspection || --- | --- | --- || Concept | Tax audit activities are routine professional activities of tax administration authorities aimed at assessing the completeness and accuracy of the information and documents in tax dossiers or evaluating the compliance of taxpayers with tax laws. | Tax inspection is an activity carried out by tax administration authorities to evaluate the compliance of taxpayers with tax laws, verify and gather evidence to identify violations of tax laws based on the analysis of information and data related to taxpayers. || Nature | Tax audit activities are routine operational work of tax administration authorities. | Tax inspection is conducted according to the plan or unexpectedly by tax administration authorities. || Scope | - Tax audits are conducted on any taxpayer (Tax audits at the headquarters of tax administration authorities are routinely performed on tax dossiers. Tax audits at the taxpayer's headquarters are performed in cases such as:
+ The taxpayer does not explain, supplement tax dossiers as requested by the tax administration authorities or provides inaccurate explanations, fails to prove the correct tax amount payable, exemption, reduction, or refund;
+ Post-clearance tax inspections include planned inspections, sample inspections, inspections of import and export goods;
+ Inspections of subjects classified under tax risk assessment criteria. | - Tax inspection is applied when:
+ Detecting entities, organizations, individuals showing signs of violating tax laws;
+ To settle complaints and denunciations regarding taxes;
+ In cases of division, merger, consolidation, dissolution, bankruptcy, equitization;
+ Inspecting taxpayers at the request of Tax Management Heads at all levels or the Minister of Finance;
+ Based on recommendations from the State Audit, conclusions from the State Inspection and other competent authorities. || Location of Implementation | At the tax office or at the headquarters of the taxpayer. | Only performed at the headquarters of the taxpayer. || Purpose | To assess the completeness and accuracy of the information and documents in tax dossiers or evaluate compliance with tax laws by the taxpayer. | To evaluate the compliance with tax laws by the taxpayer; verify, gather, and analyze information and data related to the taxpayer. || Duration | - The duration of the audit is stipulated in the audit decision but not more than 10 working days at the taxpayer's headquarters (the audit period is calculated from the date of the audit decision’s announcement); in cases where the audit scope is large and the content is complex, the person who made the audit decision can extend the period once but not more than 10 working days at the taxpayer's headquarters;
– The tax audit report must be made within 5 working days from the end date of the audit period. | - Tax inspections conducted by the Government Inspectorate shall not exceed 60 days, in complex cases, it may be extended but not more than 90 days. For specially complex inspections involving multiple sectors and localities, the inspection period can be extended but not more than 150 days;
– Tax inspections conducted by the provincial inspectorate and ministerial inspectorate shall not exceed 45 days, in complex cases, it may be extended but not more than 70 days;
– Tax inspections conducted by the district inspectorate and departmental inspectorate shall not exceed 30 days; in mountainous, border, island, remote, and isolated areas, the inspection period can be extended but not more than 45 days. || Competent Authority | Tax Inspectorate - Audit Department, Sections, Divisions, Teams assigned the function, task of tax audit by tax authorities at all levels | General Department of Taxation, Provincial Departments of Taxation || Scale | Only audits the accounting data within the audit period as stated in the audit decision | Has a broader scale, may inspect accounting data included in the inspection decision and also inspect accounting data from previous audits |
When should tax inspection be conducted?
According to Article 113 of the Tax Administration Law 2019 regulating instances of tax inspection as follows:
Instances of tax inspection
1. When there are signs of violation of tax laws.
2. To settle complaints and denunciations or implement anti-corruption measures.
3. As required by tax management tasks based on tax risk classification results.
4. Based on recommendations from the State Audit, conclusions from the State Inspection and other competent authorities.
In cases satisfying any of the criteria mentioned above, competent authorities may proceed with tax inspection.
*Distinguishing between Tax Audit and Tax Inspection Activities? When should tax inspection be conducted?*
Who has the authority to issue tax inspection decisions?
According to Article 114 of the Tax Administration Law 2019 regulating the issuance of tax inspection decisions as follows:
Issuance of tax inspection decisions
1. The head of tax administration authorities at all levels has the authority to issue tax inspection decisions.
2. Tax inspection decisions must have the following main contents:
a) Legal basis for conducting the tax inspection;
b) Subjects, content, scope, and tasks of the tax inspection;
c) Duration of the tax inspection;
d) Head of the tax inspection team and members of the tax inspection team.
3. The tax inspection decision must be sent to the inspection subject no later than 3 working days from the date of signing.
4. The tax inspection decision must be announced no later than 15 days from the date of issuing the tax inspection decision.
Thus, the head of tax administration authorities at all levels has the authority to issue tax inspection decisions.
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