Vietnam: What are the differences and similarities between tax audit and tax inspection? How many are there cases in which a tax inspection is conducted?
What are the differences and similarities between tax audit and tax inspection in Vietnam?
Pursuant to the Law on Tax Administration 2019, Decision 970/QD-TCT in 2023 and Decision 1404/QD-TCT in 2015, it is possible to distinguish tax audit and tax inspection in Vietnam by the following criteria:
Criteria | Tax audit | Tax inspection |
Concept | Tax audits are regular professional activities of tax authorities to assess the completeness and accuracy of information and documents in tax dossiers or assess taxpayers' compliance with the law. | Tax inspections are conducted by tax authorities to assess taxpayers' compliance with the law, and verify and collect evidence to identify tax law violations based on the analysis of information and data related to taxpayers. |
Nature | Tax audits are regular professional activities of tax authorities. | Tax inspections are conducted periodically or irregularly by tax authorities. |
Scope | - Tax audits are conducted with any taxpayer (Tax audits at headquarters of tax authorities are conducted regularly for tax dossiers. Tax inspection at the taxpayer's headquarters shall be carried out in the following cases: + Taxpayers fail to explain or declare additional tax dossiers at the request of tax authorities or explain or supplement incorrect declarations, fail to prove the amount of tax payable, tax exemption, reduction or refund; + Post-clearance inspection cases include planned inspection, sample selection inspection, inspection for imported and exported goods; + Inspection of inspected subjects according to tax risk assessment criteria. | – Tax inspections are conducted : + When detecting agencies, organizations and individuals showing signs of tax law violations
+ To settle tax complaints and denunciations
+ In case if separation, merger, consolidation, dissolution, bankruptcy, equitization
+ To inspect taxpayers at the request of heads of tax authorities at all levels or the Minister of Finance
+ According to recommendations of the State Audit, conclusions of the State Inspectorate and other competent authorities |
Execution location | Conducted at the supervisor tax authorities or at the headquarters of taxpayers. | Conducted only at the headquarters of taxpayers. |
Purpose | Assess the completeness and accuracy of information and documents in tax dossiers or assess taxpayers' compliance with tax laws | Assess taxpayers' compliance with the law; verify and collect and analyze information and data related to taxpayers |
Time limit | - The tax audit time limit is determined in the inspection decision but must not exceed 10 working days at the headquarters of taxpayers (the inspection time limit is counted from the date of announcement of the inspection decision); in case the scope of the inspection is large and the contents are complicated, the decision issuers may extend it 01 time but not exceeding 10 working days at the headquarters of taxpayers; – Make a tax audit record within 05 working days from the expiry date of the tax audit period. | - The inspection conducted by the Government Inspectorate shall not exceed 60 days, in complicated cases, the time limit shall be extended but not exceeding 90 days. For particularly complex inspections, involving many fields and localities, the inspection period may be extended, but not exceeding 150 days;
– The inspection shall be conducted by the provincial inspectorate or the ministerial inspectorate within 45 days, in complicated cases, the time limit shall be extended, but not exceeding 70 days;
– The inspection shall be conducted by the District Inspectorate or the Departmental Inspectorate within 30 days; In mountainous, border, island, remote, and difficult-to-travel areas, the inspection period may be extended, but not exceeding 45 days. |
Authority | Tax Audit and Inspection Departments, Divisions, Departments and Teams are assigned tax audit functions and tasks under tax authorities at all levels | General Department of Taxation, Tax Departments |
Scale | Inspect accounting data only in the tax audit period stated in that Inspection Decision | On a broader scale, inspect accounting data recorded in the Inspection Decision and inspect accounting data from previous inspections |
In addition, based on the Law on Tax Administration 2019, tax audit and tax inspection have basic similarities as follows:
- The tax audit/inspection record must be sent to taxpayers. After tax inspection and examination, a written conclusion must be sent to the taxpayer.
- The tax audit/inspection activities are both powers of tax authorities.
- Apply risk management to tax administration; apply information technology to tax audits and tax inspections.
- Comply with the provisions of the Law on Tax Administration and other relevant regulations.
- Tax document examinations must not obstruct normal operation of taxpayers.
- When deciding to carry out a tax audit or tax inspection on the taxpayer’s premises, the head of the tax authority shall issue an inspection decision.
- Tax audit and tax inspection are meant to assess the adequacy and accuracy of the documents submitted or presented to tax authorities by taxpayers; and the taxpayers’ compliance with tax laws and relevant laws.
How many are there cases in which a tax inspection is conducted in Vietnam?
Pursuant to Article 113 of the Law on Tax Administration 2019 on tax inspection cases as follows:
Cases of tax inspection
1. A tax offence is suspected.
2. The inspection is necessary to settle a complaint or implement anti-corruption measures.
3. The inspection is necessary for tax administration on the basis of the classification of risks in tax administration.
4. The inspection is requested by State Audit Office of Vietnam, State inspectorate or another competent authority.
Thus, there are 04 cases in which a tax inspection is conducted in Vietnam, including:
- A tax offense is suspected.
- The inspection is necessary to settle a complaint or implement anti-corruption measures.
- The inspection is necessary for tax administration on the basis of the classification of risks in tax administration.
- The inspection is requested by the State Audit Office of Vietnam, the State Inspectorate, or another competent authority.
What are the procedures for conducting tax inspections at the headquarters of taxpayers in Vietnam?
Pursuant to Section II Part II of the Process attached to Decision 1404/QD-TCT in 2015, the procedures for conducting tax inspections are carried out in the following steps:
Step 1: Gather documents, analyze, and determine inspection contents:
- Based on the annual inspection plan, the head of the inspection department shall assign tax inspectors to gather documents and analyze and determine inspection contents.
- The inspection department and tax inspectors may not request the taxpayer to provide information and documents but exploit information and documents already available at tax authorities such as Documents and records on tax registration, declaration, payment, reports on the use of invoices,... of the taxpayer who has submitted them to the tax authority.
Step 2: Issue an inspection decision:
Based on the results of determining inspection contents, the leader of the inspection department plans to establish an inspection team, including the head of the inspection team; and members of the inspection team; in case of necessity, there is a deputy head of the inspection team, to submit to the head of the tax authority for approval the inspection decision
Step 3: Announce the tax inspection decision:
At least 15 days from the date of signing the inspection decision, the head of the inspection team shall announce the inspection decision to the taxpayer if the inspection decision is canceled or the inspection is postponed from conducting.
Step 4: Conduct an inspection
- Announce the inspection decision
- Conduct inspection at the taxpayer’s headquarters
- Report on inspection progress
- Prepare an inspection record
Step 5: Finish the inspection.
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