Circular No. 31/2021/TT-BTC on the application of risk management in tax administration

CIRCULAR

Regulations on the Application of Risk Management in Tax Administration

On the basis of Law on Personal Income Tax dated June 13, 2019;

Decree No. 126/2020/NĐ-CP dated October 19, 2020 of the Government detailing certain provisions of the Law on Tax Administration;

Decree No. 87/2017/NĐ-CP July 26, 2017 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

At the proposal of the Director General of the State Revenue Administration,

The Minister of Finance issues this Circular on the application of risk management in tax administration.

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

This Circular stipulates the application of risk management in tax administration by tax authorities at all levels, including:

1. Collection, processing, management, and utilization of information related to taxpayers for risk management purposes.

2. Assessment of tax law compliance and classification of taxpayer risk levels.

3. Implementation of tax administration measures corresponding to levels of tax law compliance and taxpayer risk.

Article 2. Applicability

1. Taxpayers.

2. The Tax Authority.

3. Tax officials.

4. State agencies, organizations, and individuals relevant as provided for in Article 2 of the Law on Tax Administration.

Article 3. Explanation of Terms

1. Application of risk management in tax administrationis the application of business processes, principles, measures, techniques of risk management, and the results of tax law compliance assessment and taxpayer risk level classification to decide on implementing tax administration measures.

2.Risk management informationis information about taxes and related to taxes collected and processed for the application of risk management in tax administration.

3. Compliance levelis the result of the classification by the tax authority regarding the taxpayer's compliance with tax laws.

4. Compliance assessment criteriaare standards for assessing taxpayers' compliance with tax laws.

5. Compliance assessment criterion indexare specific value indicators of compliance assessment criteria for taxpayers.

6. Compliance assessmentis the collection, analysis, verification, and comparison of information about the taxpayer's operations and compliance with tax laws against compliance assessment criteria and indices to classify the compliance level of the taxpayer.

7. Compliance managementis the tax authority's implementation of compliance assessments, risk level classifications, behavior analysis of taxpayers, thereby using resources reasonably for appropriate management measures according to each level, aiming to encourage compliance and prevent non-compliance behaviors.

8. Taxpayer risk analysisis the analysis of taxpayer information to identify signs of tax law violations leading to potential revenue loss for the state budget.

9. Risk levelis the severity of the risk determined based on the combination of frequency and consequences of the risk.

10.Risk level classification criteriaare standards for classifying risk levels in tax management.

11. Risk level classification criterion indexare specific value indicators of risk level classification criteria.

12. Risk assessmentis the classification, examination, and comparison of risk levels with risk level classification criterion indices and the handling of previous risks to prioritize actions.

13. Risk indicatoris an information factor reflecting the potential for violation of the law.

14Violation signabout taxesisan information factor serving as the basis for identifying tax law violation behaviors.

15. Key monitoringis the application of tax administration measures by the tax authority against taxpayers (assessed) with high tax risks or non-compliance with tax laws in specific fields of activity, areas during specific periods.Application of information technology for risk management in tax administration (hereinafter referred to as risk management application)

16is the application of information technology to connect and receive information from related data sources within and outside the tax authority, digitizing risk management measures based on issued criteria and indices to analyze, assess compliance, determine risk levels, and serve the decision-making process for the tax authority to implement administrative measures.Taxpayer segmentation

17.is the division of taxpayers by the tax authority into groups with common characteristics to apply appropriate management measures.Classification by machine learning method

18.is the execution of computational and statistical algorithms on computers to determine models, functions, and indices that help classify and predict risk levels.Categorical ranking method

19. is the evaluation of taxpayers by comparing them against criteria and indices regarding their operations and compliance with tax laws, arranged into groups corresponding to each ranking level. A taxpayer achieves a specific ranking level if they meet the criteria and indices in the corresponding ranking level group.Scoring and classification method

20. is the evaluation of taxpayers based on scores of criteria and indices regarding their operations and compliance with tax laws.là phương pháp đánh giá người nộp thuế trên cơ sở điểm số của các tiêu chí, chỉ số về quá trình hoạt động và chấp hành pháp luật về thuế.

Article 4. Principles of risk management

1. Risk management shall be applied to ensure the effectiveness and efficiency of tax administration; encourage and create favorable conditions for taxpayers to voluntarily comply with legal provisions on taxes and tax administration while preventing, detecting, and promptly handling violations of laws on taxes and tax administration.

2. Risk management information shall be collected from internal and external sources of the tax authority (including information from abroad) in accordance with the provisions of the law; it shall be centrally managed at the General Department of Taxation through an information technology application system and processed, shared, and provided to tax authorities at all levels and other state management agencies for the purpose of tax administration in accordance with the provisions of the law.

3. The assessment and classification of the level of compliance with tax laws and the level of taxpayer risk shall be carried out automatically and periodically based on one or a combination of methods prescribed in this Circular, based on the provisions of the law, tax management procedures and measures, and criteria specified in this Circular, and data on taxpayers.

4. Based on the results of assessing the level of compliance with tax laws, classifying the level of taxpayer risk, information available in tax management support applications of the tax authority, violation signs, and other risk indicators provided at the time of decision-making, the tax authority shall implement:

a) Decisions to inspect, audit, supervise, and apply appropriate business measures.

b) Develop an overall compliance improvement plan consistent with the resources of the tax authority based on the analysis of the nature of behavior, causes, and scale of each level of compliance with tax laws and risk levels.

5. In cases where the provisions of the law, this Circular, and other regulations and guidelines on risk management have been properly implemented, tax officials shall be exempted from personal liability in accordance with the provisions of the law.

6. In cases where the risk management application encounters problems or does not meet the requirements for applying risk management as stipulated in this Circular, risk management shall be carried out manually through approval of a proposal document or issuance of a document signed by the authorized person to apply tax management business measures in accordance with the Law on Tax Administration and related implementing regulations.

7. In cases where changes in information lead to changes in the assessment results of compliance with tax laws and classification of taxpayer risk levels, and the risk management application fails to automatically adjust the compliance level and risk level, the update of the assessment result change shall be carried out manually by the official after obtaining approval from the authorized person.

8. The results of applying business measures corresponding to risk ranking levels must be fully and accurately updated into tax management support applications of the tax authority or risk management applications for each specific case, serving to complete and implement the assessment of compliance with tax laws and risk classification of taxpayers for the next period.

Article 5. Method for assessing tax law compliance and classifying taxpayer risk levels

The degree of tax law compliance and taxpayer risk level shall be determined based on one or a combination of the following methods:

1. Scoring and classification method.

2. Machine learning method.

3. Ranking method according to categories.

Article 6. Procedure for applying tax risk management

Tax risk management shall be implemented by the tax authority in accordance with the following procedure:

1. Assessing the situation, determining objectives and requirements for risk management

The tax authority reviews common risks and violations of taxpayers in implementing Article 17 of the Law on Tax Administration No. 38/2019/QH14 or current regulations to identify major risks that need to be addressed, taxpayers with high risks, and handling directions.

2. Organizing the collection, processing of risk management information

Risk management information shall be collected and processed in accordance with Chapter II of this Circular.

In cases where incorrect or incomplete declarations are discovered during risk analysis, taxpayers have the responsibility to provide, explain, or supplement information and documents as required and within the time limit notified by the tax authority to ensure accurate assessment of tax law compliance and classification of taxpayer risk levels.

3. Establishing, updating indicators for analyzing and evaluating tax law compliance, classifying taxpayer risk levels

Based on the results of assessing the situation, determining objectives and requirements for risk management as stipulated in Clause 1 of this Article, risk management information, and the application of information technology, criteria, weights for evaluation and classification of tax law compliance levels and taxpayer risk levels shall be established and updated.

4. Analyzing, evaluating the degree of tax law compliance; determining taxpayer risk levels; determining risk levels in various tax management operations; managing risk files for key monitoring cases

Taxpayers shall be segmented based on appropriate conditions for tax administration requirements at each period when conducting analysis and evaluation of tax law compliance and taxpayer risk levels.

The implementation of analysis and classification of tax law compliance and taxpayer risk levels shall be carried out using the methods prescribed in Article 5 of this Circular.

5. Based on the results of determining risk levels; evaluating taxpayer compliance with the law to apply tax management measures and develop plans to improve overall compliance for taxpayers.

6. Monitoring, updating, evaluating feedback information on the implementation of tax management measures.

7. Implementing the collection, processing, use, storage of information; directing, guiding adjustments, supplements to ensure effective risk management.

Chapter II

COLLECTION AND PROCESSING OF RISK MANAGEMENT INFORMATION

Article 7. Risk management information

Information serving risk management in tax business activities includes:

1. Information within the tax authority

a) Information on business registration, tax registration; personal information of founders, owners, and legal representatives of taxpayers; labor registration and usage; taxpayer status information; number of changes to business registration and tax registration information; capital contribution situations of members; main business activities;

b) Information on tax declaration forms; tax payment; tax arrears; tax incentives, exemptions, reductions; tax payment extension; gradual tax payment; tax refund; invoice registration, management, and usage; complaint and accusation information; inspection, audit results and post-inspection, audit handling information; related party transaction information;

c) Other relevant information.

2. Information collected from state management agencies, organizations, individuals responsible for providing

a) Information on taxpayers collected from state management agencies, organizations, individuals in accordance with Article 26, Article 27, Article 30 of Decree No. 126/2020/NĐ-CP dated October 19, 2020 of the Government detailing certain provisions of the Law on Tax Administration or current regulations;

b) Information from foreign countries, international organizations provided under obligations in international treaties related to taxation of which Vietnam is a member.

3. Other relevant information concerning taxpayers.

Article 8. Collection and Processing of Information for Risk Management

1. Sources of Information Collection

a) From the information system within the tax authority;

b) From coordination with agencies and units under the Ministry of Finance and other agencies and units under relevant ministries and sectors in the exchange and provision of information for tax administration work;

c) From coordinating to exchange information with foreign tax authorities and competent authorities according to the provisions of the law;

d) Receiving information provided by state agencies, organizations, and individuals in accordance with the law;

đ) Information related to the activities of taxpayers collected during the tax management process;

e) Purchasing information in accordance with the Law on Tax Administration and guiding documents;

g) Receiving tax-related information from abroad and international organizations in accordance with Vietnam's obligations under international treaties;

h) From other relevant sources as prescribed by law.

2. Forms of Information Collection

a) Providing and exchanging in the form of electronic data, electronic vouchers, email, through the electronic portal of the General Department of Taxation; messages and calls to officially announced telephone numbers by the tax authority;

b) Providing and exchanging in writing, telegrams, telexes, faxes, paper documents;

c) Direct exchanges based on recorded minutes, confirmed by all parties involved; sending representatives to work, verify, collect information and documents; organizing meetings and other forms.

3. Processing Collected Information

a) Evaluating the relevance of the information to the needs and purposes of its use; examining the reliability and accuracy of the information;

b) Classifying, arranging, and storing information from various sources into groups for information exploitation and analysis;

c) Analyzing information, examining, and identifying factors constituting the content of the information to serve risk management;

d) Synthesizing and linking related factors identified through analysis to clarify the content and value of the collected information to classify risk levels and assess taxpayers' compliance with tax laws.

Article 9. Application of Information Technology in Risk Management

1. The risk management system and taxpayer database are centrally built and managed at the General Department of Taxation, ensuring that the information serving risk assessment is fully, accurately, and timely updated due to the connection and exchange of information with electronic tax data processing systems and related information systems.

In case of system failure or transmission errors, updating, integrating, processing, and storing information on the system will be carried out immediately once the system failure or error is resolved.

2. Applying measures to ensure data security, computer safety, and cybersecurity in accordance with the law.

3. The General Department of Taxation shall specify the responsibilities of units and tax officials at all levels in building, managing, operating, updating, exploiting, and using the risk management application in accordance with each field of tax business operations.

Chapter III

ASSESSMENT OF TAXPAYERS' COMPLIANCE WITH TAX LAWS AND CLASSIFICATION

RISK LEVELS OF TAXPAYERS IN TAX MANAGEMENT

Article 10. Assessment of Tax Law Compliance by Taxpayers

1. Taxpayers shall be assessed and classified according to one of the following levels of tax law compliance:

a) Level 1: High compliance.

b) Level 2: Medium compliance.

c) Level 3: Low compliance.

d) Level 4: Non-compliance.

2. The level of tax law compliance of taxpayers shall be classified based on criteria specified in Appendix I of this Circular.

3. The results of the assessment of tax law compliance of taxpayers shall be monitored and handled by the tax authority as follows:

a) For taxpayers at the non-compliance level, management measures shall be implemented as prescribed in Article 22 of this Circular;

b) For taxpayers at the high, medium, low compliance levels, and non-compliance level, an analysis of the nature of their behavior shall be conducted to determine measures to enhance compliance.

Article 11. Classification of Risk Levels for Corporate Taxpayers

1. Overall Risk Level Classification

a) Corporate taxpayers shall be classified into one of the following categories based on risk level:

a.1) Category 1: Very low-risk taxpayer.

a.2) Category 2: Low-risk taxpayer.

a.3) Category 3: Medium-risk taxpayer.

a.4) Category 4: High-risk taxpayer.

a.5) Category 5: Very high-risk taxpayer.

b) The risk level of taxpayers shall be classified based on the results of the tax law compliance assessment under Article 10 and the criteria specified in Appendix II of this Circular.

c) Handling the Results of Risk Level Classification for Corporate Taxpayers

c.1) For taxpayers at the very high-risk and high-risk levels, management measures shall be applied as prescribed in Article 22 of this Circular;

c.2) Depending on the requirements of tax administration during each period, taxpayers at various risk levels may continue to be classified for risk in tax management operations as stipulated in Clause 2 of this Article.

2. Risk Level Classification in Tax Management Operations

a) The risk level of corporate taxpayers in tax management operations shall be classified into one of the following levels:

a.1) High risk.

a.2) Medium risk.

a.3) Low risk.

b) The risk level of taxpayers in tax management operations shall be classified based on the risk level ranking results of taxpayers under Clause 1 of this Article and the criteria specified in Appendix II of this Circular.

c) Handling the Results of Risk Level Classification

The results of the risk level classification of taxpayers shall be applied to tax management measures in each tax management operation as stipulated in Chapter IV of this Circular.

Article 12. Classification of Risk Levels for Individual Taxpayers

1. The risk level of individual taxpayers shall be classified into one of the following levels:

a) High risk.

b) Medium risk.

c) Low risk.

2. The risk level of individual taxpayers shall be classified based on the results of the tax law compliance assessment under Article 10 and the criteria specified in Appendix III of this Circular.

3. Handling the Results of Risk Level Classification for Individual Taxpayers

The results of the risk level classification of taxpayers shall be applied to tax management measures prescribed in Article 15 of this Circular.

Chapter IV

APPLICATION OF RISK MANAGEMENT IN TAX ADMINISTRATION

Article 13. Application of risk management in tax administration

1. The tax authority shall base on the results of tax law compliance assessment under Article 10, the classification results of taxpayer risk levels under Articles 11 and 12 of this Circular, and business information at the time of decision-making to determine the list of taxpayers classified according to different risk levels for each period and implement:

a) Tax law compliance management;

b) Risk management in tax registration;

c) Risk management in tax file inspection at the tax authority's office;

d) Risk management in tax refund administration;

đ) Risk management in inspection and examination at the taxpayer's office;

e) Risk management in tax debt administration and enforcement of administrative tax decisions;

g) Risk management in invoice and document control;

h) Risk management for taxpayers subject to key monitoring and supervision cases;

i) Risk management for individual taxpayers;

k) Application of risk management in other business activities in tax administration.

2. The list of taxpayers with risks as specified in Clause 1 of this Article shall be updated on the risk management application in tax administration. Tax authorities at all levels are responsible for compiling, updating, and managing information on taxpayers with risks to serve tax administration work throughout the tax sector.

3. The General Department of Taxation shall detail the periodic evaluation and establishment of lists of taxpayers with risks as specified in Clause 1 of this Article to identify priorities in tax administration work to meet tax management requirements in each period.

4. If there is suspicious information or signs of tax law violations discovered through inspection, examination, audit, complaints, or information from state management agencies, investigation agencies, the head of the tax authority shall decide to change the form and level of inspection, apply alternative tax management measures within their authority and bear responsibility for their decision.

Article 14. Measures to Enhance Taxpayer Compliance with Tax Laws

Based on the results of tax law compliance assessment stipulated in Article 10 of this Circular, the tax authority shall analyze the nature of behavior and scale of each level of tax law compliance of taxpayers, develop plans to enhance tax law compliance with appropriate measures for each compliance issue as follows:

1. For high compliance cases: Include in the list for consideration and selection for commendation and reward of taxpayers complying with tax laws.

2. For cases requiring enhanced compliance:

a) Coordinate with relevant agencies, organizations, and tax agents to implement support measures for taxpayers to fulfill tax procedures; organize meetings with taxpayers, dialogue conferences, seminars, and training to help taxpayers fulfill their tax obligations correctly and fully;

b) Study amendments to policies, simplify administrative procedures, implement support measures, and apply information technology to facilitate tax declaration and payment, saving time and compliance costs for taxpayers;

c) Be classified as risk and subject to tax management measures for taxpayer risk levels prescribed in Articles 15, 16, 17, 18, 19, 20, 21, and 22 of this Circular.

Article 15. Application of risk management for individual taxpayers

Based on the list of individual taxpayers classified according to risk levels under Article 13 of this Circular, tax authorities shall apply appropriate tax administration measures as prescribed.

1. For households engaged in business and individuals engaged in business

a) High risk: Apply one or combine several of the following measures:

a.1) Review, inspect, and verify related information to re-determine the revenue and tax rate of households and individuals engaged in business;

a.2) Compile a list for inspection and survey to re-determine the revenue and tax rate of households and individuals engaged in business and the fulfillment of tax obligations by relevant organizations.

b) Medium risk: Randomly select for inclusion in the revenue survey list of households and individuals engaged in business; continue to classify risks for the next evaluation period;

c) Low risk: File records, classify risk levels for the next evaluation period.

2. For individuals with income subject to personal income tax (excluding households and individuals engaged in business)

a) High risk: Select for inclusion in the inspection and verification list and organize inspections and verifications according to current regulations;

b) Medium risk and low risk: File records, classify risk levels for the next evaluation period.

In cases where individuals have income subject to personal income tax through income-paying organizations, such individuals will be monitored through the analysis of risk indicators of the income-paying organizations.

3. For individuals with income related to land and property attached to land

a) High risk: Conduct file analysis, compile a list to submit to the head of the tax authority for inspection plans at the tax authority's office, and inspect tax declaration files at the tax authority's office according to current regulations for individuals and related organizations;

b) Medium risk and low risk: File records, classify risk levels for the next evaluation period.

Article 16. Application of risk management in tax registration management

Based on the list of taxpayers classified according to tax registration risk levels under Article 13 of this Circular, tax authorities shall apply appropriate measures in handling, processing, or coordinating with business registration authorities to handle and process according to business registration and tax registration laws.

1. In cases where taxpayers change tax registration information affecting the direct managing tax authority:

a) High risk: The transferring-out tax authority and the transferring-in tax authority shall coordinate to conduct inspections at their offices or at the taxpayer's premises according to current laws;

b) Medium risk: The transferring-in tax authority shall implement supervision, request taxpayers to provide additional explanations and documentation when required by the tax authority;

c) Low risk: No immediate inspection or supervision; assess taxpayer compliance with the law, classify risks for the next evaluation period.

2. In cases where taxpayers declare temporary cessation of business operations:

a) High risk: Strengthen tax management measures according to regulations, consistent with the taxpayer's tax obligation fulfillment to promptly address tax arrears, invoices, and violations (if any);

b) Medium risk and low risk: Implement tax management measures according to regulations; assess taxpayer compliance with tax laws, classify risks for the next evaluation period.

3. In cases of termination of tax identification number validity:

Prioritize conducting audits and inspections of final tax settlements at the taxpayer's premises based on risk ranking from high to low according to regulations.

Update the status of dissolution, bankruptcy, or cessation of operations in the tax registration application system for cases that have completed tax obligations according to regulations. Implement measures to urge taxpayers to complete tax obligations before dissolution, bankruptcy, or cessation of operations according to regulations.

4. For remaining cases: Regularly review cases showing high-risk indicators to determine lists for inspection and verification of operational status at business locations.

Article 17. Application of risk management in reviewing tax declaration files at the tax authority's office

Based on the list of taxpayers classified according to different levels of risk regarding tax declaration files under Article 13 of this Circular to apply appropriate measures in handling and processing tax declaration files.

1. High risk: Conduct file analysis, prepare a list for the head of the tax authority to plan inspections at the tax authority's office, and conduct inspections of tax declaration files at the tax authority's office in accordance with regulations.

2. Medium and low risk: Not yet conducting inspections of tax declaration files at the tax authority's office; carry out compliance assessment, classify the risk level of taxpayers' tax declaration files for the next evaluation period.

Article 18. Application of risk management in refunding taxes

The tax authority classifies tax refund files in accordance with the Law on Tax Administration, relevant regulatory legal documents, or current regulations. For classification of tax refund files based on risk, based on the results of risk classification of tax refund files under Article 13 of this Circular, the tax authority applies appropriate measures in handling and processing tax refund files as follows:

1. Classification of tax refund file processing

a) Tax refund files classified as high risk: Conduct pre-inspection, post-refund

Within twelve consecutive months from the beginning of the fiscal year, if a taxpayer has continuously been assessed as high risk for tax refund files:

a.1) In cases where the ongoing risk assessment differs from the immediately preceding risk assessment in terms of total risk points or risk points at each criterion and index: The tax refund file falls within the scope of pre-inspection, post-refund.

a.2) In cases where the ongoing risk assessment is identical to the immediately preceding risk assessment in terms of total points and points at each criterion and index; or the ongoing tax refund file has fewer risk points at each index leading to a lower total risk score compared to the immediately preceding assessment:

- If the previous inspection of the tax refund file or post-refund audit does not detect any incorrect declarations resulting in underpaid taxes or over-refunded taxes, the subsequent tax refund file will not fall within the scope of pre-inspection, post-refund.

- If the previous inspection of the tax refund file or post-refund audit detects any incorrect declarations resulting in underpaid taxes or over-refunded taxes, the subsequent tax refund file will fall within the scope of pre-inspection, post-refund.

b) Tax refund files classified as medium and low risk: Conduct post-refund, pre-inspection.

c) In cases where, after applying the classification of tax refund files, during the process of handling the tax refund file, the tax authority discovers signs of violation of tax laws or customs laws by the taxpayer, or if the taxpayer fails to provide explanations or supplementary information for the tax refund file, or provides explanations or supplementary information but cannot prove that the declared tax amount is correct, the tax authority changes the application of the classification method of the tax refund file from post-refund, pre-inspection to pre-inspection, post-refund; the approval of such change must be updated in the business information system.

2. Post-refund inspection and audit

a) The sequence of post-refund inspection and audit is arranged by the tax authority based on the total risk points from highest to lowest within a five-year period starting from the date of the refund decision:

a1) High risk (for tax refund files not falling under the pre-inspection, post-refund category specified in point a, Clause 1 of this Article): Conduct inspection and audit within one year from the date of issuance of the refund decision;

a2) Medium risk: Conduct inspection and audit within three years from the date of issuance of the refund decision;

a3) Low risk: Conduct inspection and audit within five years from the date of issuance of the refund decision;

a4) Depending on actual circumstances, the tax authority may conduct post-refund inspection and audit earlier than the aforementioned deadlines.

b) The General Department of Taxation shall specify detailed procedures for post-refund inspection and audit; combine it with audits and inspections of tax law compliance as prescribed.

Article 19. Application of risk management in inspections and examinations at the taxpayer's premises

1. The tax authority must ensure that the cases selected for inspection and examination at the taxpayer's premises meet the following criteria:

a) Cases selected through analysis and assessment of tax law compliance and classification of taxpayer risk levels must account for not less than 90% of the total number of cases to be inspected and examined according to the annual plan;

b) Cases selected randomly must not exceed 10% of the total number of cases to be inspected and examined according to the annual plan.

2. Selection of taxpayers for the development of plans for on-site inspections and examinations

Based on the list of taxpayers classified according to risk levels for tax inspection and examination activities under Article 13 of this Circular, the tax authority shall select cases for on-site inspections and examinations as follows:

a) Selection of cases for inspection: Select taxpayers to be included in the annual inspection plan at their premises based on the risk ranking results from highest to lowest.

b) Selection of cases for examination: Select taxpayers to be included in the annual examination plan at their premises based on the risk ranking results from highest to lowest, ensuring no overlap with taxpayers already selected for the inspection plan under point a, Clause 2 of this Article.

c) The application of risk management in selecting taxpayers showing signs of risk to develop inspection and examination plans must avoid duplication and overlap as prescribed by the Tax Administration Law, implementing guidelines, and other relevant regulatory documents.

In cases where the tax authority has reliable information during tax administration work that reduces the risk level of a taxpayer to low or has grounds to believe that the taxpayer's risk level is low and they have not been included in the annual inspection and examination plan, the tax authority decides not to include such taxpayers in the plan and selects other taxpayers according to regulations to be included in the annual inspection and examination plan. If there is information collected and verified indicating that a taxpayer shows high-risk signs during tax administration work, the tax authority supplements them into the annual inspection and examination plan. The tax authority is responsible for its decisions to change.

d) The construction and approval authority for plans for on-site inspections and examinations of taxpayers; the supplementary and adjusted lists of on-site inspection and examination plans for taxpayers under this Article are carried out in accordance with the Tax Administration Law, implementing guidelines, and other relevant regulatory documents.

3. The tax authority bases the determination of the content and scope of tax inspections and examinations on the results of risk analysis using information technology applications or business process analysis, and actual tax administration work information.

Article 20. Application of risk management in tax debt management and enforcement of administrative tax decisions

Based on the list of taxpayers classified according to risk levels for tax debt management and enforcement of administrative tax decisions under Article 13 of this Circular, the tax authority implements tax debt management and enforcement of administrative tax decisions in accordance with the Tax Administration Law and implementing guidelines, taking into account the risk level to prioritize handling or intensify urging.

1. High risk: Based on the actual situation, the tax authority selects taxpayers who have the potential to recover tax arrears into the state budget, taxpayers with large amounts of tax arrears, taxpayers engaging in asset dispersal or fleeing, or taxpayers exiting the country to increase urging frequency; or prioritizing implementation before others in the list of taxpayers requiring enforcement measures for administrative tax decisions.

2. Medium and low risk: Carry out monitoring, urging, and applying tax collection measures as prescribed by the Tax Administration Law and implementing guidelines.

Article 21. Application of risk management in invoice and document management and in other tax administration operations

1. Application of risk management in invoice and document management

Based on the list of taxpayers classified according to risk levels in invoice and document management under Article 13 of this Circular, the tax authority shall apply the following management measures:

a) High risk: Include in the list for review and inspection at the tax authority's office, supplement annual inspection and audit plans at the taxpayer's premises in accordance with the Law on Tax Administration, guiding documents, and other relevant regulations. On the basis of inspection results, implement a shift from the current invoice usage method to purchasing invoices from the tax authority or using electronic invoices issued by the tax authority, or take other invoice management measures as prescribed; decide on the invoice usage form for taxpayers using invoices for the first time.

b) Medium and low risk: Conduct sampling reviews, inspections, and processing, and enhance support for taxpayers to comply well with laws and regulations on invoices.

The General Department of Taxation shall specify appropriate sampling methods based on the tax administration requirements of each locality and period.

2. Application of risk management in other operations

Based on the risk level in other business activities and business information, the tax authority decides to apply suitable operational measures according to its functions and responsibilities.

Article 22. Key Monitoring and Supervision of Taxpayers Showing Signs of Violating Tax Laws

1. Taxpayers subject to key monitoring regarding taxes are those showing one of the following signs:

a) Taxpayers conducting bank transactions that appear suspicious under anti-money laundering laws related to tax evasion or tax fraud.

b) Taxpayers or their authorized representatives being prosecuted for tax violations, invoice, or document-related offenses.

c) Taxpayers showing high-risk signs in key areas or through information collected from tax administration work requiring close tax management supervision.

d) Taxpayers selected from lists of non-compliant taxpayers as stipulated in Article 10, lists of very high and high-risk taxpayers as specified in Clause 1, Article 11 of this Circular, and taxpayers who fail to provide explanations or supplementary information as required and within the deadlines set out in the tax authority’s written notifications.

2. All levels of tax authorities have the responsibility to monitor, supervise, and apply appropriate tax management operational measures for each case as specified in Clause 1 of this Article.

3. The General Department of Taxation shall specify in detail the collection, analysis of information, determination of key monitoring areas, and appropriate monitoring measures in accordance with the law during each period.

Article 23. Inspection and Evaluation of Risk Management Application in Tax Administration

1. Conduct inspections and evaluations of the following contents:

a) Quality of implementing risk management operational measures and techniques;

b) Effectiveness of applying risk management in tax administration activities;

c) Implementation and results of inspection, audit decisions or other operational measures based on risk management application;

d) Evaluation of the effectiveness of compliance criteria and indices and classification of taxpayer risk levels.

2. Inspection and evaluation measures

a) Compile information and reports from all levels of tax authorities, departments, and units under the General Department of Taxation on the implementation and application of risk management;

b) Collect, analyze, and compile information on the results of risk management application in tax administration activities;

c) Organize inspection teams to check the implementation and application of risk management at all levels of tax authorities.

3. The Director of the General Department of Taxation assigns responsibilities to risk management units to inspect and evaluate the implementation and application of risk management in tax administration as stipulated in Clause 2 of this Article. Evaluations are conducted regularly; periodic reports (every six months and annually) and specific operational requirement reports are submitted.

Article 24. Supervision and Evaluation of the Implementation of the Plan to Enhance Compliance

1. The following contents shall be supervised and evaluated:

a) The organization and implementation of the plan to enhance compliance;

b) The results and effectiveness of implementing the plan to enhance compliance. Specifically:

b.1) The effectiveness and efficiency of applying measures for handling by tax authorities at all levels based on analyzing and identifying risks for each taxpayer segment;

b.2) The actual results and expected results of implementing measures to reduce risks through measuring compliance;

c) The application of transparent procedures in the development and implementation of the plan to enhance compliance;

d) Improvements in overall compliance levels among different groups of taxpayers and various tax obligations;

đ) The organizational structure and human resources of tax authorities at all levels in implementing the plan to ensure effectiveness and efficiency according to set goals.

2. Supervision and evaluation measures include:

a) Collecting and reporting information from tax authorities at all levels, departments, and units under the General Department of Taxation regarding the implementation of the plan to enhance compliance;

b) Gathering, analyzing, and summarizing information on the results of implementation;

c) Organizing inspection teams to check at tax authorities at all levels.

3. The Director of the General Department of Taxation shall delegate responsibilities to risk management units to supervise and evaluate the implementation of the plan to enhance compliance as stipulated in Clause 2 of this Article. Supervision and evaluation shall be conducted regularly, with periodic reports (every six months and annually), and according to requirements for the progress of implementing the plan to enhance compliance.

Chapter V

IMPLEMENTATION

Article 25. Responsibilities for Implementation

1. Departments and units under the Ministry of Finance and related ministries and sectors; organizations and individuals involved in tax administration activities shall have the responsibility to provide information and cooperate in the application of risk management in tax administration as prescribed by current laws and regulations and this Circular.

2. The Director of the General Department of Taxation, based on the guidance provided in this Circular, shall be responsible for issuing:

a) Indicators and criteria as specified in Articles 10, 11, and 12 of this Circular to meet tax administration requirements during each period; periodically reviewing, amending, and supplementing indicators and criteria to ensure they are up-to-date and suitable for practical needs;

b) Specific provisions on the responsibilities of tax authorities at all levels, tax officials, and methods for collecting and processing risk management information; point scores, weights, and technical measures for risk management in tax administration;

c) Procedures, regulations, and guidelines for implementing and applying risk management in tax administration.

3. The Risk Management Unit, as the main unit, shall be responsible for:

a) Managing and operating the risk management application in tax administration and information systems serving risk management according to delegated levels;

b) Implementing and guiding business practices, inspecting the collection and processing of risk management information; risk management measures and techniques, and the application of risk management in tax administration activities;

c) Managing the set of indicators and criteria issued by the Director of the General Department of Taxation as specified in Point a, Clause 2 of this Article on the risk management information system and related information systems; monitoring, evaluating, adjusting, and supplementing indicators and criteria to meet management requirements during each period.

4. Tax Revenue Offices, Regional Tax Revenue Offices, Tax Departments, other Departments and Units under the General Department of Taxation, and tax officials shall be responsible for properly and fully implementing the contents stipulated in this Circular and other relevant regulations concerning the implementation and application of risk management in tax administration.

Article 26. Effective date

1. This Circular takes effect from July 2, 2021.

2. This Circular replaces Circular No. 204/2015/TT-BTC dated December 21, 2015, of the Ministry of Finance on the application of risk management in tax administration.

3. In cases where new legal documents amend, supplement, or replace the documents cited in this Circular, such new documents shall be implemented.