Taxation

What is new Tax Audit trend in 2021?

In the context of Covid-19 pandemic, the local tax authority has been applied a new strategy to meet their annual performance target.

The first action which support to strengthen the legal basis is that Government releases two crucial regulations - New Law on Tax Administration No. 38/2019/QH14 effective on 1 Jul 2020 and Decree 125/2020/ND-CP effective on 5 Dec 2020 regulating administrative penalties for tax or invoice-related violations. Per these new regulations, the local tax authorities take more aggressive approach in managing the tax compliance of tax payers. In particular, the higher penalties for breaches of tax and invoice regulations are imposed to tax payers. Another highlight is that legal representative is prevented from leaving the country if their employer has not paid due taxes. This new regulation not only annoys the travel plan of legal representative but also has a negative impact on the brand name of the enterprise in case of violation. Therefore, it is highly recommended that the enterprise evaluate the tax risk, take remedial actions and develop tax risk management procedure in timely manner.
In addition, there is a new Tax Audit Trend in recent years, especially in FY 2021 when the Covid-19 still happens in unpredictable way and the era of technology bloom. The local tax authorities have been continuously focusing on high risk tax payers. Therefore, they categorize the tax payers into different groups based on evaluation of tax risk level. Then allocating the personnel in charge as well as other internal resources to carry out the tax audit for such high risk subjects. So, who are the high risk tax payers? They can be :
  • The enterprises who have been in extreme loss position for many continuous years but still carry out and expand operation activities widely in Vietnam
  • E-commercial businesses
  • Merge & Acquisition transactions
  • Capital transfer transactions, especially overseas transfer
  • The one have arisen many intragroup transactions without sufficient evidences that transactions are truly performed and bring benefits to the local Vietnam company.
Given that some provinces/ cities in Vietnam follow the Directive No. 16 on lock-down and Directive No. 15 on social distance, the local tax authorities carry out the tax audit at the tax officer's desk instead of visiting the enterprise's office as normal way. Therefore, the tax officer will contact with the enterprise mostly via call, email and the request documents are required to courier to tax authority's office. This shall lead to rusher time for the enterprise in preparing explanation or supporting documents and limit effective communication between the enterprise and tax authority to a certain level. The enterprise should re-structure filing system for accounting & tax documents in both hard copy and soft copy.
Another crucial thing is that the local tax authority has been applied technology into managing information/data of tax payers and has build up an internal system to share such information among different local authorities such as immigration, licensing, social insurance and tax departments. In parallel, a new system specializing data analysis to identify abnormal transaction or profit margin, then spot out tax under-declaration or tax violation. @TheSharingTown would highly recommend that the enterprise invest in technology system, specially in data analysis as soon as possible. By applying digitalization and automation, the company not only can fasten working flow, reduce human mistakes in normal routine work, but also identify non-compliance areas and plan for next remedial actions in advance before tax audit arises.

How to prepare for changes in taxation in Vietnam

During recent years, Vietnam Government has released many changes and new regulations in taxation field. A principal question that many of us including tax experts as well as the Company's Management Team always put into the table for deep discussion is "How to prepare for the changes in taxation in Vietnam?". As a Tax Senior Manager with over 10 working years experience in this field, I'd like to share my expertise knowledge to tax community and anyone who is interested in this topic. I have an idea to start a series of sharing here through one brief slide for each topic. My aim is to transfer complex taxation language into the simplest one as possible so that even non-taxation expert can get the idea/ message. In addition, I will focus on the areas that Tax Manager can add value to the Company by analyzing tax opportunity as well as risk exposure and advise remedial action accordingly.

In this first sharing - I summarize some key changes that could have significant effect to many companies in Vietnam. Hope it will be helpful. If you have any comment or concern, please feel free to let me know. I'm happy to discuss further with you as sharing is learning and gaining.

Tax Payable Dashboard in Power BI

Recently Power BI for Data Visualization has become a powerful tool to support for Decision Making Process. Many Dashboard templates for Finance, Accounting could be found in the internet, but I've not seen many useful ones for Taxation yet. Thus, I create one template for my own use and my CFO highly appreciate it. I'd like to share it with you so that you have some ideas. Of course the data in this Dashboard is surely not the real one of my firm, I amended data for sample purpose. Should you have any other idea or comment, please advise me so that I can improve my Dashboard better.