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- HM&P: Vietnam International Law Firm
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Tax
A decision to recover taxes can cause businesses to refund billions of VND. But in many cases, the more worrying problem lies not in the amount, but in the way the customs authorities perceive the production model of the business itself.
Please note that this publication is not a substitute for legal advice applicable on a case-by-case basis. Instead, the publication is built by us as an initial reference, helping businesses identify important legal issues, better understand their rights and obligations, and actively review and prepare documents to properly apply and effectively take advantage of this preferential policy.
A decision to change the HS code can lead to a series of consequences: increasing import taxes, changing origin incentives, incurring value-added tax and an arrears of up to billions of VND. At that time, what businesses need to do is not to rush to affirm that "customs applied the wrong code", but to clearly determine: what the goods really are, how the law requires classification and whether the amount of tax has been calculated correctly or not.
For many years, when it comes to Double Taxation Agreement (DTA), most businesses think of a very specific benefit: how to get tax exemptions, reductions, or avoid being taxed twice on the same income. That approach isn't wrong, but it's becoming more and more narrow. In the context of capital flows, data and profits moving across borders on an unprecedented scale, today's international tax disputes no longer stem mainly from businesses deliberately evading tax obligations, but more from differences in how countries determine their taxation rights. interpret the same provisions of the Agreement or assess the nature of the same transaction.
In the competition to attract and retain personnel, businesses are increasingly shifting their focus from salaries to welfare policies. Tuition support for employees’ children is one of the policies that are quite commonly applied, especially in foreign-invested enterprises or employing a lot of high-quality workers. From a management perspective, this is considered an investment to improve talent retention. However, from a tax perspective, the story is not so simple.
One of the notable paradoxes in tax administration today is that a transaction can be completely real but still becomes the subject of review when the supplier is found to be illegally buying and selling invoices. On the contrary, the fact that a business is investigated for invoices does not mean that all of its customers are violating the law.
For many businesses, it is quite a normal financial decision for shareholders or members to temporarily lend money to the company to solve liquidity needs. When it is necessary to pay a debt due, discharge assets at the bank or handle a short-term cash flow shortfall, capital from the shareholders themselves is often faster, more flexible and less expensive than borrowing from a credit institution. In many cases, the parties also agreed on an interest rate of 0%.
Can a Head of a Representative Office ("RO") of a foreign trader be suspended from leaving the country because of the RO's own tax debt? This seemingly only related question to the application of the law raises a larger question: whether foreign businesses and investors can accurately forecast the legal risks they face.
A recent official letter of the tax authority related to businesses seems to only solve a technical problem about interest costs for BOT enterprises. However, if we look more broadly, this case reflects an important policy question that is being asked not only in Vietnam but also in many countries around the world: how to effectively combat transfer pricing without inadvertently creating an additional compliance burden on businesses that do not have transfer pricing purposes?
If in the past, the tax authorities of each country mainly only saw the activities of enterprises taking place within their territory, today, through international information exchange mechanisms, tax authorities are increasingly able to access the overall picture of revenue profits and tax obligations of multinational corporations on a global scale.
Many businesses used to think that "collecting and paying" was just a simple accounting operation. The money collected by the business and then transferred back to a third party is of course not revenue. However, the practice of tax management shows that the story is not so simple.
A tax guidance document that has just been issued can make an impact that is much greater than the technical scope of tax policy. Official Letter No. 3896/CT-CS dated 11-6-2026 of the Department of Taxation has officially affirmed that foreign-invested enterprises (FDI), if they meet the conditions of small and medium-sized enterprises, are still exempt from corporate income tax (CIT) for three years from the date of issuance of the first Enterprise Registration Certificate as domestic enterprises .
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