06 Forms of taxpayer segmentation in Vietnam

06 Forms of taxpayer segmentation in Vietnam (Internet image)

Regarding this issue, LawNet would like to answer as follows:

The General Department of Taxation of Vietnam issued Decision 18/QD-TCT dated January 12, 2023 on the process of applying risk management in tax administration.

1. What is taxpayer segmentation?

According to Point dd, Clause 1, Article 4 of the promulgation process attached to Decision 18/QD-TCT in 2023, taxpayer segmentation is the division of taxpayers into groups with common characteristics by tax authorities to apply appropriate management measures.

2. Forms of taxpayer segmentation in Vietnam

Before building a set of indicators, assessing tax compliance, classifying taxpayers' risk levels, and applying tax management measures, tax authorities perform taxpayer segmentation.

Specifically, in Clause 1, Article 6 of the promulgation process attached to Decision 18/QD-TCT in 2023, options for segmenting taxpayers include:

(1) Segmentation by object: individual taxpayers; taxpayers are enterprises; taxpayers are other organizations.

(2) Segmentation by taxpayer size (large, medium, or small) is determined by: revenue or total income; scale of capital and assets; the amount paid to the state budget; Accounting profit before tax; The number of employees depends on the specific situation of each period and area of operation.

(2) Segmentation by economic sector promulgated together with Decision 27/2018/QD-TTg or according to current regulations.

(3) Segmentation by type of enterprise according to the provisions of the Law on Enterprise 2020.

(4) Segmentation by area of production and business activities (according to administrative decentralization).

(5) Segmentation by economic sector: state-owned economic sector, foreign-invested economic sector, non-state (private) economic sector

(6) Segmentation by other criteria in accordance with the requirements of tax administration.

3. Procedures for taxpayer segmentation in Vietnam

Taxpayer segmentation is carried out according to the provisions of Clause 2, Article 6 of the promulgation process attached to Decision 27/2018/QD-TTg in 2023, specifically as follows:

- The Risk Management Committee proposes to submit to the General Department of Taxation a plan to segment taxpayers in accordance with the assessment of tax compliance, the classification of taxpayer risk levels, and the development of a plan to improve tax compliance.

- Tax authorities at all levels use taxpayer segmentation in implementing handling measures for tax compliance levels and taxpayer risk levels.

- The Information Technology Department cooperates with the Risk Management Board to establish and update the taxpayer segmentation plan on the basis of data analysis and risk management.

4. Principles of assessment and classification of taxpayers' risks in Vietnam

According to Clause 1, Article 8 of the Process issued together with Decision 27/2018/QD-TTg in 2023, the assessment and classification of taxpayer risk is based on the following principles:

- The assessment of the taxpayer's compliance with tax laws and the classification of the taxpayer's risk are done automatically by the application of information technology, on the basis of a set of criteria and evaluation methods issued by the General Department of Taxation.

- The assessment of taxpayers' compliance with tax laws is carried out for all taxpayers.

- Depending on the requirements of the tax management profession, each taxpayer segment or taxpayer will be classified as an overall risk level and can be classified according to the level of risk according to management operations. tax.

- For classification of risk levels in tax administration operations: Depending on tax management requirements to perform periodic classification according to the number of times a year, one (01) time or many times, such as planning an inspection and examination at the taxpayer's office);

Or classify periodically by month, quarter, and instantaneously when arising business records (such as tax refund transactions).

- The order of evaluation and classification.

The assessment of the taxpayer's compliance with tax laws and the classification of taxpayer risk is carried out in the following order:

+ First: Assess the taxpayer's compliance with tax laws.

+ Second: Classify the overall risk level of taxpayers.

+ Third: Classify the level of risk in tax management operations.

- Results of evaluation and classification: The results of evaluation and classification are output according to the form issued with this Procedure and are sorted according to the following criteria:

+ According to taxpayers, the level of tax compliance is assessed, and the risk is classified from high to low.

+ In the order of the index of criteria, with many taxpayers violating, or according to the score of each criterion from highest to lowest.

More details can be found in Decision 27/2018/QD-TTg effective from the date of signing

>> CLICK HERE TO READ THIS ARTICLE IN VIETNAMESE