Tax audit and inspection by tax authorities

5/8/2021

Law on Tax Administration 2019 specifies cases subject to audit and inspection by tax authorities, specifically as follows:

TAX AUDIT

Article 109. Tax audit on tax authorities’ premises 

1. Tax audit on tax authorities’ premises shall be carried out as follows: 

a) Tax audit shall be inspected on tax authorities’ premises to assess the adequacy and accuracy of the information in the tax dossier and the taxpayer’s compliance with tax laws. Tax officials assigned to carry out tax audit shall analyze the tax dossier according to its level of tax risk, accordingly propose a plan for inspection on the tax authority’s premises, or follow the instructions in Clause 2 of this Article; 

b) Tax audit on customs authorities’ premises is meant to compare information in the tax dossier with relevant information and documents, tax laws and result of physical inspection of exports or imports. Post-clearance inspection on customs authorities’ premises shall be carried out in accordance with customs law. 

2. Processing of results of tax audit on tax authorities’ premises: 

a) If a tax offence which leads to insufficient tax or tax evasion is discovered, the taxpayer shall fully pay the tax and incur the penalties specified in this Law and relevant laws. 

b) In case clarification of specific content in the tax dossier relevant to the amount of tax payable, exempt, reduced, refunded or carried forward is necessary, the tax authority shall request the taxpayer to provide explanation or additional information or documents. In case the explanation or additional information or documents provided by the taxpayer prove that tax is declared correctly, the tax dossier will be accepted. Otherwise, the tax authority will request the taxpayer to supplement the tax dossier. 

If the taxpayer fails to provide additional explanation, information or document or fails to supplement the tax dossier, or the additional explanation or supplementation is incorrect, the tax authority shall impose tax liability or issue a decision on examination on the taxpayer’s premises or use it as the basis for development of the inspection plan according to tax risk management rules. 

Article 110. Tax audit on taxpayers’ premises 

1. Tax audit on a taxpayer’s premises shall be carried out in the following cases: 

a) The tax refund claim is subject to inspection before refund or eligible for refund before inspection. 

b) The cases specified in Point b Clause 2 Article 109 of this Law. 

c) Post-clearance inspection on the declarant’s premises shall be carried out in accordance with customs law. 

d) Violations are suspected. 

e) The inspection is carried out under a plan or theme. 

f) The inspection is requested by State Audit Office of Vietnam, State inspectorates or another competent authority. 

g) The enterprise is undergoing full division, partial division, merger, amalgamation, conversion, dissolution, shutdown, equitization, TIN invalidation, relocation of business location; other cases of surprise inspection and inspection requested by competent authorities, except for the cases of dissolution or shutdown in which tax is not finalized by tax authorities. 

2. In the cases specified in Point e, Point f and Point g Clause 1 of this Article, tax authorities shall carry out inspection on taxpayers’ premises not more than once per year. 

3. The tax audit decision shall be sent to the taxpayer within 03 working days and announced within 10 working days from the day on which it is signed. Before the decision is announced, if the taxpayer is able to prove that the declared tax is accurate and the tax has been fully paid, the tax authority shall annul the decision. 

4. Tax audit procedures: 

a) Announce the tax audit decision before carrying out the inspection. 

b) Compare the declared information with accounting books, accounting records, financial statements, tax risk analysis, information about the document inspection on the tax authority’s premises, the situation within the scope of the tax audit decision. 

c) The duration of the inspection shall not exceed 10 working days and be specified in the inspection decision. The inspection begins when the decision is announced. In case the inspection is complicated, the issuer of the decision may extend the duration for up to 10 more days. 

d) Issue a tax audit record within 05 working days from the end of the inspection. 

e) Take proper actions or request a competent authority to take actions according to the inspection results. 

5. Post-clearance inspection shall be carried out in accordance with customs law. 

Article 111. Rights and obligations of taxpayers during tax audit on their premises 

1. The taxpayer has the right to: 

a) Reject the inspection if the tax audit decision is not available. 

b) Refuse to provide information and documents that are not relevant to the audit; information and documents that are state secrets, unless otherwise prescribed by law. 

c) Receive the tax audit record and request explanation for the contents thereof. 

d) Leave comments in the tax audit record. 

e) File a complaint or lawsuit and claim damages as prescribed by law. 

f) Report violations of law committed during the audit. 

2. The taxpayer has the responsibility to: 

a) Comply with the tax audit decision. 

b) Fully and accurately provide information and documents relevant to the inspection as requested by the auditors; take legal responsibility for the accuracy of the information and documents provided. 

c) Sign the tax audit record within 05 working days from the end of the inspection. 

d) Comply with the requests specified in the tax audit record, conclusion and relevant decisions. 

TAX INSPECTION

Article 113. 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 classification of risks in tax administration. 

4. The inspection is requested by State Audit Office of Vietnam, State inspectorate or another competent authority. 

Article 114. Tax inspection decision 

1. Heads of tax authorities at all levels are entitled to issue tax inspection decisions. 

2. The tax inspection decision shall contain: 

a) Legal basis for the tax inspection. 

b) The inspected entity, scope and objectives of the inspection. 

c) Duration of the inspection. 

d) The chief and members of the inspectorate. 

3. The tax inspection decision shall be sent to the inspected entity within 03 working days from the day on which it is signed. 

4. The tax inspection decision shall be announced within 15 days from its issuance date. 

Article 115. Duration of tax inspection 

1. The duration of tax inspections shall comply with the Law on Inspection. The duration of an investigation is the period from the date on which the tax inspection decision is announced to the ending date of the inspection. 

2. Where necessary, the person who issues the tax inspection decision (hereinafter referred to as “tax inspection decider”) may extend the duration in accordance with the Law on Inspection. 

Article 116. Duties and entitlements of tax inspection deciders 

1. The tax inspection decider has the following duties and entitlements: 

a) Instructs and supervise the inspectorate’s implementation of the tax inspection decision. 

b) Request the inspected entity to provide information, documents, reports and explanation for relevant issues; request other organizations and individuals to provide relevant information and documents they have. 

c) Request professional opinions on the issuers relevant to the content of the inspection. 

d) Order suspension or request a competent person to order suspension of an operation if it is deemed to cause material damage to interest of the State, the lawful rights and interests of other organizations and individuals. 

e) Take actions or request a competent person to take actions and supervise the implementation of such actions. 

f) Settle complaints (if any) against the chief and members of the inspectorate. 

g) Suspend or replace the chief or member of the inspectorate if he/she fails to satisfy the requirements for participation in the inspection, commits violations of law or is found related to the inspected entity, or cannot participate in the inspection for other reasons. 

g) Draw a conclusion about the inspection. 

i) Trance the case to a criminal investigation authority if a criminal offence is suspected and send a written notice to the People’s Procuracy at the same level. 

j) Implement the measures specified in Article 121, 122 and 123 of this Law. 

k) Request credit institutions where the inspected entity opens their accounts to freeze such accounts if there are reasonable grounds for suspecting that the inspected entity attempts to liquidate their assets in a manner that defies the competent authority’s decision to confiscate money or assets. 

2. When performing the duties and entitlements mentioned in Clause 1 of this Article, tax inspection deciders shall be held responsible for their decisions. 

Article 117. Duties and entitlements of the chief and members of the inspectorate 

1. The chief of the inspectorate has the following duties and entitlements: 

a) Organize the investigation and instruct the members to implement the tax inspection decision. 

b) Propose necessary measures to the inspection decider to ensure accomplishment of the objectives. 

c) Request the inspected entity to present the practice certificate, certificate of business registration, certificate of enterprise registration, cooperative registration certificate, investigation registration certificate, license for establishment and operation, provide information, documents, reports and explanation for relevant issues. 

d) Issue a record on the violations committed by the inspected entity. 

e) Carry out stocktaking of the inspected entity’s assets relevant to the inspection. 

f) Request other organizations and individuals to provide relevant information and documents they have. 

g) Request a competent person to impound the violator’s money, belongings, licenses if such impoundment is deemed necessary to stop the violations or examine the evidence. 

h) Seal the investigated entity’s documents if violations are suspected. 

i) Order suspension or request a competent person to order suspension of an operation if it is deemed to cause material damage to interest of the State, the lawful rights and interests of other organizations and individuals. 

j) Request the credit institutions where the inspected entity opens their accounts to freeze such accounts if there are reasonable grounds for suspecting that the inspected entity attempts to liquidate their assets. 

k) Impose administrative penalties in accordance with law. 

l) Submit a report on the inspection results to the inspection decider and take responsibility for the accuracy and objectivity of such report. 

m) Implement the measures specified in Article 122 of this Law. 

2. Members of the inspectorate have the following duties and entitlements: 

a) Perform the tasks assigned by the chief. 

b) Request the investigated entity to provide information, documents, reports and explanation for relevant issues; request other organizations and individuals to provide relevant information and documents they have. 

c) Propose necessary measures within the chief’s duties and entitlements prescribed in Clause 1 of this Article to the chief to ensure accomplishment of the objectives. 

d) Propose solutions for the issues relevant to the inspection. 

e) Submit reports on the performance of their tasks to the chief and take legal responsibility and responsibility to the chief for the accuracy and objectivity of such reports. 

Article 118. Rights and obligations of inspected entities 

1. The inspected entity has the right to: 

a) Provide explanation for the issues relevant to the content of the inspection. 

b) File complaints against the decisions and actions made by the inspection decider, the chief or member of the inspectorate during the inspection; file complaints against the conclusion or post-inspection decision in accordance with regulations of law on complaints; the post-inspection decision still has to be implemented while the complaint is being handled. 

c) Receive the inspection record and request explanation for the contents thereof 

d) Refuse to provide information and documents that are not relevant to the inspection; information and documents that are state secrets, unless otherwise prescribed by law. 

e) Claim damages in accordance with law. 

f) Report violations committed by the head of the tax authority, the chief or member of the inspectorate in accordance with law. 

2. The inspected entity has the responsibility to: 

a) Comply with the tax inspection decision. 

b) Fully and accurately provide information and documents requested by the tax inspection decider, the chief or member of the inspectorate and take legal responsibility for the accuracy of the information and documents provided. 

c) Comply with requests, conclusions and handling decisions of the inspection decider, the chief and member of the inspectorate, and competent authorities. 

d) Sign the inspection record. 

Article 119. Tax inspection conclusion 

1. Within 15 days from the receipt of the tax inspection result, the inspection decider shall issue a conclusion unless the conclusion has to be given by another competent authority. The conclusion shall contain: 

a) Assessment of the inspected entity’s compliance to tax laws. 

b) Draw a conclusion about the inspected contents. 

c) The nature and severity of the violations, reasons, responsibility of the violators. 

d) Actions taken or penalties to be imposed by a competent person as prescribed by law. 

2. The inspection decider is entitled to request the chief and members of the inspectorate to submit reports; request the inspected entity to provide explanation before giving the conclusion or making the post-inspection decision. 

Article 120. Re-inspection 

1. The following persons are entitled to decide re-inspection in case violations of law are suspected after a conclusion has been given: 

a) Chief Inspector of the Ministry of Finance, at the request of the Minister of Finance, shall decide reinsertion of the cases concluded by the Director of the General Department of Taxation or Customs within the management of the Ministry of Finance. 

b) The Director of the General Department of Taxation or Customs shall decide re-inspection of the cases concluded by Directors of Provincial Departments. 

c) The Director of a Provincial Department shall decide re-inspection of the cases concluded by Directors of Departments of the districts in the same province. 

d) The decision on re-inspection shall have the contents specified in Article 114 of this Law. Within 03 working days from the day on which such decision is signed, the issuer shall send it to the inspected entity. The decision on re-inspection shall be announced within 15 days from the day on which it is signed. Such announcement shall be recorded in writing by the inspectorate. 

2. A re-inspection shall be carried out in the following cases: 

a) There are serious violations against the inspection procedures. 

b) Mistakes were made when giving the initial conclusion. 

c) The conclusion is contrary to the evidence collected during the initial inspection, or there are signs of high risks according to the risk assessment criteria. 

d) The inspection decider, the chief or member of the inspectorate deliberately falsifies the documents or gives a conclusion against the law. 

e) It is suspected that serious violations of law committed by the inspected entity were not discovered during the initial inspection. 

3. Time limit and duration of re-inspection: 

a) A re-inspection must not be carried out after 02 years from the day on which the initial inspection conclusion is signed. 

b) The duration of a re-inspection is specified in Article 115 of this Law. 

4. During the re-inspection, the inspection decider, the chief and members of the inspectorate have the duties and entitlements specified in Article 116 an Article 117 of this Law. 

5. The re-inspection conclusion shall be given and announced as follows: 

a) The re-inspection conclusion shall be given in accordance with Article 119 of this Law. The conclusion shall specify the nature and severity of the violations, reasons for violations, responsibility of the inspecting entities, the conclusion and proposals. 

Within 15 working days from the day on which the re-inspection conclusion is signed, it must be sent to the heads of the same-level and superior regulatory authorities. 

b) The re-inspection conclusion shall be announced in accordance with inspection laws. 

MEASURES AGAINST TAX EVATIONS

Article 121. Collection of information about tax evasion 

1. The head of the tax authority is entitled to request relevant entities to provide information about tax evasion, whether in writing or in person. 

2. In case of providing information in writing, the informant shall send the information to the provided address by the deadline and take responsibility for the accuracy of the information provided; explain in writing if the information cannot be provided. 

3. In case of providing information in person, the informant shall be present as requested to provide the information and take responsibility for the accuracy of the information provided; information may be provided in writing if it cannot be provided in person. 

In case of providing information in person, members of the inspectorate shall issue a written record and openly make a video/audio record of the conversation. 

Article 122. Impoundment of documents and items relevant to tax evasion 

1. The head of the tax authority or the chief of the inspectorate shall issue the decision to impound documents and items relevant to tax evasion. 

2. The impoundment shall be carried out when it is necessary to clarify the basis for taking actions against tax evasion. 

3. The head of the tax authority or the chief of the inspectorate shall issue the decision to impound documents and items relevant to tax evasion. Within 24 hours from the beginning of the impoundment, the chief of the inspectorate shall request the head of the tax authority to issue an impoundment decision. Such decision shall be issued by a competent person within 08 working hours from the receipt of the request. If the competent person rejects the request, the chief of the inspectorate shall return the documents and items within 08 working hours after the competent person gives the rejection. 

4. In case of impoundment, the chief of the inspectorate shall issue a record. The record shall specify the names, quantities, categories of the documents and items; bears the signature of the impoundment decider and the person responsible for management of the impounded documents and items. The impoundment decider has the responsibility to protect the impounded documents and items and take legal responsibility if they are lost, swapped or damaged. 

In case the documents or items need sealing, they shall be sealed in the presence of their owner or, if the owner is not present, the representative of the owner’s family or representative of the organization and representative of the commune authority and a witness. 

5. Storage of impounded Vietnamese currency, foreign currencies, gold, silver, gemstones, precious metals and other items that require special management shall comply with regulations of law. In case of impoundment of perishable items, the impoundment decider shall issue an impoundment record. Collected money shall be sent to an impoundment account at the State Treasury to ensure collection of tax, late payment interest and fines. 

6. Within 10 working days from the impoundment date, the impoundment decider shall handle the impounded documents or items in accordance with the handling decision or return them to their owner if they are not confiscated. The impoundment duration may be extended in complicated cases. Nevertheless, the duration must not exceed 60 days. The extension of impoundment duration shall be decided by the competent person mentioned in Clause 1 of this Article. 

7. The tax authority shall give 01 copy of the impoundment decision, impoundment record and the handling decision to the document or item owner. 

Article 123. Search of premises for documents and items relevant to tax evasion 

1. The head of the tax authority shall decide search of premises for documents and items relevant to tax evasion. In case of search of a home, it has to be approved in writing by a competent person as prescribed by law. 

2. The search of premises shall be carried out when there are reasonable grounds that documents and items relevant to tax evasion are hidden in such premises. 

3. The search shall be carried out in the presence of the premises’ owner and a witness. In case the premises’ owner is not present and the search cannot be delayed, the presence of a representative of the commune authority and 02 witnesses is required. 

4. A search of premises must not be carried out at night, during public holidays, during the premises owners’ familial events, unless in flagrante delicto (caught red handed). The reasons must be written in the record. 

5. Every search of premises is subject to a written decision and has to be recorded in writing. 01 copy of the decision and the record shall be given to the premises’ owner.