Tax inspection is an activity of assessing taxpayers' compliance with tax laws, helping tax authorities identify violations. This is a mandatory responsibility of businesses, so overcoming errors in documents, invoices and tax declaration not only helps to avoid arrears and fines but also improves the reputation and stability of business activities. When conducting tax inspections at enterprises, the management agency has pointed out a series of common errors for taxes such as Value Added Tax (VAT), Corporate Income Tax (CIT), Personal Income Tax (PIT) and contractor tax. Common mistakes such as invalid invoice declarations, non-deductible expenses, non-deduction of payable taxes and many other errors, lead to large tax arrears and fines. In this article, we will clarify these errors, and at the same time propose recommendations to help businesses overcome and prevent similar errors in business operations.
Enterprises are responsible for providing sufficient accounting documents, tax reports and explanations when requested; if there is an error, the tax authority will handle the violation according to regulations.
Overview of tax inspection
Tax inspection is the process by which tax authorities supervise and review dossiers, financial statements and accounting vouchers of enterprises to check the observance of the Tax Law, Decrees and Circulars guiding them. According to the Law on Tax Administration 2019, tax authorities can inspect when there are signs of violations, complaints, denunciations, or based on the risk classification of the tax administration system. The tax inspection conclusion shall be made after the end of the inspection at the enterprise's head office and must clearly state the violations, legal grounds, administrative sanctions, arrears and late payment interest. The inspection time is usually calculated from the inspection decision to the completion of the work at the enterprise. The inspection has a diverse scope from VAT, CIT, PIT, contractor tax,.... Enterprises are responsible for providing sufficient accounting documents, tax reports and explanations when requested; if there is an error, the tax authority will handle the violation according to regulations.
Common VAT mistakes
The group of VAT errors focuses on the declaration of input and output VAT not in accordance with regulations. Specifically, common errors include:
Wrong deduction of input invoices: The enterprise declares the input VAT deduction of illegal invoices (invoices of "ghost" units, not operating at the registered address). In case the enterprise uses input invoices from non-operating units at the address stated on the invoice, it is not eligible for deduction according to current regulations. As a result, the payable VAT amount can be increased depending on the non-deductible level.
Not paying via bank: Declaring invoices worth over 20 million VND before and now 5 million VND but not paying through a bank account also leads to exclusion when calculating input tax. This is a common mistake of businesses in the process of carrying out business activities.
Invoice errors, VAT rates: Businesses often forget to issue invoices when selling, invoice late compared to the time of generating revenue, or use illegal invoices of other organizations. Common violations include invoicing the wrong tax code, wrong unit price, wrong tax rate, and using illegal input invoices. This error can also reduce the amount of VAT deducted, leading to VAT arrears and administrative penalties.
Common mistakes about CIT
Errors in CIT often revolve around determining taxable revenue and reasonable deductible expenses. The main faults include:
Non-deductible expenses: Many businesses record expenses that do not meet the deduction conditions. According to current regulations, the cost of purchasing goods and services of the seller that does not operate legally and pays salaries and bonuses paid to individuals with the wrong name and does not have a tax code will be excluded.
Depreciation expenses exceeding the ceiling and interest exceeding the threshold: Enterprises should note that the depreciation of cars with 9 seats or less can only be deducted on the maximum cost of VND 1.6 billion[1], the interest expense of external loans does not exceed 150% of the basic interest rate of the State Bank, and the limit of 30% EBITDA for related-party transactions. Errors in these items cause expenses not to be deducted.
Revenue that has not been fully recorded: All other taxable incomes (interest on deposits, income from dividends, fines, debt settlement, etc.) must be included in taxable turnover. Omitting this income is a common mistake that causes taxable revenue to be missing.
Carrying forward losses and tax incentives: Carrying over losses exceeding 5 years or calculating tax incentives incorrectly is also a common mistake of businesses. The recording of depreciation, expenses or revenue in the preferential area in contravention of regulations (Circular 96/2015) will lead to the wrong calculation of CIT.
In general, expenses that are considered invalid will force businesses to increase taxable profits and pay more CIT.
Common mistakes about PIT
PIT errors are often related to determining the right subjects and income levels subject to tax deduction, specifically:
Wrong deduction: Enterprises confuse labor contracts and service contracts. For example, paying income to individuals under case contracts, service contracts without deducting 10% PIT due to mistaken labor contracts. In fact, if there is no labor contract, a deduction of 10% must be applied.
Not issuing tax identification numbers to employees: Since 2015, Circular 96/2015 stipulates that each individual has only one tax identification number. If the employee does not have a personal tax identification number, PIT expenses must be calculated by themselves, leading to an error in the annual tax finalization. The tax authority has pointed out that the declaration of the wrong name and the conversion of the tax code of the dependent cause salary expenses to not be deducted.
Not deducting or under-declaring tax: Enterprises may forget to deduct PIT of employees receiving income, which is common when paying commissions, wages, or declaring a declaration of insufficient taxable income. For example, missing a benefit or bonus also makes the tax payable wrong.
Errors in family circumstance deduction: Wrongly registering dependents, exceeding the maximum deduction or falsely stating the number of dependents, leading to wrong deduction.
The Tax Department conducted inspections and audits at 18 enterprises with related-party transactions. Source: Government Newspaper
Common mistakes about contractor tax
Contractor tax is a tax on foreign organizations and individuals providing services in Vietnam. This is a complex field, often with many errors as follows:
Failure to declare or falsely declare tax on behalf of contractors: Enterprises ignore the obligation to declare and pay tax on behalf of foreign contractors when using taxable services. For example, importing machinery and equipment with warranty services, outsourcing and commissioning from foreign countries but only declaring the machine part. Or borrow capital from foreign enterprises to pay interest but do not declare contractor tax on the loan interest.
Applying the wrong tax agreement: Enterprises arbitrarily apply tax exemption under the Double Taxation Avoidance Agreement but do not have enough documents and documents proving the conditions.
Split the tax avoidance contract: Split the contract to avoid contractor tax. For example, separating a contract for the purchase of machinery with other services into two: a contract for the purchase and sale of machines (not subject to contractor tax) and a service contract (subject to contractor tax). In this case, the tax administration agency may merge the two contracts to calculate tax.
Wrong tax calculation rate: Incorrect declaration of VAT or CIT rate of foreign contractors. Enterprises may impose the wrong tax rate for the wrong type of service in accordance with regulations. Contractor tax includes 5% CIT and 10% VAT. Common mistakes are under-calculating 5% of CIT payable on behalf of or under-declaring 10% VAT.
In general, errors in declarations and documents can lead to heavy financial consequences for businesses such as tax arrears, late payment interest, and administrative fines. Moreover, enterprises with many years of violations will be counted as "aggravating circumstances". In addition, the risk of being assessed by the tax authorities as a high-risk group makes it more strictly controlled, such as being suspended from electronic transactions, not being allowed to renew digital signatures,....
To avoid the above consequences, in our experience, businesses need to proactively improve tax compliance, especially for personnel and the main department in charge of the business needs to:
Firstly, review invoices and documents
Check the legality of the input invoice such as having the correct company name, business address, recognized by the tax authority. All purchase invoices must be paid via bank if the value is over 5 million VND (from 01/07/2025). No delayed or incorrect invoicing.
Secondly, declare in accordance with regulations, submit reports and pay taxes on time
Regularly compare input/output invoice data with tax declaration records. Ensure full and timely payment of VAT, CIT, PIT and contractors. Implement the financial plan well to avoid late tax payment, because the late payment penalty interest is very high. If there are temporary difficulties, enterprises should proactively request an extension of the tax payment deadline according to regulations to avoid coercive measures.
Thirdly, keep records and exchange and receive instructions from the tax authority
Fully record invoices, contracts, and payment documents to explain when necessary. Stay up to date with new tax and accounting regulations. Training accountants and taxpayers on regulations on tax deduction, contractor tax, PIT. In particular, when detecting errors, businesses should actively contact the managing tax authority for guidance on adjustments, avoiding mistakes becoming prolonged violations. The correction of business errors is also a solution to mitigate risks as well as sanctions from tax authorities.
Fourth, cooperate with the tax administration agency of the enterprise
When being inspected, businesses should coordinate to provide complete documents and transparent explanations. This helps to shorten the inspection time and minimize fines when there are non-serious errors.
It can be seen that the most common tax errors of enterprises are related to invalid input VAT invoices, CIT expenses that do not meet the deduction conditions, and the problem of PIT declaration and contractor errors. These violations, when detected, lead to tax arrears and fines. To avoid heavy consequences, businesses need to raise their awareness of tax law compliance. This not only helps to reduce the risk of sanctions, but also contributes to building reputation and creating a transparent and sustainable business environment for businesses in the context of today's highly fluctuating tax policies.
[1] Clause 4, Article 24 of Decree 181/2025/ND-CP
