24 Tax Risk Indicators for Enterprises in Vietnam

Danh mục nội dung

The tax authority may apply application of risk management to tax administration by implementation of risk management procedures, rules, measures and/or techniques and results of assessment of compliance with tax laws and levels of taxpayer risks to decide the implementation of tax administration measures.

The tax inspectors analysis of taxpayer risk by the analysis of information about a taxpayer so as to detect signs of violations against tax laws which cause loss of state budget revenues from taxes.

24 INDICATORS FOR ASSESSMENT OF TAXPAYER COMPLIANCE

Any enterprise in Vietnam shall understand and properly manage the following indicators to avoid and prevent the risks that may happen in advance:

Enterprise’s general information
Information about the enterprise’s owner and legal representative
Enterprise’s operational status
Tax declaration and payment
Audited financial statements
Revenues from sale of goods and/or provision of services
Business expenses
Profit
Assets
Enterprise’s payment capacity
Material financial items
Fulfillment of tax obligations to state budget
Value-added tax (VAT)
Corporate income tax (CIT)
Excise tax
Payments relating to land and property on land
Enterprise’s tax debts
Extent of tax-related violations
Nature and severity of the violations detected through audits or inspections
Use of invoices
Enterprise having transfer pricing or suspicious transactions
Results of assessment of taxpayer’s compliance with tax laws
Results of compliance assessment and taxpayer risk classification given by relevant authorities
Signs of risk in each period

CLASSIFIED LEVELS OF TAXPAYER COMPLIANCE

Taxpayers shall be assessed and classified into one of the following levels of compliance with tax laws:

Level 1: High compliance.
Level 2: Medium compliance.
Level 3: Low compliance.
Level 4: Non-compliance.

Taxpayers that are enterprises are classified into one of the following levels of risks:

Level 1: Very-low risk.
Level 2: Low risk.
Level 3: Medium risk.
Level 4: High risk.
Level 5: Very-high risk.

TAX MANAGEMENT IN VIETNAM

Depending on the risk levels or periodically after every 3 to 5 years of operation or when falling into the risk assessment criteria, businesses or individuals will have to undergo strict tax inspection, audit, and settlement procedures and often incur tax arrears and tax penalties.

Any enterprise shall organize professional and reliable resources to manage tax compliance, tax planning to ensure compliance, and at the same time maximize savings on exemptions and reductions according to regulations.

Any tax payer in Vietnam shall declare, pay and follow the tax settlement, tax inspection procedures from the authority.

The most common taxes in Viet Nam:

Value added tax (VAT)
Corporate income tax (CIT)
Personal income tax (PIT)
Taxes from capital investment and capital transfer
Foreign contractors tax (FCT)
Risks of related transactions and transfer pricing.

Tax procedures in Viet Nam:

Monthly, quarterly tax declaration
Annual tax settlement
Tax refund
Tax incentives
Tax planning and management tax records for individuals, foreign experts, and enterprises.
Tax review and risks management on inspection procedures from tax authorities.
Tax completion certificate.

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LEGAL EXPERT

VIVA BUSINESS CONSULTING

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* VIVA Business Consulting is strictly complied with regulations on protection of personal data, according to Decree No.13/2023/ND-CP dated April 17, 2023, issued by Viet Nam government. VIVA use and keep your info for NO other purposes but providing exclusive service for you.

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