PROCEDURES OF TAX AUDIT FROM JULY 14TH 2023

On July 14th, 2023, the General Director of the General Department of Taxation issued Decision 970/QD-TCT 2023 on Tax Audit Process, which details the new order of tax audit at the taxpayer’s headquarters, to strengthen tax audit; Improve self-discipline in compliance and administrative reform to create favorable conditions for taxpayers.

In which, for ongoing tax audit with decisions issued before the effective date of this Decision, during the remaining time of the tax audit from the effective date of this Decision, the tax audit is carried out according to the Procedures issued together with this Decision.

1. Select taxpayers to make a plan and conduct tax audit

The tax authority selects taxpayers to make a plan and conduct tax audit at the taxpayer’s headquarters as follows:

– Selection through analysis, assessment on tax law compliance and classification of taxpayers’ risk level (no less than 90%)

Selection of taxpayer for inspection at tax authority headquarters is prioritized in order of high risk and combined with consideration of selecting Company that did not inspect or tax inspected for more than five years.

– Random selection (no more than 10%): selection of expected taxpayers to be included in the plan for inspection at the taxpayer’s headquarters, randomly selected or used by the department of planning or by function application that supports random selection of planning support.

In cases where the tax authority in tax administration has reliable information that reduces the taxpayer’s risk level to a low level or has grounds to believe that the taxpayer’s risk level is low and the taxpayer has not been incorperated in the annual planning and inspection plan, the tax authority may opt not to include that taxpayer in the planning and inspection. Instead, the tax authority selects an alternative taxpayer for the annual planning and inspection. In case during tax management, there is information collected and verified that the taxpayer shows signs of high risk, the tax authority will choose to add it to the annual inspection plan. The tax authority is responsible for its change decisions.

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2. Procedure for tax audit at the taxpayer’s headquarters

– The head of the inspection team and members of the inspection team when conducting an inspection at the taxpayer’s headquarters must carry out the work assignment with right task, content and within the time limit stated in the Decision on Tax Audit. In particular, the inspection according to the Decision on Tax Audit must be conducted no later than 10 (ten) working days from the date of issuance of the Decision on Tax Audit.

– Inspection team members have the right to request taxpayers to provide information and documents related to tax inspection content that are not available on the tax industry’s database system.

– Inspection team members are allowed to check and compare analyzed contents, assess risks and contents within the scope of the inspection decision with documents collected during inspection.

– During the inspection process, the inspection team checks accounting documents, accounting books, financial reports, and relevant documents within the scope of the content of the Decision on Tax Inspection.

– In case the taxpayer performs accounting on a computer using accounting software, the inspection team requests to provide accounting books stored on electronic data that can be read with common, capable office software. The content is the same as the taxpayer has printed out for storage according to regulations, without requiring printing on paper.

– In case it is necessary to temporarily seize documents and exhibits related to tax evasion or tax fraud, the head of the inspection team must report to the leader of the tax inspection department and submit it to the head of the tax authority for a Decision on adoption of temporarily seizing money, objects, and licenses related to tax evasion and tax fraud as prescribed in Article 112 of the Law on Tax Administration.

– In case during the inspection period, the taxpayer discovers an incorrect declaration, has made additional tax records and paid the incorrectly or fraudulently declared tax amount to the state budget, the inspection team will record the payment documents, the recorded amount of tax paid in the record to handle violations according to regulations.

– In case the taxpayer provides records, documents, invoices, vouchers, and accounting books related to tax obligations over 06 working hours after receiving the request of the inspection team or not providing fully, accurately information, documents, accounting books within the inspection at the taxpayer’s headquarters, the inspection team will make a record for administrative violations according to the provisions of Article 15 of Decree No. 125/2020/ND-CP dated October 19, 2020 issued by the Government.

– Legal sanction of administrative violations is carried out through a record for administrative violation signed by the taxpayer or the taxpayer’s representative. In case the violator or representative of the violating comany is absent or intentionally avoids or for objective reasons and does not sign the record, the record must be signed by the representative of the commune or ward government where the violation occurred or confirmed by at least 1 witness. In case there is no confirmation from the government or witnesses, the reason must be clearly stated in the record.

– During the inspection process at the taxpayer’s headquarters, if the contents are discovered through the inspection and these contents are issued when a Handling Decision or Inspection Conclusion is issued that may lead to a taxpayer’s complaint about the handling results, the leader of inspection team must gather records and documents related to the content of the problem to report to the Head of Inspection Department.

– While conducting the on-site inspection at the taxpayer’s headquarters, for instances where the inspection scope is extensive, the subject matter is intricate, or circumstances necessitate an extension of the inspection to address potential issues, the leader of the inspection team is obliged to notify the authority responsible for issuing the inspection decision, at a minimum of 01 (one) working day prior to the end of the inspection at the taxpayer’s headquarters, in order to facilitate the issuance of a decision to extend the inspection.

The extension of inspection must not exceed 01 time, the extension of inspection at the taxpayer’s headquarters must not exceed 10 (ten) working days at the taxpayer’s headquarters.

– At the end of the inspection for the assigned work, the inspection team member must make a record of data confirmation with the taxpayer’s representative, and be responsible for the accuracy, honesty, and objectivity of the record of data confirmation.

In addition, the inspection results in the inspection record must be consistent within inspection team before being publicly announced to taxpayers.

At the end of the inspection at the taxpayer’s headquarters, the draft inspection record must be publicly announced in front of the inspection team and taxpayer and handed over to the taxpayer to make comments and explanations (if any) and sign the inspection record.