Tax risk assessment and key monitoring of taxpayers (Circular 31/2021/TT-BTC from July 02, 07)

Updated at 19/08/2023 - 04:38 pm

  • Assess the taxpayer's risk classification;
  • Key supervision for taxpayers showing signs of tax law violations.

Circular 31 / 2021 / TT-BTC on risk management in tax administration, according to which regulations on applying risk management in tax administration were issued by the Ministry of Finance on May 17, 5, effective from July 2021, 02.

Here are the points that businesses need to know and have a plan to avoid being classified as high-risk cases.


Assessment and supervision services of tax authorities #

  • Collect, process, manage and use information related to taxpayers for risk management.
  • Assess tax compliance and classify taxpayers' risk.
  • Apply tax management professional measures corresponding to the level of tax compliance and taxpayer risk.
  • Regulations on criteria, indicators of compliance assessment criteria and risk classification of taxpayers as businesses and individuals.

Methods of assessing tax compliance and classifying taxpayers' risk #

Tax compliance and taxpayer risk are determined by one or a combination of the following methods:

1. Scoring method and grading according to points.

2. Machine learning method (Artificial intelligence or AI to analyze data and quickly describe the status of taxpayers)

3. Method of ranking by category.

Sources and methods of collecting information on tax obligations #

Information for risk management in tax professional activities includes:

1. Information in tax authorities

i) Information on business registration, tax registration; information on the identities of the founding members, owners and legal representatives of taxpayers; registration and employment; information about taxpayer status; number of times of change of business registration information, tax registration; capital contribution of members; Main business sectors;

ii) Information about tax returns; taxpayer; tax debt; tax incentives, exemptions and reductions; tax payment extension; gradual payment of tax; tax refund; register, manage and use invoices and vouchers; information on complaints and denunciations; information on inspection and examination results and handling after inspection and examination; information about affiliate transactions;

2. Information outside the tax authority: Information collected from relevant state management agencies, organizations and individuals, including:

i) Information about taxpayers collected from relevant state management agencies, organizations and individuals, including: Banks; Labor; Social insurance; Business registration agency; Investment management agency; Relevant Ministries;

ii) Information from foreign countries and international organizations.

Application of information technology in tax risk management #

i) Tax authorities develop integrated and highly automated risk management applications

ii) Tax authorities develop a database of taxpayers which is built and managed centrally at the General Department of Taxation.

Assessment and classification of taxpayers #

1. Tax compliance assessment of taxpayers

Taxpayers are assessed and classified according to one of the following levels of tax compliance:

  • Level 1: High compliance.
  • Level 2: Moderate compliance.
  • Level 3: Low compliance.
  • Level 4: Non-compliance.

2. Classify the level of risk taxpayers are businesses

Taxpayers being businesses are classified according to one of the following categories:

  • Class 1: Very low risk taxpayer.
  • Class 2: Low-risk taxpayers.
  • Rank 3: Medium-risk taxpayer.
  • Rank 4: High-risk taxpayers.
  • Rank 5: Taxpayers at very high risk.

3. Risk classification for individual taxpayers

Individual taxpayers are classified according to one of the following levels:

  • High risk.
  • Medium risk.
  • Low risk.

Handling monitoring and evaluation results #

The tax authority shall base itself on the results of the assessment of compliance with the above-mentioned tax laws and professional information at the time of decision-making to determine a list of taxpayers classified by risk levels in each period.

The list of taxpayers at risk according to the above cases is updated on the risk management application in tax management.

The principles of management and control are as follows:

i) High risk:

  • Review, check, verify
  • Inspection, testing

ii) Medium risk:

  • Randomly selected for review, check, verify
  • Continue to perform risk classification for the next assessment period

iii) Low Risk:

  • Save records, perform risk classification for the next audit period.

In case of high compliance: Include in the list to consider, choose to commend and reward taxpayers who comply with tax laws.

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