1. Audit and examination of VAT refund
In the first three months of 2017, the Tax authorities issued 1,075 tax refund decisions; and simultaneously collected many taxes and administrative penalties. However, GDT reports that the number of after-refund audit and examination decisions is low (3%) compared to the total number of refund decisions issued and many Tax departments have not implemented audit and examination after VAT refund for the decisions arising in 2017. Therefore, GDT has requested the local tax departments to assure that the rate of audit and examination after VAT refund must be at least 20% of the refund decisions issued in the year.
2. Comprehensive tax audit and examination at the office of Enterprises in 2017
GDT requires the local tax departments to strive to conduct audit and examination at enterprises to achieve a minimum rate of 18% of the operating enterprises. Among these enterprises, the tax departments should focus on the taxpayers with signs of high tax risk, tax refunds, invoice usage, illegitimate documents, tax incentives, natural resources and minerals mining enterprises with high risk of natural resources tax, construction sand and gravel mining and trading enterprises, e-commerce and online trading.
GDT also announced the audit results at enterprises across the country with very high tax arrears and penalties for the period from 01 January 2017 to 05 April 2017 by the below summary of tax audit results in some provinces (Unit: Vietnam Dong):
In Quarter I-2017, the Tax authorities also audited and examined 25 enterprises having related-party transactions. Accordingly, it leaded to the arrear and fine of VND150.5 billion, the decrease in losses of VND180 billion, and the incremental adjustment to the taxable income of VND139 billion.
In order to meet the requirements of the Tax Audit Teams, Grant Thornton recommends Enterprises to review the accounting books and system, tax returns and relevant supporting documents to prove their properly and fully declared tax obligations; and ensure that documents relating to price determination of related-party transactions is in place for prompt submission to the tax audit team upon request.
3.The General Department of Taxation has directions for auditing the FIEs in retail sector
GDT requires local tax departments to:
- Liaise with relevant authorities (Department of Planning and Investment, Department of Industry and Trade) to review and identify the local retail brands and their owners. On this basis, the tax departments shall analyze and assess the tax risks to select FIEs declaring and finalizing Corporate Income Tax (“CIT”) at managing departments and propose a supplemental plan of tax audit schedule with minimum amount equivalent to the number of audit divisions of the Tax Department.
- Conduct the tax audit at enterprises after the General Department amends the tax audit schedule for the year of 2017 and report the audit result before 31 July 2017.
- Content of tax audit: CIT, VAT, PIT, Foreign Contractor Tax... with 5-year audit period (2012-2016).
- Collect taxpayers’ information and analyze the risks before tax audit.
Grant Thornton is willing to share more information with you about the items on which the Tax Authority will concentrate during the audit process when required.
Grant Thornton also published November 2014 Newsletter on the topic "Tax Audit in Vietnam - Things Your Business needs to know", August 2015 Newsletter on the topic "Regulation on settlement of appeal at tax authorities at all levels”, October 2016 Newsletter on the topic "Five Ways to Acquire Good Tax Strategy and Tax Administration Policy". These newsletters provide many useful solutions to help businesses to protect their rights as taxpayers during the tax audit process and control the tax risks within the framework of Vietnamese laws.
Please contact the Grant Thornton experts if Your Enterprise needs advice and assistance in the tax audit and examination period of Enterprise, document review before tax audit, transfer pricing issues or amendment to certificates of investment registration and business registration.