Quyết định 746/QD-TCT

THE MINISTRY OF FINANCE THE GENERAL DEPARTMENT OF TAXATION -------	THE SOCIALIST REPUBLIC OF VIETNAM Independence - Freedom - Happiness ---------------
No. 746/QD-TCT	Hanoi, April 20, 2015

 

DECISION

INTRODUCING THE TAX AUDIT PROCESS

THE DIRECTOR OF THE GENERAL DEPARTMENT OF TAXATION

Pursuant to the Law on Tax Administration No. 78/2006/QH11 dated November 29, 2006; the Law on the Amendments to the Law on Tax Administration No. 21/2012/QH13 dated November 21, 2012 and documents on providing guidance on the implementation of this Law;

Pursuant to the Prime Minister’s Decision No. 115/2009/QD-TTg dated September 28, 2009 on defining the functions, tasks, powers and organizational structure of the General Department of Taxation affiliated to the Ministry of Finance;

Pursuant to the Decision No. 115/2009/QD-TTg of the Ministry of Finance dated January 14, 2010 on defining the functions, tasks, powers and organizational structure of the Inspectorate affiliated to the General Department of Taxation;

After considering the request of the Director of the Inspectorate affiliated to the General Department of Taxation.

HEREBY DECIDES

Article 1. This Decision encloses herewith the tax audit process and replaces the Decision No. 528/QD-TCT of the Director of the General Department of Taxation dated May 29, 2008 on introducing the tax examination process.

Article 2. This Decision shall enter into force as from the signature date. Heads of Departments, similar-level agencies and affiliates of the General Department of Taxation, and the Director of the Taxation Department of centrally-governed cities or provinces, shall be responsible for implementing this Decision./.

 

THE DIRECTOR Bui Van Nam

 

THE TAX AUDIT PROCESS

(Issued together with the Decision No. 746/QD-TCT of the Director of the General Department of Taxation dated April 20, 2015)

Part I

GENERAL PROVISIONS

I. PURPOSES

1. Intensify the work of tax examination in accordance with the Law on Tax Administration and the Law on the Amendments to the Law on Tax Administration on the basis of applying the risk management mechanism in order to detect, prevent and tackle tax violations as well as prevent tax revenue losses.

2. Enhance the voluntary compliance of taxpayers with legislation on taxation during the process of tax declaration, assessment and payment.

3. Carry out administrative reforms in tax examination activities which help get rid of discomforts and create convenient conditions for taxpayers to improve their production, commodity and service trading operations.

II. SCOPE OF APPLICATION

This process shall specify guidelines and procedures for carrying out tax audits under the following circumstances:

- Carry out examination of tax returns filed with the taxation department's office;

- Carry out tax audits at taxpayers' offices if taxpayers do not give explanations or provide additional information or documents required in the notification sent by the taxation department, and do not make additional declarations for tax returns or give explanations, or if they have already make additional declarations for their tax returns but fail to show evidence that the assessed amount of taxes are correct; or the tax authority does not have sufficient grounds for determining tax liabilities (hereinafter referred to as examination of tax returns);

- Carry out examinations at taxpayers’ offices if, after analyzing and evaluating the compliance of taxpayers with taxation legislation, indications of law violations have been shown (hereinafter referred to as examination of violation indications);

- Carry out examinations at taxpayers' offices in the event that examinations are carried out before and after tax refunds in accordance with regulations (hereinafter referred to as examination of tax refunds);

- Carry out examinations at taxpayers' offices in the event of being entitled to choose which examinations will be carried out to correspond with the plan and theme decided by superior-level tax administration authorities (hereinafter referred to as plan-based or thematic examinations);

- Carry out examinations at taxpayer's offices in the event that taxpayers subject to the splitting, merge, consolidation, dissolution, declaration of bankruptcy, equitization, blocking of their tax codes, and business relocation of their companies, and in the event of unscheduled audits or examinations carried out under the directions of competent authorities (hereinafter referred to as other examinations).

III. APPLICABLE ENTITIES

This process shall apply to the Leadership of taxation authorities, tax audit agencies and personal income tax administration agencies and persons who are charged with tax audits and affiliated with taxation authorities at all levels as mentioned in Section II hereof.

This process shall not apply to tax bill examinations. Tax bill examinations shall be carried out under the Decision No. 381/QD-TCT of the General Department of Taxation dated March 31, 2011 issued together with the process for tax bill examinations).

IV. INTERPRETATION OF TERMS

Terms used in this process shall be construed as follows:

1. Tax audit division refers to the division charged with performing the work of tax examinations, directly examining tax returns, and examining taxes at taxpayers' offices, which is composed of tax inspection, tax examination, income tax administration subdivisions at all levels within a taxation authority.

2. Leadership of tax audit division comprises the Directors, Vice Directors, and Heads, Vice Heads of departments or divisions at the Inspectorate of the General Department of Taxation; the Department of Income Tax Administration; the Head, Vice Head of the examination division; the Head, Vice Head of the income tax administration division affiliated to the Taxation Departments of cities or provinces; the Leader, Vice Leader of the examination team, and the Leader or Vice Leader of the income tax administration team affiliated to the Taxation Sub-departments of districts, district-level towns and provincial cities.

3. Leadership of taxation authority comprises the Director, Vice Director of the General Department of Taxation; the Director, Vice Director of the Department of Taxation; the Director, Vice Director of the Sub-department of Taxation.

4. Taxation authority comprises the General Department of Taxation, the Department of Taxation and the Sub-department of Taxation;

5. Persons charged with tax examination refer to tenured public employees of all-level taxation authorities charged with examining taxes, tax returns and carrying out field examinations at taxpayers' offices.

V. SEVERAL STANDARDS OF PUBLIC EMPLOYEES CHARGED WITH EXAMINATIONS OF TAX RETURNS

1. Use computer software products for supporting examinations of tax returns under their assigned duties submitted by taxpayers to taxation authorities. In case information technology applications do not meet requirements for tax examinations, the taxation authority shall appoint its public employees to directly examine taxes under the provisions of Article 60 enshrined in the Circular No. 156/2013/TT-BTC of the Ministry of Finance dated November 6, 2013.

2. Assume their responsibility for the examination process, procedure and result of examinations under their assigned duties.

3. Keep them updated with and organize the work of using information technology applications designed for specific sectors for the work of tax examinations.

4. Maintain secrecy about the tax examination result, except for any information about violations against tax legislation committed by taxpayers in accordance with Article 73, 74 of the Law on Tax Administration, and Article 72 of the Law on Handling of Administrative Violations No. 15/2012/QH13 dated June 20, 2012.

Part II

CONTENTS OF THE PROCESS

I. EXAMINATION OF TAX RETURNS AT THE TAXATION AUTHORITY'S OFFICE (HEREINAFTER REFERRED TO AS OFFICE AUDIT)

1. Data and information update to information technology software and application used for examination activities

- Audit division, audit public employees and other relevant divisions shall punctually and sufficiently update information and data provided by taxpayers to applications assisting inspections and examinations (TTR), applications assisting the planning of inspections and examinations (TPR), etc. in its data system.

- Tax audit division and tax audit public employees shall use tax declaration data and information of taxpayers updated to its data system to serve the purpose of examining tax returns submitted by taxpayers to the taxation authority.

- The head of the tax authority in charge of tax audits shall be responsible for being regularly well-informed of and encouraging tax audit divisions and public employees to strictly carry out their abovementioned tasks in order to organize tax management and examination activities by applying the mechanism for managing risks incurred in the tax management process.

2. Examination of tax returns

2.1. Principles of office audit of tax returns

- Tax returns submitted to the taxation authority on a monthly, quarterly and yearly basis (hereinafter referred to as tax returns) shall be regularly audited under the provisions of Article 77, the Law on Tax Administration, and audited by applying the risk management mechanism as stipulated in Clause 4, Article 1 of the Law on the Amendments to several articles of the Law on Tax Administration.

- Tax returns subject to office audits shall be composed of all of tax returns submitted to the taxation authority, except for tax returns submitted by organizations carrying out tax declarations by employing the direct method; tax returns for payment of taxes on allocated land use, taxes on agricultural land use, non-agricultural land use and land rentals, license taxes, registration fees; fees and other charges.

- As for the blocking of tax codes of contractors or branches, if they have not started their business operations yet, office audits may be applied to make records and implement procedures for blocking tax codes in accordance with regulations.

- As for tax returns which are submitted to the taxation authority and will be examined by computer software products designed for the taxation sector, examinations shall be aimed at auditing the sufficiency and accuracy of these returns as well as detecting risks incurred from these returns on time.

2.2. Process for examination of tax returns

2.2.1. Manual examination process

- Select at least 20% of total existing enterprises subjected to tax management in order to compile the list of taxpayers whose tax returns shall be examined at the taxation authority’s office as follows:

+ For more than 15% of total taxpayers, the selection shall be performed by means of the application used for planning risk-based tax audits (TPR);

+ For more than 5% of total taxpayers, the selection shall be performed through the actual tax management situations at localities which are faced with high risks, indications of tax evasion and fraud activities, and wrong assessment of tax liabilities.

The list of taxpayers selected by taking into consideration the abovementioned risks to be subjected to office audits of tax returns shall not coincide with the list of taxpayers according to inspection and examination plans or audit themes. This list must be submitted by the head of the audit division to the Head of the taxation authority by December 20 every year and the Head of the taxation authority should grant their approval by December 30 every year.

The list of taxpayers subjected to office audits of tax returns may be amended and modified on a quarterly or 6-month basis depending on actual situations where violations against taxation at localities are arising and revealed. Any modification or amendment to the list of taxpayers shall be decided by the Head of the taxation authority in charge of direct management of these taxes.

- Based on the list and the number of taxpayers subjected to examinations of tax returns, the head of the audit division shall request the Head of the taxation authority to assign specific tasks to each tax audit public employees to undertake examinations of the number of taxpayers specified in these tasks.

Not later than 25 days after the end of the deadline for submission of tax returns, tax audit public employees shall be responsible for examining all kinds of tax returns submitted by taxpayers under their assigned duties, including tax returns categorized by arising periods, months, quarters or years.

- The taxation authority shall also examine bases for determination of tax liabilities; tax deductions or exemptions and tax refunds, etc. by applying the collation and comparison method as follows:

+ Collation of the abovementioned with law regulations on taxation.

+ Collation of information provided in tax returns with attached documents (if any).

+ Collation of information provided in tax returns, attached documents with tax returns (if any) with tax returns, and attached documents (if any) created in the previous month, quarter or year.

+ Collation of the abovementioned with data kept by taxpayers operating on a similar business scale, in the same industry and trading the same goods specified in the business registration.

+ Collation of the abovementioned with information and materials collected from other sources (if any).

- Upon completion of examination of each tax return, tax audit public employee must give their comments on that tax return by completing the form No. 01/QTKT enclosed herein:

+ As for tax returns providing all information, ensure the rationality and accuracy of these information and materials; if there is no indication of risks, the remark about tax returns shall be filed along with these tax returns.

+ As for tax returns after collation or comparison or analysis, if contents or data are misrepresented, or contents need to be further verified in relation to tax liabilities, tax exemptions, deductions or tax refunds, etc., tax audit public employees should report to the head of the tax audit division for submission to the head of the taxation authority to send a written notification of requesting taxpayers to explain or supplement information or materials by completing the form No. 01/KTTT issued together with the Circular No. 156/2013/TT-BTC of the Ministry of Finance dated November 6, 2013.

2.2.2. The process for software-assisted examination

- Examine bases for determination of tax liabilities; tax deductions or exemptions and tax refunds.

+ Not later than 25 days after the deadline for submission of tax returns, tax audit public employees shall use software designed for audits of tax returns in order to score each criterion in tax returns; accordingly, use applications for arranging taxpayers (tax returns) by specific risk criterion and give remarks or warnings for each criterion; concurrently use applications for arranging taxpayers based on the general risk level for all of criteria in an descending order of risks in order to help classify taxpayers (tax returns) by tax-related risk levels. In particular, as for income taxes, apply software products designed for income tax management in order to detect risks incurred in income tax returns in which individuals have not been entitled to tax deductions yet and shall not carry out the tax finalization on their own in accordance with regulations.

+ Tax audit public employees shall print out the list of taxpayers arranged in descending orders of risk levels and remarks or warnings about risks for each taxpayer on the system.

- As for the remark (or risk warning) of each taxpayer shall be printed from the system, tax audit public employees shall continue considering and collating tax returns for the purpose of providing additional remarks (if any) by completing the form No. 01/QTKT enclosed herein:

+ As for taxpayers (tax returns) from which risks incurred or in which no indication of violations have been found, tax audit public employees shall check and print the list of taxpayers who have not been faced with risks from the system and submit it to the head of the tax audit division for approval to sign the approval for filing examination records.

+ As for taxpayers (tax returns) categorized by low risk levels, tax audit public employees shall print remarks about tax returns for submission to the head of the tax audit division to sign for the purpose of filing documents without the need for issuing the notice, unless otherwise directed by the head of the tax audit division, the head of the taxation authority, or if there is any suspect that needs to be clarified.

+ As for taxpayers (tax returns) categorized by high of medium risk levels, if the remark about tax returns gives warnings of tax-related risks, tax audit public employees shall print out notifications sent out to taxpayers in an descending order ranging from high to medium risk levels in order to report to the head of the tax audit division for submission to the head of the taxation authority to approve the notification sent to taxpayers to explain or provide additional information or materials by completing the form No. 01/KTTT issued together with the Circular No. 156/2013/TT-BTC of the Ministry of Finance.

2.3. Handling of the result of examinations of tax returns

a) Handling activities after sending notifications

a.1) The permitted duration for taxpayers' explanations and submission of additional information or materials as stated in such notifications shall be within 10 working days from the date on which taxpayers receive notifications from the taxation authority or make their responses to such notifications (if these are sent through by mails).

a.2) Taxpayers can send their written explanations or contact the taxation authority's office in person. In case taxpayers contact the taxation authority in person to explain or supplement information or materials according to the notification of the taxation authority, tax audit public employees should make the minutes of their examinations by completing the form No. 02/KTTT issued together with the Circular No. 156/2013/TT-BTC of the Ministry of Finance.

a.3) After taxpayers have already explained or provided a sufficient amount of additional information or materials upon the request of the taxation authority and demonstrated assessed tax liabilities are correct, tax audit public employees must report to the head of the tax audit division for submission to the head of the taxation authority for approval in order to file explanations, supplement information or materials along with examination records.

a.4) After taxpayers have already explained or supplemented information or materials without demonstrating assessed tax liabilities are correct, tax audit public employees must report to the head of the tax audit division for submission to the head of the taxation authority in order to send notifications of requesting taxpayers to provide additional declarations (by completing the form No. 02/QTKT issued together with this process). The maximum duration for this supplementation is 10 working days from the date on which the taxation authority issues the notification of requesting additional declarations.

a.5) After the end of the deadline permitted in the notification of the taxation authority, if taxpayers do not explain and supplement information or materials, or do not provide additional declarations for tax returns, or explain or provide additional declarations for tax returns but fail to demonstrate that assessed tax liabilities are correct, the taxation authority shall:

- Decide the determination of tax liabilities by completing the form of the Decision No. 01/ADTH issued together with the Circular No. 156/2013/TT-BTC of the Ministry of Finance; or

- Decide the office audit in the situation where there are an insufficient amount of grounds for the determination of tax liabilities. Decide the office audit by completing the form No. 03/KTTT issued together with the Circular No. 156/2013/TT-BTC of the Ministry of Finance.

b) When tax audit public employees report to the head of the tax audit division for submission to the head of the taxation authority to issue the notification of giving explanations (providing additional information or materials) or grant a decision on determination of tax liabilities, the administrative procedures mentioned hereunder must be followed:

b.1) Procedures for submission of the report to the head of the taxation authority to issue the notification of giving explanations and providing additional information or materials, or providing additional declarations:

- The notification (the notification of giving explanations, providing additional information or materials) must enclose the statement and the following documents:

+ Draft notification;

+ Remark about the examination result;

+ Tax returns.

- The notification of providing additional declarations must enclose the statement and the following documents:

+ Draft notification of providing additional declarations;

+ Written explanation or information or materials that taxpayers additionally provide according to the first notification or the meeting minutes (with regard to the situation where taxpayers directly contact the taxation authority to give explanations or provide additional information or materials).

+ All documents required in the notification of giving explanations, providing additional information or materials.

b.2) Documents submitted to apply for the decision on determination of tax liabilities including:

- The statement that specifies bases for determination of tax liabilities.

- Draft notification of determining tax liabilities.

- All documents required in the notification of giving explanations, supplementing documents and notification of requesting additional declarations.

II. TAX EXAMINATION THAT TAKES PLACE AT TAXPAYERS’ OFFICES (HEREINAFTER REFERRED TO AS FIELD AUDIT)

1. Principles of field audit

1.1. Every year, the superior-level taxation authority shall assign tax examination tasks to the inferior-level taxation authority in which the number of taxpayers shall be determined according to the criteria of the percentage of currently operating taxpayers subjected to 5 types of tax audits, including examination of tax returns, examination of indications of violations, examination of tax refunds, plan-based of thematic examination and other examinations.

1.2. With regard to the plan-based and thematic examination, and the examination of indications of violations, the taxation authority carries out field audits not more than once a year.

1.3. With regard to the examination before tax refunds and the examination after tax refunds, and the plan-based and thematic examination, before carrying out the field audit, the taxation authority can request taxpayers to give explanations or provide information or materials in the same manner as the office audit (when necessary).

1.4. With regard to the examination of taxpayers subject to the splitting, merging, acquisition, dissolution, bankruptcy or blocking of tax codes (including tax codes of contractors), business relocation, and unscheduled examinations, or examinations as directed by competent authorities, the form of examination of tax returns or examination of indications of violations or the plan-based or thematic examinations shall be applied under the provisions of the documents guiding the implementation.

1.5. As for types of tax returns such as foreign contractors’ taxes, tax-paying organizations carrying out the tax declaration by applying the direct method; payment of taxes on allocated land use; taxes on agricultural land use; taxes on non-agricultural land use and land rentals; taxes on license fees; fees and other charges, the field audit shall be carried out on the basis of tax-related risks.

1.6. Contents of field audits in the following specific cases:

- Contents subject to the examination of tax returns include items for which taxpayers do not give explanations or provide additional declarations after the deadline of notification issued by the taxation authority;

- Contents subject to the examination of tax refunds include the requested amount of tax refunds or the amount of taxes that have been refunded under the decision of the taxation authority;

- Contents subject to the examination of indications of violations include contents or items showing signs of violations against tax legislation;

- Contents subject to the plan-based or thematic examination include contents showing signs of risks after in-depth analysis of tax returns (at least one year) of taxpayers.

- Contents subject to the examination of taxpayers split up, merge, consolidate, dissolve, equitize, close tax codes, change business locations of their companies, and unscheduled audits or examinations carried out under the directions of competent authorities include contents of the examination of compliance with tax legislation.

1.7. Resolution of overlapping during the tax examination process

- If there is any overlapping between the annual plan and theme of examination developed by the inferior-level taxation authority with those developed by the superior-level taxation authority, the latter shall prevail.

- In the event that there is any coincidence in terms of contents subject to the examinations with those specified in the tax inspection or examination plan developed by the provincial inspectorate, the Department of Finance and local inspection agencies, the Head of the Department of Taxation shall collaborate with the Chief of the provincial inspectorate, the Director of the Department of Finance in handling this coincidence, and reporting to the Director of the General Department of Taxation for consideration and decision when necessary.

2. Formulation of tax examination plan and theme

2.1. Formulation of tax examination plan and theme

- Applying risk management application software to formulation of the tax audit plan and theme;

- Steps in formulation of tax examination plan and theme shall be taken in the same manner as those specified in the process for tax examination;

- The number of taxpayers included in the annual plan or theme must be at least 60% of total taxpayers assigned annual examination tasks (annual examination tasks which have been specified in Clause 1.1, Point 1, Section II and Part B hereof).

- The task of formulating the examination plan and theme must be assigned to one unit (division or team) to be responsible for acting as central entity to report to and request the head of the taxation authority to approve the examination plan and theme.

2.2. Formulation of tax examination plan

a) Development of tax examination plan

- Based on the requirements of tasks and duties of the taxation sector, the General Department of Taxation shall issue documents to provide guidance on developing the plan for tax examination before October 15 every year; the Department of Taxation shall issue documents to provide instructions on developing the examination plan before November 1 every year.

- The formulation of the examination plan must stick to the principle of analyzing and evaluating risks on the basis of risk management application software which has been issued by the General Department of Taxation in a consistent manner; concurrently, based on the actual situation of tax administration at localities, taxpayers posing risks shall be selected to be included in the tax examination plan.

- The annual examination plan must be balanced on the basis of human resources carrying out tax examination operations, and the actual number of taxpayers and actual situations at localities within the taxation authority's management, in order to determine the list of taxpayers subjected to tax examinations.

- Taxpayers included in the examination plan and theme shall be selected as follows:

+ Selection by means of application software TPR: Selecting 80% - 85% of taxpayers specified in the list of taxpayers arranged in risk-based order by means of TPR application software (after being selected to be included in the tax inspection plan); the selection of taxpayers to be included in the examination plan and theme must entail the review, selection and elimination of taxpayers posing low risk levels and simultaneously substitute them with those posing higher risk levels in conformity with the tax-related risk criteria set out at localities.

+ Selection of taxpayers based on the actual situations where the tax administration activities are occurring at localities: Selecting 15% - 20% of total taxpayers posing high risk levels, showing indications of tax evasion and fraud, and wrong assessment of tax liabilities on the basis of the actual situations where the tax administration is occurring at localities.

- The examination plan shall be composed of the following key information such as the list of names, tax codes and addresses of taxpayers subject to tax audits, examination contents, examination themes and examination schedule (the form No. 03/QTKT enclosed in this process).

b) Approval and modification of the annual examination plan

- The Department of Taxation shall compile the list of taxpayers included in its examination plan for submission to the General Department of Taxation on November 25 every year at the latest.

- The Director of the General Department of Taxation shall approve the examination plan submitted by the Department of Taxation by December 15 every year.

- The Subdepartment of Taxation shall compile the list of taxpayers included in the examination plan for submission to the Department of Taxation by December 5 every year.

- The Director of the Department of Taxation shall approve the examination plan submitted by the Department of Taxation by December 20 every year.

- If there is the need for amending the examination plan, the head of the competent authority that approves the examination plan shall make a decision on such amendment. The examination plan shall be amended under the following circumstances: Upon the request of the Minister of Finance, or the Head of the superior-level taxation authority, or at the proposal of the taxation authority assigned the task of carrying out tax audits.

- Where, by the end of the tax year, tax administration authorities have not already examined all taxpayers subjected to tax examinations according the approved examination plan, the rest of taxpayers shall be prioritized to be brought forward to the examination plan in the following year.

2.3. Selection of thematic examinations

a) Circumstances under which thematic examinations apply shall include:

- The circumstance under which the thematic audit shall be assigned by the superior-level tax administration authority who acts as the presiding unit to the inferior-level tax administration authority who acts as the executive or collaborating unit.

- The circumstance under which examinations are carried out according to the particular theme proactively developed by the inferior-level tax administration authority for submission to the superior-level tax administration authority for approval.

b) Development of the annual thematic examination plan

- The development of the annual thematic examination plan shall be carried out consistently with the development of the annual thematic examination stipulated in Point 1 Section II mentioned above.

- The report on development of each examination theme shall include the following contents: Specific objectives and contents of the examination theme; proposed schedule of implementation of the examination theme; the list of names, tax codes, addresses of taxpayers specified in the examination them (following the form No. 03/QTKT issued together with this process).

- The number of taxpayers subjected to thematic tax audits shall be aggregated into the number of taxpayers specified in the annual tax examination plan of each tax administration authority.

- Approval-granting authority and permitted duration of the annual examination theme shall be compliant with regulations applying to the examination plan stipulated in Point 1 Section II mentioned above.

- Any adjustment to the examination theme which has been approved shall be applied under the following circumstances:

+ Adjusting the list of taxpayers specified in the theme; stopping executing the theme.

+ In the course of performing the task of tax administration, the tax authority shall rely on the requirements set out in the actual situation and particular situation of each locality under their management and human resources eligible for carrying out examination operations if formulation of a new examination theme is found necessary.

Under these circumstances, the adjustment shall be restricted to once a year and the permitted duration of requesting the adjustment shall not be later than September 30 every year and must be subject to the decision on such adjustment issued by the Head of the approval-granting competent authority.

2.4. Documents submitted to apply for approval and adjustment to the examination plan and theme

- A written interpretation which clearly states the bases for formulation of the examination plan (adjustment to the plan), bases for selection of the theme (adjustment to the theme); objectives and expected achievements; contents of the plan and the theme.

- The list of taxpayers subjected to tax audits according to the plan and the theme (enclosing the form No. 03/QTKT).

3. Preparations for field audits

3.1. Issuance of the examination decision

a) Where there is no ground for determination of tax liabilities after the examination of tax returns as prescribed in Point 2.2 Section I mentioned above, the decision on the field audit must be issued.

Documents submitted to apply for issuance of the examination decision shall be composed of the followings:

- The written request in which the reasons for such examination must be clearly state; the contents of the examination shall specify which issues shall be examined.

- The draft decision on tax examination by following the form No. 03/KTTT issued together with the Circular No. 156/2013/TT-BTC

- All documents required in the notification of giving explanations, supplementing documents and notification of requesting additional declarations.

b) Where it is established that there is an indication of violation against laws after analysis and evaluation of compliance of taxpayers with the tax legislation, the decision on the field audit must be issued.

Since analysis and evaluation of the compliance with the tax legislation which rely on the database may sometimes find out indications of violations against the tax legislation, the taxation authority shall issue the decision on the field audit.

Documents submitted to apply for issuance of the examination decision shall be composed of the followings:

- The written request in which the reasons for such examination must be clearly state; the contents of the examination shall specify which issues shall be examined.

- The draft decision on the tax examination (as mentioned above)

- Attached materials on risk analysis (enclosing the form No. 04/QTKT issued together with this process).

c) In case the examination is carried out before or after tax refunds in accordance with regulations, the decision on the field audit must be issued.

Based on the classification of examination documents before tax refunds as stipulated in Point 2 Article 41 and after tax refunds as stipulated in Point 4, Article 41 of the Prime Minister’s Decree No. 83/2013/ND-CP dated July 22, 2013 on providing specific provisions on implementation of several articles enshrined in the Law on Tax Administration and the Law on Amendments to and supplementation of several articles enshrined in the Law on Tax Administration, the tax authority shall issue the decision on the field audit.

Documents submitted to apply for issuance of the examination decision shall be composed of the followings:

- The written request in which the reasons for such examination must be clearly state; the contents of the examination shall specify which issues shall be examined.

- The draft decision on the tax examination (as mentioned above).

- Documents submitted to claim tax refunds (applicable to the situation where the tax examination is carried out before tax refunds), or documents submitted to apply for permission for tax refunds (applicable to the situation where the tax examination is carried out after tax refunds).

- Attached materials on analysis of risks (if any).

d) The field audit applying to taxpayers that can be selected according to the plan and theme, or applying to taxpayers subjected to acquisition, splitting, dissolution, bankruptcy, equitization, and the unscheduled field audit or the examination under the directions of the competent authority.

Based on the approved examination plan or theme, or taxpayers subjected to acquisition, splitting, dissolution, bankruptcy, equitization, and the unscheduled field audit or the examination under the directions of the competent authority, the head of the audit division shall assign public employees to collect, study and analyze in-depth information about taxpayers subjected to the tax examination (completing the form No 04/QTKT issued together with this process) in order to issue the decision on the field audit.

Documents submitted to apply for issuance of the examination decision shall be composed of the followings:

- The written request in which the reasons for such examination must be clearly state; the contents of the examination shall specify which issues shall be examined.

- The draft decision on the tax examination (as mentioned above).

- Materials on analysis (enclosing the form No. 04/QTKT issued together with this process) together with the approved examination plan or theme or the official dispatch as a request for examination of the tax finalization applying to the case in which taxpayers are subjected to merging, splitting, dissolution, bankruptcy, equitization and other unscheduled audits or the examination carried out under the directions of the competent authority.

3.2. The decision on the field audit must be sent immediately to the division in charge of tax declarations and accounting, and sent to taxpayers not later than three working days from the date of issuing such decision.

3.3. Before announcing the decision on the field audit, the leader of the audit team should assign team members to carry out examination parts of audit tasks according to the contents specified in the decision on the field audit (following the form No. 05/QTKT issued together with this process).

3.4. The decision on the field audit shall be cancelled, or the field audit is postponed, or punitive actions are taken due to refusal to accept the decision on the field audit under the following circumstances:

a) The decision on the field audit shall be cancelled under the following circumstances:

- As for the case stipulated in Point 2 Section 1 mentioned above, before the date of initiating the field examination, if taxpayers prove that the amount of tax liabilities are correct, within 5 working days, the Leader of the audit team shall report to the head of the audit division to request the head of the taxation authority to issue the decision to cancel the decision on the field audit.

- The taxation authority shall issue the decision on examination of taxpayers who terminates their business operations; or representatives of taxpayers who have been absent for a long time due to unexpected events; or representative offices of foreign traders which have been closed or have not been closed but have no contact with the state management agencies after verifications; or investigating or inspecting organizations that are carrying out examination and inspection of the enterprise.

- Documents submitted to apply for cancellation of the decision on tax examinations shall include:

+ The written request in which the reasons for cancellation of the decision on the tax examination must be specified.

+ The draft decision on cancellation of the decision on the tax examination (following the form No. 19/KTTT issued together with the Circular No. 156/2013/TT-BTC of the Ministry of Finance).

+ Materials submitted by taxpayers that help prove that the amount of tax liabilities is correct.

b) Postponement of tax examination

Where the decision on the tax examination is received and taxpayers wish to request postponement of the tax examination, they must send documents to the taxation authority in which reasons and postponed duration must be specified for consideration and decision. Within a permitted period of 05 (five) working days of receipt of the written request for postponement of the tax examination, the taxation authority shall notify in writing (completing the form No. 06/QTKT issued together with this process) taxpayers of whether their request is accepted or not. The postponement of the tax examination shall be allowed once and postponed duration is limited to 3 months.

c) Handling of violations committed by taxpayers who refuse to accept the decision on the tax examination.

In case taxpayers are still carrying out their business operation as usual and filing their tax returns but they refuse to accept the decision on the tax examination issued by the taxation authority, or they intentionally stay away to avoid accepting the decision on the tax examination, tax audit public employees shall be obliged to make a record on the penalty for their administrative violation in accordance with Clause 1 Article 11 enshrined in the Circular No. 166/2013/TT-BTC of the Ministry of Finance dated November 15, 2013.

When the record on administrative violations is made, if defaulting persons or representatives of organizations are absent or intentionally stay away or, for some objective reasons, fail to sign that record, it must be signed by representatives of the competent authority at the place where violations are detected, or signed by more than 2 witnesses.

4. The process for carrying out field audits

4.1. The field audit must be commenced not later than 10 working days from the date of issuing the decision on tax examinations. The leader of the tax examination team shall be responsible for announcing the decision on tax examinations and explaining examination contents specified in the decision. After announcing the tax examination decision, the tax examination team and taxpayers must make the record on determination of the time and contents specified in the decision according to the form No. 05/KTTT issued together with the Circular No. 156/2013/TT-BTC of the Ministry of Finance.

4.2. Team members must perform their tasks assigned by the leader of the examination team and assume their responsibility for their assigned tasks. Upon completion of their assigned tasks, team members shall make the record on determination of findings verified by the representatives of taxpayers (completing the form No. 07/QTKT issued together with this process).

4.3. In the course of carrying out the examination, the examination team shall be vested with the right to examine assets, raw materials, goods, and review accounting vouchers and records, and financial statements as well as other related materials within the contents of the decision on tax examinations. As for information, materials or data provided by taxpayers for the taxation authority in accordance with applicable regulations such as materials, documentation submitted to apply for tax registration, declaration of tax payments or statements on invoice use, etc., the tax examination team shall not request taxpayers to provide them but shall be obliged to discover and look them up at the taxation authority to serve the purpose of supporting the tax examination.

In case taxpayers perform accounting activities by means of accounting software (meeting the regulations laid down in the Circular No. 103/2005/TT-BTC of the Ministry of Finance dated November 24, 2005 on providing guidance on standards and requirements of accounting software), the tax examination team shall request them to submit accounting records stored in the format of digital data, which can be read by common office software and have the same contents as those printed out for filing purposes by taxpayers in accordance with regulations, without requesting them to provide hard copies of these ones.

In case it is necessary for the examination team to temporarily keep cash, objects or licenses involving tax evasion or fraud acts, the leader of the examination team shall be obliged to report to the leader of the audit division to request the head of the taxation authority to issue the decision to apply measures to temporarily keep cash, objects or licenses involving tax evasion and fraud acts in accordance with regulations laid down in the Law on Tax Administration.

4.4. The leader of the examination team and team members shall not be allowed to request taxpayers to provide information or materials which do not involve the examination contents, or pieces of state secret information, unless otherwise stipulated by laws.

4.5. In case, during the process of the tax examination, taxpayers have shown their initiative in discovering and paying their tax liabilities to the state budget as a remedy for their misrepresenting tax assessment or frauds, the tax examination team shall make a record on the receipt and that payment amount in order to impose penalty for their violations in accordance with the Law on Tax Administration.

4.6. The permitted duration of a field audit shall not exceed 5 actual working days from the date of starting to announce the decision on such field audit. In some situations where it is necessary to have an extension of verification and collection of materials and proofs, within a maximum of one day prior to the deadline for the tax examination, the leader of the examination team shall be obliged to report to the head of the audit division to request the head of the taxation authority to issue the decision on examination deadline extension (completing the form No. 18/KTTT issued together with the Circular No. 156/2013/TT-BTC) In each tax examination, the deadline for the tax examination shall be only extended once. The extended duration shall be restricted 5 (five) actual working days.

4.7. In the course of the field audit, if there are unexpected events that may happen to cause that field audit to be temporarily suspended, taxpayers shall submit the written request for this suspension in which the reasons for this will be clearly stated and the duration of such suspension will be determined as well. In this case, the leader of the examination team shall report to the head of the audit division to request the head of the taxation authority to issue the notification of such temporary suspension.

In the event that the field audit is temporarily suspended because of unexpected events that may happen to the taxation authority, the leader of the examination team shall report to the head of the audit division to request the head of the taxation authority to issue the notification of such temporary suspension. The duration of this suspension shall not be included in the permitted examination duration.

4.8. In case taxpayers fail to comply with the decision on the tax examination within a permitted duration of 03 (three) working days from the date on which they are bound to comply with the decision of the competent authority, or they refuse, postpone or evade supply of materials, invoices, documents or accounting records relating to their tax liabilities 06 working hours late as from the time they receive the request from the competent authority during the process of the field audit, they shall be subjected to penalties for administrative violations in accordance with applicable regulations.

Imposition of penalties for administrative violations shall be carried out through the record on administrative violations signed by taxpayers or representatives of taxpayers. If defaulting persons or representatives of organizations are absent or intentionally stay away or, for some objective reasons, fail to sign that record, it must be signed by representatives of the competent authority at the place where violations are detected, or signed by more than 2 witnesses.

5. Establishment of the record on the tax examination

5.1. The record on the tax examination must be made by following the form No. 04/KTTT issued together with the Circular No. 156/2013/TT-BTC of the Ministry of Finance. Bases for making the record on the tax examination shall be composed of data and situations presented in the record on the examination of specific parts of the examination task assigned by the leader of the examination team to each team member.

5.2. The examination record shall include the following main contents:

- Legal grounds for establishing the examination record.

- Description of details of the examination. The findings of the examination team in comparison with the data provided by taxpayers shall be identified; the reasons for any discrepancy shall also be stated.

- The conclusion on specific contents subject to the tax examination shall be reached, and the amount of additional tax liabilities shall be determined through the examination and determination of behaviors, the severity of violations, and any proposal of measures to sanction violations within their jurisdiction shall be specified as well. Measures to sanction violations that fall within the remit of the examination team shall be recommended.

5.3. The examination record shall be established on the basis of the result mentioned in the written confirmation of findings issued by team members and must be all agreed by members of the examination team before being made known to taxpayers. If there is any member of the examination team who disagrees, the leader of the examination team shall be vested with the right to grant his/her decision and assume his/her responsibility for contents of the examination record. In this case, team members shall have the right to preserve their findings according to the record on specific parts of their assigned tasks.

5.4. Within a permitted duration of 5 (five) working days as from the end date of the deadline for the tax examination, the leader of the tax examination must publicly announce the examination record in front of taxpayers and members of the examination team. Upon the request of taxpayers, the leader of the examination team must explain unclear contents of the examination record.

5.5. Each page of the examination record must be signed by the leader of the examination team and taxpayers (legal representatives of taxpayers) and stamped by taxpayers (if any) on the date of announcement.

In case taxpayers wish to preserve their opinions in the examination record, the leader of the examination team shall create necessary conditions for them to exercise their right to preserve their opinions.

In the event that there is any difficulty that may arise from policies or regulations in which the superior-level competent authority’s opinions are needed, this must be noted in the examination record; whenever the superior-level competent authority make their response, the examination team or the audit division shall make an appendix to the examination record in order to take any necessary measures to deal with the case in accordance with laws.

5.6. Where the examination record has been announced and taxpayers fail to sign that record, within 05 (five) working days from the date of announcing the examination record, the leader of the examination team must make the record on administrative violations (as mentioned in instructions specified in Clause 4.8 Point 4 Section II Part B), and report to the head of the audit division to request the head of the taxation authority to issue the decision to impose any proper penalty for such administrative violations in accordance with regulations, and concurrently request taxpayers to sign the examination record. In case taxpayers continue refusing to sign that record, within 30 (thirty) working days from the date of announcing the examination record, the head of the taxation authority shall issue the decision to collect tax arrears; impose penalty for tax-related administrative violations or reach a conclusion on the tax examination according to contents of the examination record, data or findings collected during the examination process.

5.7. In the event that it is impossible to announce the examination record and taxpayers refuse to sign the examination record due to their absence from their company's office, or intentional evasion, or for some objective reasons, within 5 9five) working days from the date of completing the examination, the leader of the examination team must obtain the signature from the representative of the local authority at the area where violations are occurring, or from two witnesses, in the examination record. In this case, the head of the taxation authority shall issue the decision to collect tax arrears; impose penalty for tax-related administrative violations or reach a conclusion on the tax examination according to contents of the examination record, data or findings collected during the examination process.

5.8. The examination record must be made into a minimum of 5 copies with the same legal value.

- 01 copy kept by taxpayers.

- 01 copy kept by the leader of the examination team.

- 01 copy sent to the division in charge of tax declarations and accounting.

- 01 copy sent to the division in charge of debt management and tax liability enforcement.

- 01 copy stored at the tax audit division.

6. Handling of the result of the field audit

6.1. Within 5 (five) working days from the date of signing the examination record, the leader of the examination team shall report to the head of the tax audit division to submit the tax audit result (following the form No. 08/QTKT issued together with this process), the draft decision on imposing tax-related penalty (following the form No. 20/KTTT issued together with the Circular No. 156/2013/TT-BTC) or the conclusion on the tax examination (following the form No. 06/KTTT issued together with the Circular No. 156/2013/TT-BTC) to the head of the taxation authority.

In case the collection of tax arrears is required , and the penalty for administrative violations relating to taxes is imposed, within 07 (seven) working days from the date of signing the examination record (if the examination contains a lot of complicated details, the permitted duration is within 30 (thirty) working days from the date of signing the examination record), the head of the taxation authority shall issue the decision to sanction tax-related violations by completing the form No. 20/KTTT issued together with the Circular No. 156/2013/TT-BTC In case the collection of tax arrears is not required, and the penalty for administrative violations relating to taxes is not imposed, within 07 (seven) working days from the date of signing the examination record, the head of the taxation authority shall sign the tax audit conclusion.

The decision to sanction tax-related violations or the tax audit conclusion shall be sent to the followings:

- 01 copy sent to taxpayers.

- 01 copy kept by the leader of the examination team.

- 01 copy sent to the division in charge of tax declarations and accounting.

- 01 copy sent to the division in charge of debt management and tax liability enforcement;

- 01 copy stored at the tax audit division together with the decision on the tax examination and the tax examination record.

The decision to sanction tax-related violations shall be sent in person or by registered mails and the defaulting organization or individual shall be informed within a permitted duration of 02 (two) working days from the date of issuing the decision to sanction tax-related violations. If this decision is sent in person but the organization or individual intentionally evades receiving it, the competent person shall make a record on this with a verification obtained from local authorities and then the decision is deemed the sent one. If this decision is sent by registered mails, and after the permitted duration of 10 (ten) days from the date of sending the decision to sanction violations by mails, the decision is returned three times due to the organization or individual's refusal to receive it, or the decision is posted at the residence of individuals or the office of organizations, or it is established that defaulting persons refuse to receive it, the decision shall be deemed as the sent one.

6.2. In case, through the tax examination, tax-related violations have been found, or indications of tax evasion or fraud have been shown within 7 (seven) working days from the date of completing the tax examination (in respect of the complicated case, the permitted duration is within 30 (thirty) working days from the date of completing the tax examination), the leader of the examination team shall be responsible for reporting to the head of the audit division to request the head of the taxation authority to issue the decision to sanction violations after the tax examination, or forward the examination file to the inspecting division, or consider sanctioning violations in accordance with legal regulations.

The examination file forwarded to the inspecting division shall be composed of the followings:

- The statement on the reasons for forwarding such examination file;

- The tax audit decision;

- The examination record;

- Materials and proofs that show taxpayers’ indications of tax evasion.

6.3. In case, through the tax examination, the tax evasion have shown a criminal indication, within 10 (ten) working days from the date of detecting this, the leader of the examination team shall be responsible for reporting to the head of the audit division to request the head of the taxation authority to forward the examination file to the competent authority to carry out investigation in accordance with the law on criminal proceedings.

The examination file forwarded to the investigation authority shall be composed of the followings:

- The decision to forward the examination file to the competent investigation authority;

- The duplicate examination record;

- The duplicate result of assessment or verification (if any);

- Duplicate evidence or record on sealing exhibits of violations (if any)

- Other duplicate relevant documents (if any).

7. Post-audit supervision

The audit division shall be responsible for collaborating with the debt management and tax debt enforcement division in monitoring and accelerating the payment of retrospectively-paid taxes and refunds and fine specified in the examination result to the state budget in accordance with regulations within 90 (ninety) days from the deadline for making required payments to the state budget through the tax examination as stated in the decision to sanction tax-related violations.

III. AGGREGATE REPORTING AND FILING OF TAX AUDIT DOCUMENTS

1. Data input into the system

- The head of the tax audit division shall be responsible for directing his/her division to input all data about examination, such as office audits of tax returns and field audits, into the system assisting inspection and examination activities (TTR).

- Data input into the system for assisting the inspection and examination (TTR) must conform to time-based requirements which assists the work of reporting the result of unscheduled and periodic examinations in accordance with regulations.

- The Inspection Department shall be responsible for examining, accelerating Taxation Departments to input post-audit data into the system and aggregate the performance of Taxation Departments to report to the General Department of Taxation as the basis for directing the work of tax examinations.

- The Taxation Department shall assign one audit division to take charge of examining and encouraging Taxation Sub-departments to input post-audit data into the system and aggregate the performance of Taxation Departments to report to the General Department of Taxation as the basis for directing the work of tax examinations.

- The leader of the examination team carrying out the field audit shall assume responsibility for the punctuality, adequacy and accuracy of performance and data of taxpayers which will be checked before being input into the TTR system.

2. Reporting regime

In addition to carrying out the occasional report as requested by the competent authority, the tax audit division affiliated to the taxation authority at all levels must review the result of performing the examination task through the application assisting the tax inspection and examination (TTR); concurrently report on the result of performing the examination task to the head of the taxation authority at the same level for signature. During the process of upgrading the application assisting the inspection and examination (TTR), the report on the result of performing the examination task shall be made and sent to the taxation authority at the directly superior level, including several specific contents and requirements as follows:

2.1. The time of finalizing reporting data

Since the particular characteristics of the tax examination is continual and transferable between reporting periods, the report must ensure the right time and continuality between reporting periods, and avoid the state of being overlapping and missing due to the inconsistent time of finalizing reporting data. The reporting data in each reporting period must stick to the principle of finalizing the data in the previous period and at the end of the reporting period (the month-based report is the result in the whole month and the year-based report is the result in the whole year).

2.2. Types of periodic reports

- During the process of upgrading the application assisting the inspection and examination (TTR), the inferior-level taxation authority shall be obliged to aggregate date to report to the superior-level taxation authority by submitting monthly and annual documents on the result of office and field audit of tax files according to the reporting form No. 09/QTKT, 10/QTKT and 11/QTKT issued together with this process.

- The head of the taxation authority shall assign one division (or one examination team) to combine all reports obtained from audit divisions (or examination teams) by adopting the report form No. 09/QTKT, 10/QTKT and 11/QTKT issued together with this process to report to the superior-level taxation authority.

2.3. Reporting time

- Monthly report: The Taxation Sub-departments shall report to the Department of Taxation by the 5^th day of the month following the reporting month; the Department of Taxation shall report to the General Department of Taxation by the 10^th day of the month following the reporting month.

- Annual report: The Taxation Sub-departments shall report to the Department of Taxation by the 15^th day of the first month of the following year; the Department of Taxation shall report to the General Department of Taxation by the 20^th day of the first month of the following year.

2.4. Reporting form

- The report shall be in writing and sent by mails and immediately mailed to the email address of the Inspection Department of the General Department of Taxation and the Examination Division of the Department of Taxation) which includes contents according to the form mentioned in paragraph 2.2 Point 2 Section III Part B hereof.

- The written report must be consistent with the report printed out from the application assisting the inspection and examination (TTR). The taxation authority at all levels shall carry out the finalization of monthly reporting data depending on the reporting time in accordance with regulations laid down in Point 2.3 Section III Part B issued together with this process in order to support the work of directing the examination task and report on the examination result.

3. Storage of examination files

3.1. Within 30 (thirty) days from the date of signing the decision to sanction violations against tax legislation or the examination conclusion, the leader of the examination team shall be responsible for delivering examination files to affiliated divisions and persons assigned tasks in accordance with laws and organizational rules and regulations.

Files or materials to be handed over must be made into a record (completing the form No. 12/QTKT issued together with this process), and stored at the same examination file.

3.2. Tax examination files shall be stored at the taxation authority’s office in the following durations:

- As for tax examination files stored at the taxation authority's office, and tax examination files stored at taxpayers' offices, shall be stored within 5 (five) years as from the date of completing the tax examination.

- The aggregate report shall be stored at the taxation authority’s office within 5 (five) years as from the reporting year.

Part III

IMPLEMENTATION

1. The Inspection Department affiliated to the General Department of Taxation shall be responsible for providing guidance and directions for taxation authorities at all levels to implement this process.

2. The head of the taxation authority at all levels shall organize and execute the work of office and field audits of tax returns in conformity with this process; the superior-level taxation authority shall organize the work of examining the conformity of the inferior-level taxation authority with this process and apply measures to offer rewards or impose penalties on a periodic or occasional basis in accordance with regulations.

3. In the course of implementation, if there is any difficulty that may arise, the Department of Taxation at cities or provinces must submit their timely report to the General Department of Taxation for possible solutions./.