Principles for applying risk management in classifying value-added tax refund dossiers in Vietnam

Principles for applying risk management in classifying value-added tax refund dossiers in Vietnam (Internet image) 

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

On September 18, 2023, the Director General of the General Department of Taxation issued Decision 1388/QD-TCT on applying risk management in classifying value-added tax refund dossiers and selecting taxpayers to develop a plan for inspection and inspection after tax refund

1. Principles for applying risk management in classifying value-added tax refund dossiers in Vietnam

- Assessing risk ratings for taxpayers to classify VAT refund dossiers; developing inspection plans and post-tax refund inspections is carried out in accordance with the provisions of law, the set of criteria indicators, and implementation instructions issued under this Decision.

- Information used to analyze and evaluate to identify taxpayers with signs of risk includes: information about taxpayers on the tax industry database system; information about employees collected during the process of management, supervision, inspection, and inspection of employees; Information about taxpayers is provided by relevant agencies, units, and organizations. This information is regularly and fully updated in the employee database system and risk management application to ensure accurate and timely analysis, evaluation, and identification of employees with signs of risk.

- Risk assessment and ranking for taxpayers is done completely automatically and centrally using a risk management application to classify VAT refund documents; Planning for inspection; and post-tax refund inspection.

- The classification of documents subject to inspection before a tax refund is carried out in the following order of priority:

(1) Dossier requesting VAT refund is reviewed and compared with the provisions of the Law on Tax Administration and legal documents stipulating and guiding in detail a number of articles of the Law on Tax Administration to identify cases subject to inspection before tax refund later.

(2) Dossier requesting a VAT refund showing signs of risk belonging to one of the Group I financial policies in Appendix I issued under this Decision is determined to be a case subject to inspection first and a tax refund later.

(3) The VAT refund request dossier is analyzed and ranked as high risk according to the Ministry of Finance prescribed by the General Department of Taxation under the Group II and Group III criteria index in Appendix I issued with this Decision.

(4) Dossier requesting a VAT refund is analyzed and ranked as high-risk according to the Ministry of Finance selected by the Department of Taxation.

- The remaining VAT refund request documents subject to advance tax refund are transferred to the risk management application of the inspection planning module at the taxpayer's headquarters to monitor and plan post-tax refund inspections.

- In cases where the provisions of law and regulations in Circular 31/2021/TT-BTC dated May 17, 2021 of the Ministry of Finance and regulations and instructions on risk management and Tax officials are exempt from personal liability according to the provisions of law.

2. Content of the set of risk management criteria indicators in classifying value-added tax refund dossiers in Vietnam

The Ministry of Finance classifies VAT refund dossiers and selects taxpayers with signs of risk to develop a post-tax refund inspection and examination plan including 03 groups, specifically:

- Group I: Group of criteria indicators for classifying VAT refund applications subject to inspection first and tax refund later

Is a group of criteria indicators that if the taxpayer shows signs of risk belonging to one (01) of these criteria indicators, the application for VAT refund will be classified as being inspected first and refunded later.

- Group II: Group of criteria indicators for classifying VAT refund applications according to the risk scoring method

Is a group of criteria indicators that apply scoring and risk ranking methods. On that basis, classify VAT refund dossiers and select taxpayers with signs of risk to develop a post-tax refund inspection and examination plan.

- Group III: Group of criteria indicators according to the management requirements of tax authorities

Is a group of criteria indicators applying the risk scoring method that tax authorities can choose to add to the Ministry of Finance to assess risks and classify VAT refund applications.

The General Department of Taxation uses Group II criteria indicators and can select additional Group III criteria indicators (if necessary) to analyze and evaluate risks, classify VAT refund request documents, and select taxpayers with signs of risk appropriate to each period to develop a post-tax refund inspection and examination plan. The set of criteria indicators used by the General Department of Taxation is applied nationwide.

The Tax Department can develop an additional set of criteria indicators based on the selection of criteria indicators Group II and Group III issued under this Decision to perform analysis, risk assessment, and classification of VAT refund documents to suit the characteristics of taxpayers and the management of each locality. In the event that the Tax Department chooses and builds an additional Ministry of Finance, the Tax Department will send a written report to the General Department of Taxation (through the Risk Management Board) for consideration and a decision on implementation.

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