Procedures for postponement of tax audit in Vietnam (tax finalization)

Currently, paying taxes is considered one of the basic obligations of individuals and organizations doing business in the territory of Vietnam. In order to manage tax payment as well as control and minimize errors in the tax declaration process, competent tax administration agencies will conduct audits and inspections based on tax declaration dossiers of enterprises, organizations and individuals. However, according to the provisions of current law, upon receipt of the inspection decision, the taxpayer can request to postpone the time to conduct the inspection. However, this proposal must receive written approval from the tax authority. So how is the procedure for applying for postponement of tax audit carried out? How to prepare an application for postponement of tax inspection? Viet An Tax Agent would like to send you the following article to help you better understand these issues.

What is a tax audit? Purpose of tax audit in Vietnam

What is a tax audit

Tax inspection is a professional activity carried out by tax authorities to supervise and assess taxpayers’ compliance with tax laws. During the inspection, the taxpayer is responsible for providing complete, honest and accurate dossiers and documents at the request of the inspection team, and at the same time is fully responsible before law for the information provided.

Purpose of tax audit

In the current context, taxpayers declare, calculate and pay taxes by themselves, which poses a potential risk of errors or fraud.

Therefore, tax audit and inspection are implemented to ensure that taxpayers fully and strictly comply with tax laws, and at the same time help detect and promptly handle violations, contributing to improving the efficiency of tax administration and ensuring fairness in the performance of financial obligations to the State.

Procedures for tax inspection at enterprises

The tax authority shall carry out the procedures for tax audit at the enterprise as follows:

Step 1: The tax authority issues a decision on tax inspection

Before conducting tax inspection at an enterprise, the tax authority must take the official notification step in accordance with the order and procedures prescribed by law. Specifically, the head of the tax authority is responsible for issuing a notice of tax inspection, using form No. 04/KTT according to the provisions of Appendix I issued together with Circular No. 80/2021/TT-BTC of the Ministry of Finance. This notice is a legal document expressing the will and authority of the tax authority in implementing inspection activities, and is also the basis for enterprises to prepare dossiers and documents and coordinate in carrying out inspections in accordance with regulations.

After being signed for promulgation, the notice of tax audit must be sent by the tax authority to the relevant enterprise within 03 working days from the date of signing the document. The sending of notices should be carried out in an appropriate form, ensuring that enterprises receive information in a timely and complete manner, in order to create conditions for enterprises to have time to prepare and arrange work, as well as ensure transparency and publicity in tax inspection activities of state agencies.

Step 2: Notify the enterprise’s decision on inspection or request for postponement of tax audit

In case the enterprise does not respond after receiving the inspection decision of the tax authority. The tax authority shall announce the inspection decision and conduct the inspection. The inspection under the decision shall be conducted within 10 working days after the signing of the inspection decision

The head of the tax inspection team shall:

• Go directly to the enterprise to announce the tax inspection decision;
• Make a record of announcement;
• Explain the content on the inspection decision so that taxpayers can grasp the information and be responsible for compliance.

In case an enterprise applies for postponement of tax inspection, after receiving a notice from the tax authority, if the enterprise finds that it has not been able to promptly carry out the inspection, it may send a written request for postponement of the inspection to the tax authority, clearly stating the reason and time for postponement. Accordingly:

• Time limit for sending a written request for postponement of tax audit: Before the tax authority announces the inspection;
• Time for the tax authority to reply: Within 5 working days from the date of receipt of the written request for postponement of tax audit from the enterprise.

The tax authority will inform the business about whether the business is accepted or not to accept the postponement of the inspection period.

Step 3: Conduct tax inspection at the enterprise

After announcing the inspection record, the tax inspection team may conduct an inspection at the head office of the enterprise within 10 days from the announcement of the inspection.

During the inspection at the head office of the enterprise, if the tax authority finds that the inspection decision must be adjusted or a force majeure case arises in which the inspection must be suspended, the head of the inspection team shall report to the head of the inspection division for issuance of a decision on adjustment or suspension of inspection.

Step 4: Make an inspection record

After the time of checking enterprise data, the inspection team will mention specific problems and violations (if any) by showing them on the tax inspection record.

The signing of the inspection record of the 2 parties shall be carried out within 5 working days from the end of the inspection. If the enterprise still has other opinions, it shall be kept with the record.

In case the taxpayer fails to comply and sign the inspection record upon the expiration of the prescribed time limit, a record of sanctioning of tax-related administrative violations will be made.

Step 5: Determine the results after the test

Depending on each case, the head of the tax authority shall issue a decision:

• Handling of tax-related violations if there is a pre-tax handling fee after inspection;
• Sanctioning administrative violations;
• Issue inspection conclusions if no payable tax is incurred.

Process and procedures for making an official letter requesting postponement of tax finalization in Vietnam

Step 1: Send an official letter requesting postponement of tax inspection

To apply for postponement of tax inspection, enterprises should draft the form of Official Letter No. 08/KTT issued together with Circular No. 80/2021/TT-BTC. Specifically:

• Content of the official dispatch: The enterprise needs to fully and clearly present the proposed postponement time and the specific reasons leading to the inability to receive the inspection team according to the original plan. The reasons need to be reasonable and well-founded, in order to create favorable conditions for tax authorities to consider and decide.
• Time limit for sending: An official letter requesting postponement of inspection should be sent by the enterprise immediately after receiving the tax audit decision, but it is mandatory before the tax authority announces this decision at the enterprise’s headquarters. Sending official letters in a timely manner will help ensure the interests of businesses and show the spirit of cooperation with tax authorities.
• Where to receive the official dispatch: The official letter should be sent to the right tax authority that has issued the Decision on tax audit or inspection for the enterprise, in order to ensure that the information is processed quickly and in accordance with the competence.

Step 2: Receive a notification from the tax authority

After receiving an official letter requesting postponement of tax audit from an enterprise, the tax authority shall:

• Send a notice to the business to be informed of whether the application for postponement has been approved or not;
• The time limit for notification is within 5 days from the date of receipt of the official dispatch.

Accordingly, there are 2 cases that will occur as follows:

• In case the tax authority agrees: If the tax authority agrees to postpone the previously issued tax finalization time to the enterprise, based on the time requested, the enterprise needs to prepare dossiers and documents to serve the tax finalization at the end of the postponement application period;
• In case the tax authority does not agree: If the tax authority does not agree with the reason for postponing tax finalization that the enterprise has raised, the enterprise is still required to continue to prepare dossiers for tax finalization within the prescribed time limit so as not to be administratively violated by the tax law.

If you have any difficulties or questions related to the procedure for postponement of tax audit (tax finalization) service, please contact Viet An Tax Agent for the most specific advice.