Representatives of Sao Da Lat Joint Stock Company in Lam Dong recently received a tax audit decision with the following content: “Inspection of compliance with tax laws regarding value-added tax, corporate income tax, personal income tax and related land lease fees”; the audit period is “from 2018 to 2023 and related periods”.

In particular, the phrase "relevant periods" provoked a reaction from the business representative.

Speaking to PV.VietNamNet, a representative of the company said: “ The inspection period is the time during which policies, laws, assigned tasks and powers, professional and technical regulations, and management rules related to the industry and field of the inspected entity are being considered and evaluated in an inspection .”

Tax inspector.jpg
Businesses are questioning the wording in the tax audit decision. Photo: Nam Khanh

Comparing current legal regulations, this person stated: "To avoid duplication in inspection activities and ensure compliance with the provisions of the Inspection Law, when conducting inspections, inspection agencies must issue inspection decisions that clearly state the scope of the inspection, including the content of the inspection (specifically which work will be inspected) and the inspection period (specifying the year from which to which year). They are not allowed to use vague statements to circumvent the law and conduct inspections beyond the scope permitted by the Inspection Law (an indefinite inspection period) ."

In the common understanding of accounting and taxation, the phrase "relevant periods" refers to the period from the company's establishment to its dissolution, because accounting and tax data are always cumulative, from year to year, so any period can be considered a "relevant period".

According to this business representative, if the tax authorities intentionally include the phrase "related periods" and then require the business to provide explanations, the business will have to go back through records from many previous years, including years (accounting periods) that have already been audited or inspected by the tax authorities or other relevant agencies and have been closed. This causes businesses to waste a lot of time, effort, and manpower, affecting their legitimate production and business operations.

This person argued that, according to current regulations, after an inspection agency has conducted an inspection and issued an inspection conclusion, only the superior agency of the previous inspection agency, and only if one of the five cases stipulated in Clause 1, Article 56 of the Inspection Law occurs, is allowed to conduct a re-inspection; the statute of limitations for re-inspection is only 2 years from the date of signing and issuing the inspection conclusion.

In response to a question from VietNamNet newspaper regarding whether the inspection decision, which includes the phrase "relevant period," complies with the law on inspections, the Lam Dong Tax Department cited Article 113 of the Law on Tax Administration No. 38/2019/QH14, which stipulates the cases for tax inspection, including: " 1. When there are signs of violations of tax laws; 2. To resolve complaints, denunciations, or implement measures to prevent and combat corruption; 3. At the request of tax management based on the results of risk classification in tax management ."

In addition, the Tax Authority also cited Clause 10, Article 2 of the Inspection Law No. 11/2022/QH15 regarding the inspection period.

Based on the above regulations, if a business shows signs of tax risk, the tax authorities will include it in their inspection and audit plan to conduct inspections and audits to handle violations of tax laws from the periods in which violations occurred, in order to combat revenue loss for the state budget.

According to the tax authorities, Sao Da Lat Joint Stock Company has independently determined the corporate income tax exemption for the "Sao Da Lat High-Class Resort " project in Lam Dong province based on the Investment Incentive Certificate.

However, based on the Government 's regulations guiding the implementation of the Investment Law and the Government's regulations on the implementation of the Corporate Income Tax Law, the company's project is located in an area not included in the list of investment-incentive areas; the company's field of activity is providing services (revenue from selling tickets to tourists).

Therefore, the company is not eligible for the corporate income tax exemption or reduction under Government Decree No. 24/2007/ND-CP dated February 14, 2007.

Following a risk analysis, the Lam Dong Provincial Tax Department issued Document No. 4686 dated September 8, 2023, to Sao Da Lat Joint Stock Company regarding the review and adjustment of tax obligations arising from the company's inability to enjoy corporate income tax incentives.

However, the company has not yet filed an amended tax return for corporate income tax that is not eligible for preferential treatment.

"Based on risk assessment and to avoid revenue losses for the state budget, the tax authorities include in their inspection and audit plans the inspection and handling of tax law violations during the periods in which violations occurred. Therefore, the inspection decision including the phrase 'relevant periods' in the inspection timeframe is in accordance with the law," the tax authorities affirmed.

In the latest development, Sao Da Lat Company has filed a lawsuit against the Lam Dong Provincial Tax Department at the Lam Dong Provincial People's Court.