Tax inspection is one of the important instruments enabling tax authorities to examine and supervise the compliance of organizations and individuals with tax laws. Through tax inspection activities, tax violations are detected and addressed in a timely manner, thereby ensuring fairness in tax administration, increasing State budget revenues, and fostering a transparent and healthy business environment. The following article focuses on analyzing the fundamental legal provisions on tax inspection, including frequently asked questions relating to such an issue.

I. Current situation of tax inspection of enterprises

The current situation of tax inspection of enterprises in Vietnam reflects a complex landscape, with significant efforts by tax authorities to enhance management and prevent revenue loss, while still facing various challenges requiring resolution.

Groups of enterprises frequently subject to inspection:

  • Enterprises with related-party transactions, particularly FDI companies that have reported losses for years yet continue to expand investment scale, showing signs of transfer pricing or “artificial losses and real profits” to evade tax obligations.
  • Enterprises suspected of fraud, use of illegal invoices, or those considered high-risk in tax refund activities.
  • Enterprises operating in high-risk industries such as petroleum, oil, electricity, telecommunications, banking, insurance, securities, financial leasing, pharmaceuticals, real estate, construction, gold and gemstone trading, entertainment, advertising, and e-commerce.

II. Legal provisions on tax inspection

1. Definition of tax inspection

According to Clause 1, Article 3 of the Law on Tax Administration 2019, tax is a compulsory payment to the State budget imposed on organizations, households, business households, and individuals in accordance with tax laws.

Tax inspection is one of the tax administration activities under Article 4 of the Law on Tax Administration 2019. It may be understood as a higher-level, more comprehensive examination of taxpayers. Tax inspection is conducted periodically for major taxpayers, those engaged in diverse or large-scale business activities, or taxpayers showing signs of violating tax laws. It is also implemented to resolve complaints or denunciations concerning tax matters or upon the request of heads of tax authorities or the Minister of Finance.

2. Timing of tax inspection

Pursuant to Article 113 of the Law on Tax Administration 2019, enterprises may be subject to tax inspection in the following cases:

  • There are signs of tax law violations;
  • Cases of resolving complaints, denunciations, or implementing anti-corruption measures;
  • Based on tax administration requirements and risk-based classification results;
  • Following recommendations from the State Audit Office, conclusions from the State Inspectorate, or other competent authorities.

3. Duration of tax inspection

According to Article 115 of the Law on Tax Administration 2019, the duration of a tax inspection shall comply with the provisions of the Law on Inspection. The duration of an inspection refers to the period conducted at the taxpayer’s locations, from the date of the announcement of the inspection decision to the date of conclusion of the inspection at the taxpayer’s locations.

Specifically, Article 47 of the Law on Inspection 2022 provides:

  • Inspections by the Government Inspectorate: Not exceeding 60 days; it may be extended once for up to 30 days in complex cases, or a second time for up to 30 days in particularly complex cases;
  • Inspections by ministerial, general department, departmental, or provincial inspectorates: Not exceeding 45 days; it may be extended once for up to 30 days in complex cases;
  • Inspections by district or departmental inspectorates: Not exceeding 30 days; it may be extended once for up to 15 days in complex or geographically difficult areas such as mountainous, border, island, or remote regions.

III. Questions about tax inspection

1. Tax inspection procedures 

Currently, the latest tax inspection procedure is provided in Section 2, Part 2 of Decision No. 1404/QD-TCT (2015). Tax inspections conducted at the taxpayer’s locations include:

Stage 1: Preparation and issuance of the inspection decision

  • Step 1: Collecting documents and analyzing inspection contents;
  • Step 2: Issuing the inspection decision;
  • Step 3: Notifying the taxpayer of the inspection decision.

Stage 2: Conduct of the inspection

  • Step 1: Announcing the tax inspection decision;
  • Step 2: Conducting inspection at the taxpayer’s locations;
  • Step 3: Preparing the inspection report.

2. Purposes of tax inspection

According to Section 1, Part 1 of Decision No. 1404/QD-TCT (2015), the objectives of tax inspection include:

  • Standardizing activities and procedures in tax inspection;
  • Ensuring that tax inspection activities comply with legal regulations uniformly from the General Department of Taxation to local tax offices, meeting the requirements of reform and modernization of the tax sector;
  • Enhancing the effectiveness, objectivity, transparency, and integrity of tax inspection work.

3. Preparation for tax inspection

Enterprises should prepare as follows when subject to tax inspection:

  • Fully preparing records and documents: Accounting books, invoices, contracts, and tax reports;
  • Appointing a representative to coordinate and explain matters with the tax authorities;
  • Reviewing figures to identify and correct any errors prior to inspection;
  • Understanding rights and obligations to protect lawful interests during inspection.

4. Tax violations subject to sanctions 

Tax inspections may impose sanctions for the following violations:

  • Failure or delay in submitting tax declarations or reports;
  • Failure to declare or incorrect/incomplete declaration of taxable amounts;
  • Use of illegal invoices or failure to issue invoices;
  • Tax evasion, fraud, or falsification of data to reduce tax liabilities;
  • Failure to maintain lawful and complete accounting books and records;
  • Failure to comply with tax authority decisions or recommendations within prescribed time limits.

5. Procedures for appealing tax inspection results

The procedures for appealing tax inspection results includes:

  • Filing a complaint: The taxpayer submits a written complaint to the authority that issued the inspection decision or to its superior authority within 30 days from the date of receipt of the decision;
  • Acknowledgment of receipt: The receiving authority must confirm or respond regarding receipt of the complaint;
  • Resolution: The competent authority must review and resolve the complaint within the statutory time limit (typically 45 days, extendable by 30 days in complex cases);
  • Notification of result: The authority must provide a written notice to the complainant regarding the resolution outcome.

IV. Legal consulting services on tax inspection

The above information has been compiled by NPLaw to assist clients in understanding tax inspection matters. Should clients have any further questions related to the foregoing or other legal concerns, please contact NPLaw for direct consultation and guidance from our legal experts.