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FAQs on Tax

Crowe Vietnam consolidates regulations related to taxation in Vietnam, helping you stay updated with the latest changes in tax laws and ensuring accurate compliance with your tax obligations.

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You can refer to information related to various types of taxes, tax rates, and tax guidelines in the Crowe Vietnam Tax Book and view detailed tax regulations.

The tax violations stipulated in Decree 129/2013/ND-CP, Decree 100/2016/ND-CP, and Decree 125/2020/ND-CP include:

  • Delay in submitting tax registration documents or delay in notifying changes to tax registration information beyond the prescribed deadline
  • Failure to fully declare the required information in tax documents
  • Delay in submitting tax declaration documents beyond the prescribed deadline
  • Violations of regulations on providing information related to determining tax obligations
  • Violations of regulations on complying with tax inspection, audit decisions, or enforcement of administrative tax decisions
  • Incorrect declarations leading to underpayment of tax liabilities or overstatement of tax refunds
  • Tax evasion or tax fraud
  • Use of illegal invoices or documents; unlawful use of invoices or documents
  • Other violations as stipulated by regulations

Depending on the severity of the violations, the tax authority will impose corresponding penalties. Please download the attached document here for detailed information on the penalties for the above violations.

The tax department in an enterprise typically performs the following tasks:

1. Beginning-of-Year Tasks

– Declare and pay the business license tax at the beginning of the year.

+ Deadline for paying the business license tax is January 31.

+ For newly established companies, the declaration and payment of the business license tax must be completed within 30 days from the issuance of the business license.

+ If the company has changes in capital, the deadline for submitting the business license tax declaration is December 31 of the year in which the change occurs.

– Submit the VAT and PIT declarations for December or the fourth quarter of the previous year. If declared monthly, the deadline is January 20. If declared quarterly, the deadline is January 30.

– Submit the provisional Corporate Income Tax (CIT) declaration for the fourth quarter of the previous year.

– Submit the invoice usage report for the fourth quarter of the previous year.

– Submit the Financial Statements, CIT Finalization, and PIT Finalization for the previous year: Deadline is March 31.

2. Daily Tasks

– Record, collect, process, and store invoices and accounting documents:

+ When the enterprise engages in economic transactions such as buying or selling goods, the accounting department must collect all related invoices and documents (input and output) to serve as the basis for tax declaration and accounting.

+ After collecting the relevant invoices and documents, the tax accountant must process and verify whether the invoices are legal, valid, and reasonable.

+ If an invalid VAT invoice or illegal invoice is detected, the accountant must handle it immediately in accordance with Circular 39/2014/TT-BTC and related legal documents.

+ Prepare receipts, payment vouchers, sales invoices, warehouse dispatch notes, and other necessary documents during the day.

– Record in the cash book, bank deposit book, and other necessary ledgers:

+ Note: Documents not used for recording or accounting must be retained for 5 years.

+ Documents used for recording or accounting must be retained for 10 years.

+ Particularly important documents and records must be stored permanently.

3. Monthly Tasks

– Prepare the monthly VAT declaration (if the enterprise declares VAT monthly).

– For output invoices, those incurred in a given month must be declared in that month. From January 1, 2014, input invoices are not subject to a time limit for declaration but must be declared before the tax authority issues an inspection or audit decision.

– Prepare the monthly PIT declaration (if the enterprise declares VAT monthly and has PIT payable in the month).

– Prepare declarations for other taxes, if applicable.

– Prepare the monthly invoice usage report (for enterprises established for less than 12 months).

– The deadline for submitting declarations is the 20th of the following month.

– Note: If tax is payable in a given month, the deadline for submitting the declaration is also the deadline for paying the tax.

4. Quarterly Tasks

– Prepare the quarterly VAT declaration (if the enterprise declares VAT quarterly).

– Prepare the provisional CIT declaration for the quarter.

– Prepare the quarterly invoice usage report.

– Prepare the quarterly PIT declaration (if the enterprise declares quarterly).

– The deadline for submitting the above declarations is the 30th day of the first month of the following quarter.

5. End-of-Year Tasks

– Prepare the tax reports for the last month of the year and the fourth quarter tax report.

– Prepare the annual PIT finalization report.

– Prepare the annual CIT finalization report.

– Conduct an inventory of cash, warehouse stock, and assets, and reconcile outstanding debts.

– Prepare accounting ledgers, reconcile detailed ledgers with general ledgers.

– Prepare the annual Financial Statements, including: Balance Sheet, Income Statement, Cash Flow Statement, Notes to the Financial Statements, and Account Balance Development Table.

– Print accounting ledgers and documents, and obtain approval signatures for these ledgers and documents.

– Store the documents and ledgers.

Tax Administration Law 2019 specifically stipulates the cases subject to inspection and audit by the tax authority, detailed as follows:

Article 109. Tax Inspection at the Tax Authority’s Office

1. Tax inspection at the tax authority’s office is conducted by the tax authority for tax documents as stipulated below:

a) Tax inspection at the tax authority’s office is conducted based on the taxpayer’s tax documents to assess the completeness and accuracy of the information and documents in the tax file, as well as the taxpayer’s compliance with tax laws. The tax officer assigned to conduct the inspection, based on the level of tax risk of the classified tax documents from the information technology database or as assigned by the head of the tax authority, analyzes the tax documents according to the level of tax risk to propose a plan for inspection at the tax authority’s office or handle it as prescribed in Clause 2 of this Article;

b) Tax inspection at the customs authority’s office is conducted to verify, compare, and cross-check the contents of tax documents with related information and documents, tax laws, and, where necessary, the results of physical inspections of exported or imported goods. In the case of post-clearance inspections at the customs authority’s office, they shall be conducted in accordance with customs laws.

2. The handling of tax inspection results at the tax authority’s office is stipulated as follows:

a) If violations leading to underpayment of tax or tax evasion are detected during customs clearance procedures, the taxpayer must fully pay the tax and be subject to penalties as prescribed by this Law and other relevant legal provisions;

b) If the tax documents contain content requiring clarification regarding the amount of tax payable, tax exempted, tax reduced, tax carried forward for deduction, tax refunded, or non-collectible tax, the tax authority shall notify the taxpayer to provide explanations or supplement information and documents. If the taxpayer provides explanations and supplementary information or documents proving the declared tax amount is correct, the tax documents are accepted; if there is insufficient evidence to prove the declared tax amount is correct, the tax authority shall require the taxpayer to submit supplementary declarations.

If the taxpayer fails to provide explanations, supplementary information, or documents, or fails to submit supplementary tax declarations, or provides incorrect explanations or supplementary declarations by the deadline specified in the tax authority’s notice, the head of the tax authority shall decide to assess the tax amount payable, issue a decision for tax inspection at the taxpayer’s premises, or use it as a basis for developing an inspection or audit plan based on risk management principles in tax administration.

Article 110. Tax Inspection at the Taxpayer’s Premises

1. Tax inspection at the taxpayer’s premises is conducted in the following cases:

a) Cases where the tax file is subject to inspection before a tax refund; or post-refunded tax inspection for files subject to prior refund;

b) Cases specified in Clause 2, Point b of Article 109 of this Law;

c) Cases of post-clearance inspection at the premises of the customs declarant as stipulated by customs laws;

d) Cases showing signs of legal violations;

e) Cases selected based on plans or specific topics;

f) Cases based on recommendations from the State Audit, State Inspection, or other competent authorities;

g) Cases involving division, separation, merger, consolidation, enterprise type conversion, dissolution, termination of operations, privatization, termination of tax code validity, change of business location, and other ad-hoc inspections or inspections as directed by competent authorities, except for cases of dissolution or termination of operations where the tax authority is not required to conduct tax finalization as stipulated by law.

2. For cases specified in Points e, f, and g of Clause 1 of this Article, the tax authority shall conduct inspections at the taxpayer’s premises no more than once per year.

3. The tax inspection decision must be sent to the taxpayer within 3 working days and announced within 10 working days from the date of issuance. If, before the announcement of the inspection decision, the taxpayer proves that the declared tax amount is correct and has fully paid the tax due, the tax authority shall cancel the tax inspection decision.

4. The procedures and process for tax inspection are stipulated as follows:

a) Announce the tax inspection decision at the start of the tax inspection;

b) Compare the declared contents with accounting books, accounting documents, financial statements, results of tax risk analysis, data from inspections at the tax authority’s office, related documents, and the actual situation within the scope and content of the tax inspection decision;

c) The inspection duration is specified in the inspection decision but shall not exceed 10 working days at the taxpayer’s premises. The inspection duration is calculated from the date of announcement of the inspection decision; in cases of large inspection scope or complex content, the person who issued the inspection decision may extend it once, but not exceeding 10 working days at the taxpayer’s premises;

d) Prepare a tax inspection report within 5 working days from the end of the inspection period;

e) Handle within authority or propose to competent authorities for handling based on the inspection results.

5. Post-clearance inspections shall be conducted in accordance with customs laws.

Article 111. Rights and Obligations of Taxpayers During Tax Inspection at Their Premises

1. Taxpayers have the following rights:

a) Refuse inspection if there is no tax inspection decision;

b) Refuse to provide information or documents unrelated to the inspection content or classified as state secrets, except where otherwise stipulated by law;

c) Receive the tax inspection report and request explanations of its contents;

d) Reserve opinions in the tax inspection report;

e) File complaints, lawsuits, and claim damages as stipulated by law;

f) Report violations of the law during the tax inspection process.

2. Taxpayers have the following obligations:

a) Comply with the tax inspection decision of the tax authority;

b) Promptly, fully, and accurately provide information and documents related to the inspection content as requested by the tax inspection team; be legally responsible for the accuracy and truthfulness of the provided information and documents;

c) Sign the tax inspection report within 5 working days from the end of the inspection;

d) Comply with the recommendations in the tax inspection report, conclusions, and decisions on handling the inspection results.

Article 112. Duties and Powers of the Head of the Tax Authority Issuing the Tax Inspection Decision and Tax Officials Conducting Tax Inspections

1. The head of the tax authority issuing the tax inspection decision has the following duties and powers:

a) Direct the implementation of the content and timeline specified in the tax inspection decision;

b) Apply measures prescribed in Article 122 of this Law;

c) Extend the inspection duration;

d) Decide on tax handling and impose administrative penalties within their authority or propose to competent authorities to issue conclusions and decisions on penalties for tax administration violations;

e) Resolve complaints and denunciations within their authority.

2. Tax officials conducting tax inspections have the following duties and powers:

a) Implement the content and timeline specified in the tax inspection decision;

b) Request the taxpayer to provide information and documents related to the inspection content;

c) Prepare the tax inspection report; report the inspection results to the person who issued the inspection decision and be responsible for the accuracy, truthfulness, and objectivity of the report;

d) Impose administrative penalties within their authority or propose to competent authorities to issue conclusions and decisions on handling tax violations.

Article 113. Cases for Tax Audit

1. When there are signs of tax law violations.

2. To address complaints, denunciations, or implement anti-corruption measures.

3. Based on tax administration requirements derived from the results of risk classification in tax management.

4. Based on recommendations from the State Audit, conclusions of the State Inspection, or other competent authorities.

Article 114. Tax Audit Decision

1. The head of tax authorities at various levels has the authority to issue a tax audit decision.

2. The tax audit decision must include the following main contents:

a) Legal basis for the tax audit;

b) Subject, content, scope, and tasks of the tax audit;

c) Duration of the tax audit;

d) Head of the tax audit team and members of the tax audit team.

3. No later than 3 working days from the date of issuance, the tax audit decision must be sent to the audit subject.

4. The tax audit decision must be announced no later than 15 days from the date of issuance of the tax audit decision.

Article 115. Duration of Tax Audit

1. The duration of a tax audit shall comply with the provisions of the Inspection Law. The duration of the audit is calculated as the time spent conducting the audit at the taxpayer’s premises, from the date of announcement of the audit decision to the date of completion of the audit at the taxpayer’s premises.

2. When necessary, the person issuing the tax audit decision may extend the audit duration in accordance with the Inspection Law. The extension of the tax audit duration is decided by the person issuing the audit decision.

Article 116. Duties and Powers of the Person Issuing the Tax Audit Decision

1. The person issuing the tax audit decision has the following duties and powers:

a) Direct, inspect, and supervise the tax audit team to ensure compliance with the content and decision of the tax audit;

b) Request the audit subject to provide information, documents, written reports, and explanations regarding issues related to the tax audit content; request agencies, organizations, or individuals with relevant information or documents to provide such information or documents;

c) Request expert assessments on issues related to the tax audit content;

d) Temporarily suspend or propose to competent authorities to suspend actions that are deemed to cause serious harm to the interests of the State or the legitimate rights and interests of agencies, organizations, or individuals;

e) Decide on handling within their authority or propose to competent authorities to handle the audit results, and urge the implementation of decisions on handling tax audit results;

f) Resolve complaints and denunciations related to the responsibilities of the head of the tax audit team and other members of the audit team;

g) Suspend or replace the head or members of the audit team if they fail to meet the requirements or tasks of the audit, commit legal violations, are related to the audit subject, or are unable to perform audit tasks due to objective reasons;

h) Issue conclusions on the tax audit content;

i) Transfer case files of legal violations to investigative agencies when signs of criminal activity are detected, and simultaneously notify the Procuracy at the same level in writing;

k) Apply measures stipulated in Articles 121, 122, and 123 of this Law;

l) Request the credit institution where the audit subject holds an account to freeze that account to support the audit when there is evidence that the audit subject is dispersing assets or failing to comply with decisions to recover money or assets issued by the head of the State Inspection Agency, the head of the agency assigned to perform specialized inspection functions, or the head of the state management agency.

2. When performing the duties and powers specified in Clause 1 of this Article, the person issuing the tax audit decision is responsible before the law for their decisions.

Article 117. Duties and Powers of the Head and Members of the Tax Audit Team

1. The head of the tax audit team has the following duties and powers:

a) Organize and direct the members of the tax audit team to comply with the content of the tax audit decision;

b) Propose to the person issuing the audit decision to apply measures within their duties and powers as stipulated by inspection laws to ensure the fulfillment of assigned tasks;

c) Request the audit subject to present professional licenses, business registration certificates, enterprise registration certificates, cooperative registration certificates, investment registration certificates, establishment and operation licenses, and provide information, documents, written reports, and explanations regarding issues related to the tax audit content;

d) Prepare reports on violations committed by the audit subject;

e) Conduct inventory of assets related to the audit content of the audit subject;

f) Request other agencies, organizations, or individuals with relevant information or documents to provide such information or documents;

g) Request competent authorities to temporarily seize money, items, or illegally used licenses when it is deemed necessary to prevent immediate legal violations or to verify details as evidence for conclusions and handling;

h) Decide to seal documents of the audit subject when there is evidence of legal violations;

i) Temporarily suspend or propose to competent authorities to suspend actions that are deemed to cause serious harm to the interests of the State or the legitimate rights and interests of agencies, organizations, or individuals;

k) Request the credit institution where the audit subject holds an account to freeze that account to support the audit when there is evidence that the audit subject is dispersing assets;

l) Impose administrative penalties as stipulated by law;

m) Report the audit results to the person issuing the tax audit decision and be responsible for the accuracy, truthfulness, and objectivity of the report;

n) Apply measures stipulated in Article 122 of this Law.

2. Members of the tax audit team have the following duties and powers:

a) Perform tasks as assigned by the head of the tax audit team;

b) Request the audit subject to provide information, documents, written reports, and explanations regarding issues related to the audit content; request agencies, organizations, or individuals with relevant information or documents to provide such information or documents;

c) Propose to the head of the audit team to apply measures within the duties and powers of the head of the audit team as stipulated in Clause 1 of this Article to ensure the fulfillment of assigned tasks;

d) Propose handling of issues related to the tax audit content;

e) Report the results of assigned tasks to the head of the tax audit team, and be responsible before the law and the head of the audit team for the accuracy, truthfulness, and objectivity of the reported content.

Article 118. Rights and Obligations of the Tax Audit Subject

1. The tax audit subject has the following rights:

a) Provide explanations regarding issues related to the tax audit content;

b) File complaints about decisions or actions of the person issuing the audit decision, the head of the audit team, or members of the audit team during the audit process; file complaints about audit conclusions or post-audit handling decisions as stipulated by complaint laws; while awaiting complaint resolution, the complainant must still comply with those decisions;

c) Receive the tax audit report and request explanations of its contents;

d) Refuse to provide information or documents unrelated to the tax audit content or classified as state secrets, except where otherwise stipulated by law;

e) Request compensation for damages as stipulated by law;

f) Report legal violations by the head of the tax authority, the head of the tax audit team, or members of the tax audit team as stipulated by law.

2. The tax audit subject has the following obligations:

a) Comply with the tax audit decision;

b) Promptly, fully, and accurately provide information and documents as requested by the person issuing the audit decision, the head of the audit team, or members of the audit team, and be responsible before the law for the accuracy and truthfulness of the provided information and documents;

c) Comply with requests, recommendations, audit conclusions, and handling decisions of the person issuing the audit decision, the head of the audit team, members of the audit team, and competent state agencies;

d) Sign the tax audit report.

Article 119. Tax Audit Conclusions

1. No later than 15 days from the date of receiving the tax audit results report, except in cases where the audit conclusion depends on the professional conclusions of competent agencies or organizations, the person issuing the tax audit decision must issue a written tax audit conclusion. The tax audit conclusion must include the following main contents:

a) Assessment of the audit subject’s compliance with tax laws within the scope of the tax audit;

b) Conclusions on the audited content;

c) Clear determination of the nature, extent, causes, and responsibilities of agencies, organizations, or individuals committing violations;

d) Handling within authority or proposing to competent authorities to handle administrative violations as stipulated by law.

2. During the process of issuing the conclusion or handling decision, the person issuing the audit decision may request the head of the audit team or members of the audit team to report, or request the audit subject to provide explanations to clarify necessary issues for issuing the conclusion or handling decision.

Article 120. Re-audit in Tax Audit Activities

1. The authority to decide on re-auditing a case that has been concluded but shows signs of legal violations is stipulated as follows:

a) The Chief Inspector of the Ministry of Finance decides on re-auditing a case concluded by the Director General within the scope and authority of state management of the Ministry of Finance when assigned by the Minister of Finance;

b) The Director General decides on re-auditing a case concluded by a Director under the General Department;

c) A Director decides on re-auditing a case concluded by a Deputy Director under the Department;

d) The re-audit decision includes the contents stipulated in Article 114 of this Law. No later than 3 working days from the date of issuance, the person issuing the re-audit decision must send the re-audit decision to the audit subject. The re-audit decision must be announced no later than 15 days from the date of issuance, and the audit team must prepare a report on the announcement of the re-audit decision.

2. A re-audit is conducted when one of the following grounds exists:

a) Serious violations of procedures during the audit process;

b) Errors in applying the law when issuing audit conclusions;

c) Audit conclusions that are inconsistent with the evidence collected during the audit or show signs of high risk based on risk assessment criteria;

d) The person issuing the audit decision, the head of the audit team, or members of the audit team intentionally falsify case files or issue conclusions contrary to the law;

e) Serious legal violations by the audit subject that were not fully detected during the audit.

3. The statute of limitations and duration for re-auditing are stipulated as follows:

a) The statute of limitations for re-auditing is 2 years from the date of issuance of the audit conclusion;

b) The duration of the re-audit is conducted in accordance with Article 115 of this Law.

4. During a re-audit, the person issuing the audit decision, the head of the audit team, and members of the audit team perform their duties and powers as stipulated in Articles 116 and 117 of this Law.

5. Re-audit conclusions and public disclosure of re-audit conclusions are stipulated as follows:

a) Re-audit conclusions are conducted in accordance with Article 119 of this Law. The content of the re-audit conclusion must clearly determine the nature, extent, causes, and responsibilities of the agencies, organizations, or individuals conducting the audit and issuing the audit conclusion, and propose handling measures.

Within 15 days from the date of issuance of the re-audit conclusion, the person issuing the re-audit decision must send the re-audit conclusion to the head of the state management agency at the same level and the superior state inspection agency;

b) The public disclosure of re-audit conclusions is conducted in accordance with inspection laws.

Article 121. Collection of Information Related to Tax Evasion

1. The head of the tax authority has the right to request agencies, organizations, or individuals with information related to tax evasion to provide such information in writing or respond directly.

2. When information is requested in writing, the agency, organization, or individual is responsible for providing accurate and truthful information as per the requested content, deadline, and address, and bears responsibility for the accuracy and truthfulness of the provided information. If the information cannot be provided, a written response stating the reasons must be submitted.

3. When information is requested through direct response, the requested person must be present at the specified time and place to provide the information as per the requested content and bears responsibility for the accuracy and truthfulness of the provided information. If the person cannot be present, the information must be provided in writing.

During the process of collecting information through direct response, members of the audit team must prepare a working minutes report, and the process must be openly recorded with audio and video.

Article 122. Temporary Seizure of Documents and Evidence Related to Tax Evasion

1. The head of the tax authority or the head of the tax audit team has the authority to decide on the temporary seizure of documents and evidence related to tax evasion.

2. The temporary seizure of documents and evidence related to tax evasion is applied when it is necessary to verify details as a basis for making a handling decision or to immediately prevent tax evasion.

3. During a tax audit, if the audit subject shows signs of dispersing or destroying documents or evidence related to tax evasion, the head of the tax audit team performing the task has the right to temporarily seize such documents or evidence. Within 24 hours from the time of seizure, the head of the tax audit team must report to the head of the tax authority to issue a decision on the temporary seizure. Within 8 working hours from receiving the report, the competent authority must review and issue a seizure decision. If the competent authority does not approve the seizure, the head of the tax audit team must return the documents or evidence within 8 working hours from the time of disapproval.

4. When temporarily seizing documents or evidence related to tax evasion, the head of the tax audit team must prepare a seizure report. The report must clearly state the name, quantity, and type of the seized documents or evidence, and include the signatures of the person executing the seizure and the person managing the seized documents or evidence. The person issuing the seizure decision is responsible for preserving the seized documents or evidence and is liable before the law if the documents or evidence are lost, sold, swapped, or damaged.

If the documents or evidence need to be sealed, the sealing must be conducted immediately in the presence of the person holding the documents or evidence. If the person is absent, the sealing must be conducted in the presence of a family representative or organizational representative, a representative of the local commune authority, and witnesses.

5. Evidence consisting of Vietnamese currency, foreign currency, gold, silver, precious stones, precious metals, or items subject to special management must be preserved in accordance with legal provisions. Evidence consisting of perishable goods or items must be documented in a report and sold immediately to avoid losses; the proceeds must be deposited into a temporary holding account opened at the State Treasury to ensure full recovery of taxes, late payment fees, and penalties.

6. Within 10 working days from the date of seizure, the person issuing the seizure decision must process the seized documents or evidence according to the measures in the handling decision or return them to the individual or organization if no confiscation penalty is applied. The seizure duration may be extended for complex cases requiring verification, but not exceeding 60 days from the date of seizure. The extension of the seizure duration must be decided by the competent authority specified in Clause 1 of this Article.

7. The tax authority must provide one copy of the seizure decision, seizure report, and decision on handling the documents or evidence related to tax evasion to the organization or individual whose documents or evidence were seized.

Article 123. Search of Locations Concealing Documents or Evidence Related to Tax Evasion

1. The head of the tax authority has the authority to decide on the search of locations concealing documents or evidence related to tax evasion. If the location is a residence, written consent from the competent authority is required as stipulated by law.

2. The search of locations concealing documents or evidence is conducted when there is evidence of concealment of documents or evidence related to tax evasion.

3. The search of locations concealing documents or evidence must be conducted in the presence of the owner of the location and witnesses. If the owner is absent and the search cannot be delayed, it must be conducted in the presence of a representative of the local commune authority and two witnesses.

4. Searches of locations concealing documents or evidence related to tax evasion must not be conducted at night, on public holidays, or during Tet, or when the owner of the location is attending a funeral or wedding, except in cases of flagrant violations, with the reasons clearly stated in the report.

5. All searches of locations concealing documents or evidence related to tax evasion must be authorized by a written decision and documented in a report. One copy of the search decision and report must be provided to the owner of the searched location.

Tax-related tasks at businesses of varying sizes typically differ in terms of the volume and complexity of transactions. Larger businesses usually engage in a wider range of transactions, making tax obligations potentially more complex.

In smaller businesses, tax tasks are usually handled by a single individual, often managed within the accounting department. For larger businesses with numerous tax-related transactions, there may be additional support from 1 to 2 staff members to handle detailed tasks.

You can find more details on the specific tasks of the tax department in question 4 above.

Key criteria for recruiting personnel for the tax department:

  • Thorough understanding of state regulations on tax policies and related provisions.
  • Detail-oriented, meticulous, and logical thinking.
  • Agile, careful, honest, and responsible in work.
  • High accuracy and strong discipline.
  • Ability to handle work pressure.
  • Effective time management skills.
  • Good communication and tactful interpersonal skills.
  • Proficient in using accounting and tax software to support work.

***Please click on each question below to view detailed content

Scope of Work for Outsourced Tax Services:

For details, please refer to outsourced tax services by Crowe Vietnam

Benefits of Using Outsourced Tax Services:

  • Access to highly skilled and professional tax accountants: Recruiting personnel today is extremely challenging, especially for a role that requires both high expertise and strong discipline and professional ethics, such as tax accounting. By using outsourced tax accounting services from professional firms, you naturally gain access to highly competent personnel with professional problem-solving skills and the ability to quickly adapt. Moreover, they stay updated with the latest changes in the industry to support you in all situations, ensuring maximum protection of your enterprise’s interests while fully complying with state regulations.
  • Ensures work efficiency and minimizes risks: The high expertise and professional work attitude of tax accountants from service providers give you complete peace of mind regarding work efficiency. Furthermore, the service provider takes full responsibility for the accuracy of documents and records. This allows you to focus on business operations with confidence, as all tax accounting and legal matters are handled by the service provider.
  • Saves time and costs: Using outsourced tax accounting services saves significant time in handling tasks, especially when issues arise, as they are addressed quickly, accurately, and professionally. The cost of these services depends on the workload and complexity of the tasks, but it is always significantly lower than hiring an in-house tax accountant and investing in their workplace equipment. Therefore, outsourcing tax accounting is highly suitable for small-scale or newly established enterprises.
  • Quick and professional issue resolution: With their high expertise and daily exposure to the field, outsourced tax accountants become experts in identifying and resolving issues to ensure the most efficient and timely outcomes for your enterprise. For complex tasks, they can leverage solutions or consult with industry peers to provide the most appropriate resolution tailored to your enterprise’s specific situation.
  • Representation for the enterprise in dealings with state authorities: Explaining and presenting documents and records to tax authorities is inevitable. By using outsourced tax accounting services, enterprises can feel confident in the professional expertise and ability of the service provider to handle, resolve, and explain issues with authorities, ensuring compliance with legal regulations.

Limitations of Outsourcing Tax Accounting

  • Not present regularly at the enterprise, which may result in less in-depth involvement with operations compared to an in-house tax accountant.
  • Focuses solely on tax accounting tasks and advisory services as stipulated in the contract.
  • Enterprises may have concerns about the confidentiality of their accounting information.

However, these limitations can be mitigated through the following solutions:

  • Choose reputable companies with sufficient resources and personnel to perform the tasks effectively.
  • Engage in open discussions with service providers about the above limitations and request tailored solutions to address them.

Criteria for Selecting a Tax Service Provider:

  • Experience in providing tax accounting services: The more experience a company has, the better equipped it is to refine its service delivery process and enhance service quality.
  • Comprehensive, detailed, and clear service delivery process: This can be evaluated through the company’s website or during initial discussions related to service provision.
  • Strong brand reputation in the market: Companies with a good brand reputation typically demonstrate a high level of commitment to ensuring the quality of their services.
  • Team of highly qualified professionals with sufficient resources to handle the workload.
  • Written commitment to confidentiality with clear provisions, supported by comprehensive policies, processes, and tools to ensure confidentiality commitments are upheld.

Key issues enterprises should note when using outsourced tax accounting services:

Determining the Type of Tax Accounting Service Contract

There are typically three main types of contracts:

  • Comprehensive Tax Accounting Service: The consultant will be responsible for receiving daily invoices generated by the enterprise and handling all subsequent tasks to prepare periodic tax reports for the enterprise. Enterprises usually sign a one-year comprehensive contract, after which they evaluate and decide whether to continue with a longer-term contract.
  • One-Time Tax Accounting Service: Performed once before the enterprise’s tax finalization period. Depending on the enterprise’s situation, the scope of this service can be divided into two cases. First, if the enterprise already has complete accounting data and records for the period, the consultant’s role is to receive, review, and prepare tax reports. Second, if the accounting data for the period has not been recorded, is not accurately or fully accounted for, or has not been accounted for at all, the consultant’s role is to record all transactions for the period and prepare tax reports.
  • Tax Accounting Review Service: The enterprise has completed all accounting activities, including recording and preparing reports, but seeks to ensure legal compliance by hiring a consultant to review all books, documents, and tax reports. Additionally, the consultant provides guidance on improving the enterprise’s accounting system.
  • Other Accounting Services: Completing accounting books, improving the accounting system, case-specific tax advice, etc.

Key Considerations for Enterprises to Protect Their Interests

  • Both parties must clearly define the scope of the project and provide a detailed list of specific tasks, deliverables, and corresponding timelines for completion or delivery.
  • Each time documents or deliverables are handed over, a handover report must be prepared, ensuring signatures from both parties.
  • For tax accounting services spanning multiple months, require the consultant to provide monthly quick reports. For example, with a comprehensive monthly tax accounting service, around the 5th of each month, request a quick report on the previous month’s activities, including items such as deductible or payable VAT, total taxable revenue/income, total allowable expenses, estimated corporate income tax for the period, and solutions for the next period.
  • Require the consultant to provide forecasts, such as the amount of tax the enterprise must pay, risks related to governance or legal compliance when certain actions are taken, etc.
  • Clearly specify which party is responsible for submitting tax declarations/reports, along with responsibilities for safeguarding and managing the validity of digital signatures. Additionally, the specific responsibilities of both parties must be clearly defined.
  • Clearly outline the responsibilities of both parties when explanations are required by the tax authority.
  • Specify the warranty period and associated benefits for the enterprise after the consulting service concludes.

Key Responsibilities of Enterprises to Ensure Effective Consultant Performance

  • Provide complete, accurate, and truthful information and data related to the project to the consultant.
  • Supply necessary accounting data within the agreed scope to the consultant on time.
  • Collaborate with the consultant during the process, avoiding the mindset of delegating all tasks and responsibilities to the consultant or expecting everything from them.
  • Clearly understand the documents to be provided to the consultant and the deadlines to protect their rights and responsibilities.
  • Understand the deliverables and delivery timelines to ensure their rights and responsibilities are upheld.
  • During initial interactions with the consultant (before signing the contract), avoid over-sharing or disclosing everything. Take time to evaluate the consultant’s assessments to accurately gauge their expertise regarding the enterprise’s issues.
  • Finally, while qualifications and certifications are necessary, they are not the decisive factors in the quality of consulting services. Consider the consultant’s practical experience and their insights into the enterprise’s issues.

***Please click on each question below to view detailed content

Common issues encountered when tax authorities conduct tax audits at enterprises:

1. Errors in Purchase Invoices

As guided by Circular 39/2014/TT-BTC, which details regulations on invoices for the sale of goods and provision of services, the seller may commit the following errors:

  • Invoice list lacks the seller’s stamp.
  • Missing information about the selling or purchasing entity.
  • Incomplete information, such as the seller, buyer, or head of the entity.

2. Loans and Interest Expenses

Tax authorities will pay special attention to the enterprise’s loans, specifically:

  • The amount of borrowed capital relative to equity.
  • Whether the loan is short-term or long-term.
  • Whether the loan aligns with the enterprise’s production and business activities.

3. Procedures for Capital Increase and Capital Structure

An enterprise’s request to increase capital or change its capital structure significantly impacts its operations. Key points to note include:

  • Timing of the increase or decrease in owner’s equity.
  • Reasons for the increase or decrease in capital.
  • Form of capital increase or decrease.
  • Ability to prove the owner’s equity.
  • Accurate accounting of the capital form.

4. Capital Contribution or Investment in Other Channels

Transactions involving the enterprise’s capital for contributions or investments in other entities must be clearly documented for tax purposes. At the time of contribution, pay attention to:

  • Clear allocation of profits and losses.
  • Specific accounting of the capital contribution ratio.
  • Approval documents for the capital contribution.
  • Profits from investment activities.

5. Dining and Entertainment Expenses

Dining and entertainment expenses are a type of cost that tax authorities always scrutinize. These expenses are considered reasonable only with the following information:

  • Accurate details of the restaurant, location, and time.
  • Complete information on the invoice.

Invoice details must include:

  • Service name: Dining service.
  • Complete accompanying list attached to the service invoice.
  • The invoice must contain full information to be deemed valid.

Additionally, note: Dining and entertainment expenses must not exceed 15% of total deductible expenses.

6. Fuel Expenses

Fuel expenses incurred by the enterprise must be thoroughly checked:

  • Are they reasonable given the fuel consumption of a vehicle (approximately how many liters of fuel per 100 km)?
  • Are supporting documents available, such as vehicle logs detailing routes, odometer readings, vehicle condition, and fuel usage, to manage costs and avoid risks of VAT deductions or expense disallowance during tax audits?

For enterprises in the transportation service business:

  • Fuel expenses: Must align with the enterprise’s revenue (ratio of 10–30%).
  • Expenses must be verified and confirmed with the service recipient.

7. Transportation and Travel Expenses

Transportation expenses are frequent for enterprises and can lead to issues. Enterprises should prepare the following details carefully:

  • Transportation contract: If a fixed transportation provider is hired.
  • Transportation fee list: Based on the contract or per trip.
  • Travel support for employees: Comprehensive policies and employee documentation.
  • During tax audits, failure to provide documents proving transportation expenses as actual costs incurred for production and business activities, including proof of routes, transported goods quantities, etc., may result in VAT disallowance and corporate income tax recovery.

8. Salary Expenses for Owners

As stipulated in Point d, Clause 2.5, Article 2, Circular 78/2014/TT-BTC dated June 18, 2014, effective from August 2, 2014, by the Ministry of Finance, non-deductible expenses when determining taxable corporate income include:

“d) Salaries and wages of the owner of a private enterprise, the owner of a single-member limited liability company (owned by an individual); remuneration paid to founders, members of the member council, or board of directors who do not directly participate in managing production or business activities.”

Thus, for companies with owners falling under the above conditions, these expenses cannot be claimed. If claimed, the tax authority will disallow them and impose late payment penalties.

9. Payroll Expenses

Payroll expenses have increasingly come under scrutiny recently. Enterprises should note the following issues:

  • Ensure all employees have labor contracts.
  • Comply with social insurance regulations for employees as required by law.
  • Verify and confirm the status of personal income tax.

Payroll expenses, especially for manufacturing or construction enterprises, will be closely examined. Enterprises should pay particular attention.

10. Fixed Asset Depreciation

Fixed assets must be depreciated according to the correct standards:

  • Consistent monthly and annual depreciation rates.
  • Depreciation timeframe as per regulations.
  • Depreciation calculation method.

Fixed assets must be equipment or tools meeting the standards of Circular 45/2013/TT-BTC.

11. Allocation of Tools and Equipment

Accountants must understand the nature of assets to allocate them accurately (consumable materials, tools, equipment, or fixed assets):

  • Transfer from fixed assets to tools and equipment.
  • Allocation of tool and equipment costs must align with the type of expense.

12. Inventory Import/Export Pricing

Goods imported into inventory must be handled correctly:

  • Accurately recorded in account 156 (Goods).
  • Inventory import price: Purchase price of goods + costs incurred from purchasing activities – deductions (discounts, promotions, etc.).
  • Thoroughly check the cost of goods sold and inventory export price.

13. Inventory Goods Report

Inventory goods are the enterprise’s business goods based on purchase/sale invoices. Inventory goods require special attention:

  • Avoid “negative inventory” situations (sales invoices issued before purchase invoices) – issue invoices on the correct date.
  • Inventory levels must be reasonable given the business situation.
  • For businesses with consumable goods: The ratio of exported or destroyed goods to purchased goods must be reasonable.

14. Cost of Goods Sold to Revenue Ratio

The cost of goods sold ratio must be reasonable given the business situation:

  • For trading enterprises, this ratio should not exceed 80%.
  • For other business types, the ratio will be lower.
  • Accurately record the import price of goods (increases or decreases affect this ratio).

In cases where the cost of goods sold equals or exceeds revenue, during tax audits or finalizations, the tax authority may assess prices based on typical market transaction prices.

Additionally, for enterprises with large revenue, high cost of goods sold ratios, or prolonged losses, tax authorities may suspect tax fraud or evasion, potentially leading to penalties and tax recovery of 1–3 times the amount (Articles 107, 108 of the Tax Administration Law).

15. Allocation of Customer Conference Expenses

Enterprises must prepare complete documentation for these expenses, including:

  • Customer conference implementation plan.
  • Contracts, invoices, and payment documents (specifying budget, location, and time of implementation).
  • List of invited guests and their details.
  • Photos, videos, or other evidence.

Only with sufficient supporting documents will the tax authority accept these expenses as deductible.

16. Transactions with Credit Balance in Account 131

Issues may arise with account 131 in the following cases:

  • Large receivables from customers.
  • Customer advances for purchases.
  • Deposits related to distribution.
  • Prolonged account balances.

These transactions require review of contracts, payment/receipt documents, and explanations, as there is a risk of revenue concealment.

17. Allocation of Promotional/Gift Item Expenses

Promotional or gift items for distribution/trading enterprises are closely scrutinized. Enterprises must prepare complete documentation:

  • Promotional program registration documents submitted to the Department of Industry and Trade.
  • Actual promotional program details.
  • Visual evidence (import/export).
  • Related invoices and documents.
Businesses can access here to see a summary of the tax audit and inspection process at Businesses:Or refer to the specific regulations in the documents below:Tax audit process:
  • Decision 746/QD-TCT on Tax Audit Process
  • Decision 1215/QD-TCT on amending and supplementing Decision 746/QD-TCT
Tax inspection process:
  • Decision 1404/QD-TCT on the issuance of the Tax Inspection Process
  • Decision 2605/QD-TCT on amending and supplementing Decision 1404/QD-TCT
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Tax Inspection and Audit Process

Rights and obligations of businesses upon receiving a tax audit/inspection notice

In addition to the mandatory requests from the tax authorities, Businesses have certain rights and obligations listed below:

  • Refuse the audit/inspection if there is no tax audit/inspection decision;
  • Refuse to provide information and documents not related to the content of the tax audit/inspection; information and documents classified as state secrets, unless otherwise provided by law;
  • May request to postpone the tax audit/inspection time upon receiving the audit/inspection decision with a legitimate and convincing reason if there are any obstacles;
  • Announcement of the audit decision: Until the audit decision is announced, businesses still have the right to review their declarations. Businesses should quickly adjust any undeclared or insufficiently declared taxes to avoid penalties that businesses certainly do not want.
  • Receiving the audit/inspection report:
    • i. Businesses need to check to ensure the report is signed by the Head of the audit/inspection team;
    • ii. Businesses need to fully express their opinions before signing the report.
  • Filing a complaint when disagreeing with the audit/inspection conclusions: Businesses submit 01 set of documents, including the following components:
    • i. Complaint letter.
Tax Inspection and Audit Process

What businesses need to prepare before a tax audit/inspection

To prepare for the audit/inspection process, taxpayers need to review the current status of related books and documents, and supplement necessary information for the audit/inspection process.

A. General recommendations for businesses before a tax audit/inspection:

Review and adjust: Comprehensively review tax risks, consider supplementing declarations and making adjustments (if necessary);

Exchange: Proactively exchange with tax authorities about the content, time of audit/inspection as well as the list of documents to be provided;

Prepare: Prepare the necessary documents to be provided and request an extension from the tax authorities for preparation time (if needed);

Discuss: Discuss with relevant departments, assign responsible members;

Support: Consider support from consulting firms for comprehensive advice/review of tax risks.

B. Some common documents that need to be prepared during the audit/inspection process are listed below for businesses’ convenience in reviewing.

1. Prepare accounting books

  • Arrange original documents monthly:
    • i. Purchase invoices are arranged with payment Vouchers/bank statements, goods receipt notes, payment requests, contracts, and contract liquidation minutes (if any);
    • ii. Sales invoices are arranged with collection Vouchers/bank statements, goods issue notes, contracts, and contract liquidation minutes (if any).
  • Monthly/quarterly/annual financial statements.
  • Print annual accounting books as prescribed, e.g., general journal, sales journal, purchase journal, cash book, etc.

2. Arrange and prepare reports submitted to tax authorities

  • Corporate income tax finalization declaration:
    • i. Taxable revenue;
    • ii. Non-deductible expenses when determining corporate income tax.
  • Personal income tax finalization declaration.
  • Value-added tax on imported goods.
  • Periodic reports: Monthly/quarterly value-added tax declarations, Report on the use of invoices, etc.

3. Fully gather and arrange economic contracts for each purchase and sale case; labor contracts and salary scales as well as appointment and salary adjustment decisions.

4. Legal documents of the business: Documents must be originals or notarized photocopies

  • Investment registration certificate/Business registration certificate.
  • Tax exemption or reduction decisions (if any).
  • Other relevant documents (if any).

Things to know when a business receives a tax inspection/audit decision:

1. Receiving the tax inspection/audit decision

From the time of receiving the inspection decision until the decision is announced, if there are any obstacles, the Business can submit a written request to postpone the implementation time with a legitimate and convincing reason.

2. Before the inspection decision is announced

Until the inspection decision is announced (the moment the Business signs the minutes announcing the inspection decision), the Business still has the right to review its declaration. If any tax has not been declared, or has been declared but is insufficient or incorrect, the Business can quickly adjust it to avoid unwanted penalties.

3. Complying with the tax inspection/audit decision

During the process of complying with the inspection decision, the Business should always note that it only has responsibilities and obligations within the scope limited in the inspection decision. In return, the inspector also only has authority over the Business within this scope.

4. Receiving the tax inspection/audit minutes

When receiving the inspection minutes from the inspection/audit team, even in draft form, understand that this is an extremely important document related to the Business itself. So the first thing to note is that the bottom of each page and the last page require the signature of the Head of the inspection/audit team.

From the time of receiving the minutes from the inspection/audit team, the Business has a maximum of 05 days to understand the points it wants to clarify and prepare documents. This is the most important period for you to take advantage of to resolve issues you still disagree with before reserving your opinion.

If deemed necessary, the Business has the right to request a working session with the inspection/audit team to clearly understand their opinions recorded in the minutes and to have an opportunity for the Business to present its opinions. If for some reason this direct working session cannot be held, the Business should provide its opinions in writing to the inspection/audit team.

When the opportunities have passed, the last thing the Business needs to do is to fully express its opinions (exercise the right to reserve opinions) before signing the minutes. With this opinion, no one can assume that the Business signing the inspection minutes means that the Business agrees (accepts) with the opinions of the Inspection Team stated in the minutes. Before signing and issuing an Administrative Decision to handle the inspection/audit results, the Business’s opinions will be considered and weighed very carefully by the responsible person.

5. Receiving the tax inspection/audit conclusion decision

Although all opinions have been expressed when signing the inspection minutes, the administrative decision issued by the Tax Authority does not always satisfy the Business. In this case, the Business can file a Complaint or Lawsuit to protect its legitimate rights and interests.

6. Complaining or suing against the tax inspection/audit decision

Complaining directly to the decision-issuing agency is the right of the Business, but the Business can also sue directly in the Administrative Court without having to carry out the Complaint procedure (according to Clause 1, Article 103 of the Law on Administrative Procedure).

Businesses can also consult free expert opinions on this matter at the Legal Department of the provincial/city Tax Department.

***Please click on each question below to view detailed content

Tax accountants need to pay attention to the following tasks to minimize unnecessary shortcomings:

1. Initial year-end tasks for tax accountants

– Declare and pay business license tax at the beginning of the year

+ The deadline for business license tax payment is January 31st

+ If it’s a newly established company, submit the declaration and business license tax within 30 days from the date of business registration certificate

+ If the company has capital changes, the final deadline for submitting the business license tax declaration is December 31st of the year of change

– Submit VAT and Personal Income Tax declarations for December or Q4 of the previous year. If declared monthly, the deadline is January 20th. If quarterly, it’s January 30th

– Submit the Corporate Income Tax provisional declaration for Q4 of the immediately preceding year

– Submit the report on invoice usage for Q4 of the immediately preceding year

– Submit Financial Statements, Corporate Income Tax Finalization, Personal Income Tax Finalization for the immediately preceding year: The deadline is March 31st

2. Daily tasks

– Record, collect, process, and store invoices and accounting documents:

+ When the business incurs economic transactions such as buying and selling goods, etc., the accountant’s job is to collect all relevant invoices and documents (output, input) as a basis for tax declaration and accounting

+ After collecting the relevant invoices and documents, the tax accountant must proceed to process and check whether the invoice is legal, valid, or reasonable

+ If a VAT invoice is found to be incorrectly written or illegal, the accountant must handle it immediately according to the provisions of Circular 39/2014/TT-BTC and related legal documents

+ Prepare cash receipts, payment vouchers, sales invoices, stock issue notes… as needed daily

– Enter data into cash books, bank deposit books, and other necessary ledgers

+ Note: Documents not used for recording or accounting are kept for 5 years

+ Documents used for recording or accounting are kept for 10 years

+ Especially important documents and records are stored permanently

3. Monthly tasks

– Prepare monthly VAT declaration (If the business declares monthly VAT)

– For output invoices, they must be declared in the month they arise. Since January 1, 2014, input invoices are not time-barred for declaration, but must be declared before the Tax Authority makes a decision to inspect

– Prepare monthly Personal Income Tax declaration (If the business declares monthly VAT and has personal income tax payable in the month)

– Prepare declarations for other taxes if any

– Prepare monthly invoice usage report (For newly established businesses under 12 months)

– The deadline for declaration submission is the 20th of the following month

– Note: If there is tax payable in the month, the deadline for declaration is also the deadline for tax payment

4. Quarterly tasks

– Prepare quarterly VAT declaration (If the business declares quarterly VAT)

– Prepare quarterly Corporate Income Tax provisional declaration

– Prepare quarterly invoice usage report

– Prepare quarterly Personal Income Tax declaration (If the business declares quarterly)

– The deadline for submitting the above declarations is the 30th of the first month of the immediately following quarter

5. Year – end tasks

– Prepare tax reports for the last month of the year and Q4 tax report

– Prepare annual Personal Income Tax finalization report

– Prepare annual Corporate Income Tax finalization report

– Conduct cash count, inventory count, asset count, and reconcile accounts payable/receivable

– Prepare accounting ledgers, reconcile detailed ledgers and general ledgers

– Prepare annual Financial Statements including: Balance Sheet, Income Statement, Cash Flow Statement, Notes to Financial Statements, Trial Balance

– Print accounting ledgers and documents and have them signed

– Store documents and ledgers

Common errors in Corporate Income Tax (CIT) at Businesses:

Salary Expenses

  • Incomplete documentation: Employment contracts, timesheets, signatures for cash receipts.
  • Accounting for prior year’s salary expenses that were not fully disbursed by the CIT finalization declaration deadline or incorrect provisioning for salary expenses (maximum within 6 months) (Salary provisioning must ensure that after provisioning, the business does not incur losses; if the business incurs losses, it cannot provision the full 17%).
  • Incorrect accounting of salary fund according to employment contracts, employee bonuses, and irregular allowances.
  • Paying holiday bonuses to employees beyond the amount stipulated in employment contracts or collective labor agreements.
  • Creating fictitious employment contracts to account for expenses, but no actual disbursement occurred.

Depreciation of Fixed Assets

  • Fixed asset depreciation expenses lacking required documentation, depreciation applied to assets not owned by the business, or depreciation exceeding regulations.
  • Expensing fixed asset purchases in one go instead of capitalizing them and calculating depreciation as per regulations; expensing asset upgrade costs.
  • Incorrectly accounting for fixed asset depreciation expenses, depreciation of fixed assets not serving production and business activities, and depreciation of machinery and equipment not engaged in production and business activities during certain periods. (Except for seasonal suspensions of 9 months and relocation of 12 months).
  • Registering a depreciation method but not implementing it consistently.
  • Depreciation of fixed assets with original cost exceeding the controlled limit (cars exceeding 1.6 billion VND, airplanes, yachts).
  • Failure to depreciate fixed assets used for employee welfare.

Cost of Goods Sold (COGS)

  • Transferring all production costs to COGS in the period, not corresponding to actual revenue, and not allocating production and business costs to work-in-progress at the end of the period.
  • Accounting for a higher volume of raw materials in COGS than the actual project settlement volume.
  • Failure to maintain detailed ledgers for work-in-progress construction costs for each project, determining COGS without basis.
  • Creating fictitious purchase lists for goods (agriculture, forestry, aquaculture, seafood) to inflate COGS or expenses.
  • Determining raw material and fuel costs exceeding reasonable consumption norms as regulated by the state.
  • Using illegal invoices for purchased goods and services.
  • Incorrectly accruing expenses (Account 335) into COGS; businesses failing to reverse accruals that have not actually been disbursed.
  • Incorrectly accounting for provisions for inventory devaluation and doubtful debts in COGS.

Raw Materials

  • Incomplete documentation and procedures.
  • Unreasonable consumption norms (compared to state regulations).
  • Inappropriate valuation for inventory inwards.
  • Inappropriate and inconsistent valuation for inventory outwards.
  • Failure to open detailed ledgers (Accounts 152, 154, 155, 156) as required.

Interest Expenses

  • Accounting for interest expenses not serving production and business activities as expenses.
  • Borrowing from individuals at interest rates exceeding 150% of the basic interest rate set by the State Bank.
  • Failure to allocate financial expenses to other activities (outside business operations) that use borrowed capital.
  • Directly expensing interest incurred during basic construction that is not capitalized into assets.

Actual Expenses

  • Accounting for expenses that do not match revenue in the period.
  • Accounting for accrued expenses that have not actually been disbursed.
  • Accounting for expenses serving investment in basic construction (undergoing investment, not yet operational in production and business activities).
  • Accounting for unreasonable expenses, expenses not serving production and business, and expenses without legal invoices or documents.
  • Expenses for innovation and improvement bonuses where the business lacks specific regulations for such bonuses, or does not have an acceptance council for innovation and improvement.
  • Accounting for administrative penalties from prior year’s inspections as tax-deductible expenses.
  • Businesses purchasing agricultural, forestry, aquatic, and seafood products, or land, stone, sand, and gravel not directly from catchers or miners, but preparing lists (form 01/TNDN) to include in expenses.
  • The portion exceeding 1 month’s average salary for vocational training expenses, welfare expenses directly paid to employees such as: accident insurance, health insurance, and other voluntary insurance for employees.
  • Contributions to voluntary retirement funds, social welfare funds, and purchases of voluntary retirement insurance or life insurance for employees not included in employment contracts or collective labor agreements.
  • The portion exceeding 5 million VND for cash clothing allowances for employees (in-kind clothing is not restricted).
  • Expenses without invoices or documents.
  • Accounting for expenses paid on behalf of parent companies or related contractors.
  • Accounting for expenses funded by other sources.
  • Sponsorship for education not to the specified beneficiaries or without documented proof of sponsorship as required.
  • Sponsorship for healthcare not to the specified beneficiaries or without documented proof of sponsorship as required.
  • Sponsorship for disaster recovery not to the specified beneficiaries or without documented proof of sponsorship as required.
  • Sponsorship for building charitable homes for the poor not to the specified beneficiaries or without documented proof of sponsorship as required.
  • Businesses that have exceeded their CIT preferential period but still apply preferences.
  • Incorrectly identifying eligible industries, fields, conditions for preferences, preferential tax rates, and tax exemption/reduction periods.
  • Registering an operating location but later relocating, failing to meet the conditions for CIT exemption/reduction preferences as per investment law and CIT law.
  • Not separately accounting for income from production and business activities eligible for preferences, but determining CIT exemption/reduction based on total eligible income using an incorrect method as regulated.
  • Incorrect allocation of expenses between production and business activities with different CIT preference levels, leading to an increase in tax exemptions/reductions for businesses currently in the tax exemption/reduction period.
  • Increasing or decreasing expenses between tax-preferential and non-preferential production and business activities to minimize payable CIT.
  • Applying CIT preferences to other income such as: financial activity income, provision reversals, asset liquidations, etc.
  • Incorrect loss carry-forward.
  • At the end of the fiscal year, when preparing the CIT finalization declaration, review all revenue items, verify consistency between statements and documents, review reasonable and valid expenses, compare controlled norms, and ensure consistency in dates between supporting documents and accounting entries.
  • Prepare a detailed table of differences to be adjusted between accounting books and tax regulations => perform declarations to increase or decrease revenue and expenses according to tax obligations on the CIT finalization declaration.

Housing Rent Allowance:

  • The housing rent paid by the business on behalf of the employee is included in their taxable income based on the actual amount paid. However, this amount cannot exceed 15% of the total taxable income, excluding the housing rent itself.

Employee Membership Cards:

  • For membership cards (golf, tennis, fitness, club activities, etc.): If the membership card explicitly names the employee as the beneficiary, this expense is considered part of the employee’s taxable income. If the membership card is not personalized but for the collective, this expense is not included in the employee’s taxable income. Instead, this cost will be considered a business expense.
  • Similarly for other services related to healthcare, entertainment, beauty, etc.: If the details clearly state the individual beneficiary, that expense must be included in the individual’s taxable income. If it does not name the individual beneficiary but is for the collective, this expense is not included in the employee’s Personal Income Tax. Instead, this cost will be considered a business expense.
  • However, to be considered a deductible expense, it must be reasonable: This expense must be stipulated in the business’s regulations or collective labor agreement, with a specific decision outlining the issuance of membership cards or the provision of these services.

Expenses for Stationery, Business Trips, Uniforms, etc.

  • These stationery or business trip expenses will not be included in taxable income, provided they comply with regulations and are stipulated in one of the following documents: collective labor agreement, employment contract, or company regulations.
  • Meal Allowances:
    • If paid in cash: Effective from October 15, 2016, with the implementation of Circular 26/2016/TT–BLĐTBXH, the mid-shift meal allowance for employees must not exceed 730,000 VND/person/month. If the business pays more than this amount, the excess portion will be subject to Personal Income Tax for the employee. Simultaneously, the excess will not be considered a deductible expense for the business.
    • If the mid-shift meal allowance is provided through self-organized catering: If the business organizes mid-shift meals by self-catering, there is no limit on the expense amount. However, sufficient invoices and documents are required.
  • Uniform Allowance:
    • If paid in cash: The expense will be calculated based on the actual expenditure but must not exceed 5,000,000 VND/person/year.
    • If uniforms are provided in kind: There is no limit on the expense amount. However, legal, reasonable, and valid invoices and documents are required for these uniforms.
  • Expenses for employee transportation from home to work and vice versa are not included in the employee’s taxable income.

Expenses for inventions, technical improvements, and discoveries recognized and paid by competent state agencies will not be included in taxable income. However, if the business subsequently pays additional bonuses, these bonus amounts will be subject to Personal Income Tax.

Expenses paid on behalf of employees for training to improve their skills and qualifications. If the course is relevant to the employee’s expertise or according to the employer’s plan, it will not be included in the employee’s taxable income.

Support for critical illness treatment for employees or their relatives will not be included in Personal Income Taxable income.

Overtime pay for holidays, paid days off, or night work, if paid at a higher rate than normal working hours, the higher portion of income will be subject to Personal Income Tax.

Common Errors in Businesses Related to Value Added Tax (VAT)

1. Input VAT deduction for products and services with discounts or trade allowances

Businesses are eligible for discounts and trade allowances when the seller has registered these amounts in accordance with the Law on Commerce. In such cases, the input VAT for the discounted or allowed products and services is reduced. If the business receives discounts or trade allowances on a per-transaction (daily) basis, the discount is directly applied to the purchase unit price, and the corresponding input VAT is deductible based on that reduced purchase price. Furthermore, if a business receives discounts or trade allowances periodically (monthly, quarterly, annually), two scenarios may arise:

  • If the value of the last purchase is greater than the discount or allowance value, the seller, when issuing the VAT invoice, must add a line item for the discount or allowance. In this case, the buyer can fully deduct the input VAT based on the invoice.
  • If the value of the last purchase is less than the discount or allowance value, the seller should apply the discount or allowance to a subsequent transaction. The seller must absolutely not record a negative amount on the invoice.

In cases where the buyer no longer makes purchases, the seller will issue a separate VAT invoice recognizing the discount or allowance for invoices “from number … to number ….” and send it to the buyer.

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2. Input VAT deduction for returned products and services

When products or services are returned by the buyer to the seller, the buyer needs to adjust their input VAT downwards, and the seller needs to adjust their output VAT. Both the buyer and seller should note that the reason for the return must be clearly stated and acceptable in the contract, such as: substandard goods, incorrect specifications, or wrong types.

  • If a business entity returns goods: The buyer prepares a goods return record and issues a VAT invoice for the returned goods to the seller. The invoice should clearly state: “Invoice issued for returned goods due to substandard quality or incorrect specifications/types” (as per Section 2.8, Appendix 04, Circular No. 39/2014/TT-BTC).
  • If a non-business organization (Department of Finance, Department of Labor, Invalids and Social Affairs, etc.) returns goods: The buyer needs to prepare a return record clearly stating the reason for the return, such as substandard quality or incorrect specifications, the quantity of goods returned, the corresponding amount, tax amount, etc. The buyer must return the original VAT invoice. If the buyer only returns a portion of the purchased goods, they must also return the original VAT invoice before the seller issues a supplementary VAT invoice.
  • If an individual returns goods: The individual does not have an invoice; they need to return the original VAT invoice and the goods return record to the seller. If the individual loses the invoice, they will be fined ½ of the invoice value, and the individual must pay this fine to the tax authority.

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3. Input VAT deduction for lost products during inventory count, losses due to natural disasters, or caused by individuals

  • Products lost during inventory count: If the lost products are fully compensated, the business is **not allowed to deduct input VAT** for those products. The business must reduce input VAT and expenses because the products are no longer in stock and are not used for production or business. If the accountant handles the lost products by issuing a sales invoice for them to allow the business to deduct input VAT, the business will be penalized further (twice) because this is a **fictitious invoice**. If the accountant handles it by replacing with other products, it is also not accepted because the seller will issue an invoice for the replacement products. If the buyer is the business, this is a new purchase; if it’s an individual, it’s unrelated to the business.
  • Products lost due to natural disasters (floods, lightning strikes, etc.): The business is **still allowed to deduct input VAT** for these products (Clause 1, Article 4, Circular No. 219/2013/TT-BTC). However, if the business has purchased insurance and received compensation including VAT, no deduction is allowed. If the business has purchased insurance and received compensation excluding VAT, input VAT can be deducted normally. If no insurance was purchased for these products, the business can still deduct input VAT for the identifiable portion of lost products.
  • Products lost due to an individual’s fault: In this case, the individual is responsible, and the business may partially assist the individual. The business is **not allowed to deduct input VAT** for products lost due to an individual’s fault.

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4. Input VAT deduction for products and services with payment discounts or purchase support

  • Regarding **payment discounts**: The seller is **not allowed to reduce** the payment discount based on the pre-tax price on the VAT invoice issued to the buyer; otherwise, the buyer will not be able to deduct input VAT on that invoice. However, the seller is allowed to not record the payment discount on the purchase invoice but instead settle it in cash or by offsetting debts as per the economic contract signed between the buyer and seller.
  • Regarding **purchase support**: If the seller provides purchase support in cash, it is not related to input VAT deduction. If the seller provides purchase support in goods or services, the seller must issue a VAT invoice and declare output VAT, but the buyer is **not allowed to deduct input VAT** because the buyer does not have to pay for those goods or services.

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5. Allocation for monthly and year-end VAT deduction for non-VAT taxable items, non-declarable items, and VAT taxable items

When allocating for monthly and year-end VAT deduction for non-VAT taxable items and VAT taxable items, accountants should apply the provisions of Clause 9, Article 1 of Circular No. 26/2015/TT-BTC to allocate shared VAT for both activities. Accountants should note that the denominator of the formula includes an additional indicator for “non-declarable revenue” as per Article 5 of Circular No. 219/2013/TT-BTC and Article 1 of Circular No. 193/2015/TT-BTC. Businesses are **only allowed to deduct input VAT** for activities producing VAT-taxable products. Input VAT used for both non-declarable VAT items and VAT-taxable items can be fully deducted, so accountants do not need to allocate it.

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6. Input VAT deduction for products exceeding consumption norms

If products exceed the consumption norms established by the business itself, the business is **still allowed to deduct** the portion of VAT within the permitted norms. If products exceed the consumption norms established by the State, the business is **not allowed to deduct input VAT**, and the incurred expenses will also be excluded from deductible expenses. If the business does not establish product consumption norms, the tax authority will set the norms. If within the norms, the business can deduct input VAT; otherwise, the business cannot deduct input VAT.

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7. Allocation for VAT deduction in cases of incorrect financial year payment and incorrect financial invoices

For input VAT invoices that a business must pay in the current year but pays in the following year, and the payment is made incorrectly, the business is **not allowed to deduct input VAT** and is not allowed to recognize the expense in the month/year of the incorrect payment. Therefore, allocating VAT for deduction in this case is incorrect.

For input VAT invoices that have been deducted this year but are discovered to be incorrect financial invoices next year, the accountant needs to submit a supplementary declaration to **reduce input VAT** for the current year.

1. Incorrect Invoice Issuance

– Failure to issue invoices recording revenue recognized by progress for construction projects, real estate businesses, and infrastructure.

– Failure to issue invoices based on the volume of construction and installation work completed, accepted, and handed over.

– Incorrect timing of invoice issuance:

+ For sales of goods: This is the time when ownership or the right to use the goods is transferred to the buyer, regardless of whether payment has been received.

+ For provision of services: This is the date the service provision is completed, regardless of whether payment has been received. If payment is received before or during the service provision, the invoice date is the date of payment.

+ For the supply of electricity, water, telecommunication services, and television services: At the latest, no more than seven consecutive days from the date of recording the electricity or water meter reading, or the end of the agreed-upon period for telecommunication and television services.

+ For construction and installation: This is the time of acceptance and handover of the work, work item, or completed construction/installation volume, regardless of whether payment has been received.

Note: If goods are delivered multiple times or services are handed over in stages/sections, an invoice must be issued for the corresponding volume and value of goods or services delivered each time. For businesses involved in real estate, infrastructure construction, or building houses for sale/transfer that collect payments based on project progress or contractual payment schedules, the invoice date is the date of payment.

+ For exported goods and services: The exporter determines this independently in accordance with the agreement between the exporter and importer. The date for determining export revenue for tax calculation is the date customs procedures are confirmed as completed on the customs declaration.

+ For sales of gasoline, banking services, securities: Invoices are issued periodically according to the contract between the two parties (accompanied by a detailed list or other documents confirmed by both parties), but no later than the last day of the month in which the purchase and sale activity occurs.

+ For sales of crude oil, natural gas, processed oil and gas, and some specific cases: Follow separate guidelines from the Ministry of Finance.

– Invoices are not prepared in accordance with regulations.

– Failure to issue an invoice at the end of the day or issuing an invoice with a value lower than the actual cash collected when the buyer does not request an invoice.

– Conducting business for goods or services off-book. This means not recording input invoices and documents to avoid issuing output invoices.

– Incorrectly determining the time of revenue recognition for VAT calculation. For example: In cases of deferred payment sales, installment sales where money has not yet been collected, or prepaid rental income for multiple periods where invoices have been issued and money collected, but VAT is not declared.

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2. Incorrect determination of VAT taxable value

For example: In cases where invoices are issued but the deductible land value in the VAT taxable revenue for real estate business, infrastructure construction, houses for sale, etc., is incorrectly determined.

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3. Failure to declare (omission) VAT taxable revenue

– Failure to declare revenue from asset disposals.

– Failure to declare tax for liquidated fixed assets, sold scrap, or defective products.

– Failure to declare output VAT for goods given as gifts, presents, or exchanges.

– Incomplete declaration or declaration of revenue lower than that stated on the invoice.

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4. Other errors

– For deductions that do not meet legal procedures as required. For example, failure to comply with procedures for trade discounts or sales price reductions.

– Goods or services that do not meet export procedures but are still declared at 0% VAT.

– Incorrectly determining and declaring the tax rate for goods and services that are not subject to VAT.

– For companies operating in multiple sectors and establishing multiple branches in different locations but only declaring and paying VAT for their main business sector, without declaring revenue for activities with other income.

Supporting documentation for exported goods:

+ Failure to explain discrepancies between invoices and customs declarations; or between invoices and payment documents.
+ Lack of legal payment documents for exported goods.
+ No customs confirmation in box 47 of the customs declaration.

The VAT refund request form does not specify which category of VAT refund the applicant belongs to (e.g., export or accumulated negative balance for 3 months).

The summarized declaration of incurred amounts requested for refund does not match the VAT amounts declared monthly (the incorrectly declared data must be adjusted before preparing the VAT refund application).

A Deputy Director or authorized person signing the VAT refund request letter is not considered valid.

The account number provided for the VAT refund does not match the account number and bank name registered for tax purposes.

Common Errors at Businesses Related to Foreign Contractor Tax:

– Failure to declare or incorrectly declare tax payable on behalf of foreign contractors when taxable services arise from new production line investments, or import of machinery and equipment accompanied by warranty, installation, and trial run services.

– Borrowing capital from foreign enterprises and paying interest without declaring foreign contractor tax.

– Incomplete declaration of tax payable on behalf of foreign contractors for expenses related to foreign experts sent to Vietnam by the contractor, such as: Accommodation, travel, and other related services.

– Failure to declare and pay foreign contractor tax when contracts with foreign contractors arise, citing tax treaty application, but without sufficient documentation to prove eligibility for the treaty.

– Declaration and payment are made, but are incomplete, incorrect, or lack full tax obligations.

– Intentional violations, such as splitting one contract into multiple contracts to avoid tax. For example: Separating a contract for machinery and equipment purchase with multiple services into two contracts: one for the pure purchase of machinery and equipment (not subject to foreign contractor tax), and another for other services (subject to foreign contractor tax).

– Under-declaration of taxable revenue:

+ Only taxing a portion of the contract value.

+ Only declaring Value Added Tax (VAT), not Corporate Income Tax (CIT).

+ Having contracts to hire foreign managers but failing to declare tax, citing that the foreigners are experts or lacking sufficient evidence to prove their expert status.

– Deducting foreign contractor expenses from revenue for contract execution (such as accommodation, travel expenses, etc.).

– Offsetting payables against receivables to avoid declaring tax.

– Errors in tax rates, tax calculation ratios, and incorrect application of VAT and CIT calculation ratios. Often, an incorrect tax rate is applied to an industry with the aim of reducing the tax payable on behalf of foreign contractors.

– Expenses for internal transactions with the parent company:

+ Expenses incurred but considered unpaid, therefore foreign contractor tax was not calculated.

+ Actually paid, foreign contractor tax should have been calculated immediately, but disguised as contract guarantees to avoid declaring tax payable on behalf of foreign contractors.

+ Transactions involving the purchase and sale of machinery, equipment, and other services between the foreign parent company and its Vietnamese subsidiary are tracked as accounts payable, with no actual payment made, to avoid foreign contractor tax.

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