On September 18, 2023, the General Department of Taxation issued Decision No. 1388/QD-TCT applying risk management in classifying Value Added Tax (VAT) refund files and selecting taxpayers to develop a plan for post-refund inspection and audit.
Accordingly, in Article 6 of the Decision, the criteria index for classifying VAT refund files and selecting taxpayers with risk indicators to develop a plan for post-refund inspection and audit consists of three groups, specifically:
– Group I: Criteria index for classifying VAT refund request files subject to inspection before refund
This group includes criteria indicators where, if a taxpayer exhibits risk indicators in any one of these criteria, the VAT refund request file will be classified as subject to inspection before refund.
– Group II: Criteria index for classifying VAT refund request files based on the risk scoring method
This group applies criteria indicators using a risk scoring method. Based on this, VAT refund files will be classified, and taxpayers with risk indicators will be selected to develop a plan for post-refund inspection and audit.
– Group III: Criteria index based on the tax authority’s management requirements
This group applies criteria indicators using a risk scoring method that the tax authority can select and add to the risk assessment criteria index for classifying VAT refund request files.
Specifically, the criteria index for each group is detailed in Appendix I attached to the Decision.
For Group I, the Decision outlines three criteria:
(1) Suspicious transactions through banks or other credit institutions.
(2) Legal representative of the enterprise.
(3) Other criteria. For example: Enterprises on the list of taxpayers with risk indicators are subject to inspection regarding the management and use of invoices within 12 consecutive months from the time of the refund request.
For Group II, there are 11 criteria divided into two types: the group of criteria for classifying the level of taxpayer risk and the group of criteria for evaluating compliance with tax laws.
The group of criteria for classifying taxpayer risk includes the following criteria:
(1) General information about the enterprise.
(2) The situation of the enterprise’s invoice usage.
(3) The amount of tax refunded in the period.
(4) Fluctuations in profits.
(5) Number of times declaring a loss.
(6) Fluctuations in revenue from goods and services sold.
(7) Time of establishment.
(8) The registered address of the enterprise’s headquarters.
The group of criteria for evaluating compliance with tax laws includes three criteria:
(1) Legal representative of the enterprise.
(2) Recovered tax after refund.
(3) Tax refund history. For Group III, the Decision outlines 16 criteria for reference purposes, and readers can refer to Appendix I of the Decision for a more comprehensive overview.
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