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.
The article will cover:
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Assess the taxpayer's risk classification;
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Key supervision for taxpayers showing signs of tax law violations.
1. Tax authority assessment and supervision operations
- 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.
2. Method of assessing tax law compliance and classifying taxpayer risk levels
Tax compliance and taxpayer risk are determined by one or a combination of the following methods:
- Scoring and grading method.
- Machine learning method (Artificial Intelligence or AI to analyze data and quickly describe the taxpayer's status)
- Category ranking method.
3. Sources and methods of collecting information on tax obligations
Information for risk management in tax professional activities includes:
3.1. Information in tax authorities
a) Information on business registration, tax registration; information on the identity of the founding members, the owner and the legal representative of the taxpayer; 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;
b) Information about tax declaration dossiers; 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;
3.2. Information outside the tax authority: Information collected from relevant state management agencies, organizations and individuals, including:
a) Information about taxpayers collected from state management agencies, organizations and related individuals including: Banks; Labor; Social insurance; Business registration agencies; Investment management agencies; Relevant ministries and branches;
b) Information from foreign countries and international organizations.
4. Application of information technology in tax risk management
a) Tax authorities build comprehensive and highly automated risk management applications
b) Tax authorities build a database of taxpayers which is built and centrally managed at the General Department of Taxation.
5. Assessment and classification of taxpayers
5.1. 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.
5.2. 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.
5.3. Risk classification for individual taxpayers
Individual taxpayers are classified according to one of the following levels:
- High risk.
- Medium risk.
- Low risk.
6. Processing 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:
a) High risk:
- Review, check, verify
- Inspection, testing
b) Medium risk:
- Randomly selected for review, check, verify
- Continue to perform risk classification for the next assessment period
c) 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.