How should a foreign company lawfully file a complaint against a tax inspection decision?

In the context of deep international economic integration, investors operating in Vietnam frequently take numerous challenges related to the tax administration system, particularly tax inspection decisions. Filing a complaint against a tax inspection decision is not only a lawful right of foreign companies but also an important measure to safeguard their legitimate business interests. NPLaw would like to provide readers with legal matters and regulations on foreign companies filing complaints against tax inspection decisions.

I. Current situation of foreign companies filing complaints against tax inspection decisions

In recent years, the number of foreign companies filing complaints against tax inspection decisions in Vietnam has tended to increase, largely due to intensified efforts to prevent transfer pricing and recover unpaid taxes from foreign direct investment (FDI) enterprises.

The main causes stem from differences in the interpretation and application of tax laws, issues related to transfer pricing, tax incentives, determination of deductible expenses, or tax obligations arising from cross-border transactions. In practice, many complaints are prolonged due to insufficient supporting legal documents, lack of understanding of legal procedures, or the absence of timely assistance from legal professionals.

II. What does it mean for a foreign company to file a complaint against a tax inspection decision?

To exercise the right to complaint in compliance with the law, enterprises must clearly understand the nature and scope of such activities.  

1. Concept of a foreign company filing a complaint against a tax inspection decision

Clause 1, Article 147 of the Law on Tax Administration 2019 provides that:

• Taxpayers, organizations, and individuals have the right to file complaints with competent authorities against administrative decisions or administrative acts of tax administration authorities or tax officials when there are grounds to believe that such decisions or acts are unlawful and infringe upon their lawful rights and interests.

Accordingly, a foreign company filing a complaint against a tax inspection decision may be understood as an enterprise with foreign elements exercising its statutory right to lodge a complaint when it considers that a decision, conclusion, or act of the tax authority during the tax inspection process is unlawful and infringes upon its lawful rights and interests.

2. Circumstances leading to foreign companies filing complaints against tax inspection decisions

Some common circumstances that lead to complaints by foreign companies against tax inspection decisions include:

• Disagreement with tax arrears assessments, late payment interest, or sanctions;
• Disputes over methods for determining prices in related-party transactions;
• Rejection of deductible expenses; incorrect application of tax incentives or tax periods;
• Inadequate assessment of documents and materials provided by the enterprise.

If not clarified in a timely manner, these circumstances may result in inappropriate tax liabilities, directly affecting the enterprise’s rights and operational efficiency.

3. How to resolve cases where foreign companies file complaints against tax inspection decisions

When a complaint arises in relation to a tax inspection decision, foreign companies should proceed cautiously and follow these steps:

• Reviewing the entire content of the tax inspection decision and conclusions, and comparing them with accounting records, supporting documents, and relevant tax regulations to identify issues that may be inappropriate;
• Preparing comprehensive documents and evidence to substantiate the complaint;
• Filing the complaint in accordance with the prescribed procedures and jurisdiction under the Law on Tax Administration 2019 and Decision No. 178/QD-TCT dated 25 February 2019 on regulations for handling complaints at tax authorities at all levels;

Besides the complaint procedure, enterprises should proactively communicate, work, and engage in dialogue with the tax authority to clarify differences in interpretation and application of the law.

III. Legal regulations related to foreign companies filing complaints against tax inspection decisions

1. Relevant regulations governing the resolution of complaints by foreign companies against tax inspection decisions

The resolution of complaints against tax inspection decisions filed by foreign companies is primarily governed by the following legal instruments:

• Law on Tax Administration 2019, Article 147 on complaints and denunciations, and Article 149 on the responsibilities and powers of tax administration authorities in resolving tax complaints. These provisions clearly define jurisdiction, scope of resolution, and mechanisms for protecting taxpayers’ rights and interests.
• Decision No. 178/QD-TCT dated 25 February 2019 on regulations for handling complaints at tax authorities at all levels, which provides detailed procedures for receiving and handling complaints, ensuring that tax complaints are resolved in a consistent, transparent, and competent manner, and avoiding delays that may affect the lawful rights and interests of complainants.
• Law on Complaints 2011, including Article 5 on responsibilities for resolving complaints and coordination in complaint resolution; Article 7 on complaint procedures; and Article 9 on limitation periods for complaints, which establish procedural requirements and time limits to prevent complaints from being dismissed due to procedural errors or expiry.

When filing complaints against tax inspection decisions, foreign companies must comply with both tax law and complaint law regulations to ensure that the protection of their lawful rights and interests is implemented in the correct order and with legal effectiveness.

2. Competent authorities for resolving complaints by foreign companies against tax inspection decisions

Where a foreign company has grounds to believe that a tax inspection decision is unlawful and directly infringes upon its lawful rights and interests, it may file a first-time complaint with the person who issued the tax inspection decision or initiate an administrative lawsuit before a court in accordance with the Law on Administrative Procedures 2015.

If the company disagrees with the first-time complaint resolution decision or if the complaint is not resolved within the statutory time limit, it has the right to file a second-time complaint with the immediate superior of the person who resolved the first-time complaint, or to initiate an administrative lawsuit before a court, pursuant to Clause 1, Article 7 of the Law on Complaints 2011.

Accordingly, the person competent to resolve a first-time complaint against a tax inspection decision is the person who issued such a decision, while the person competent to resolve a second-time complaint is the immediate superior of the first-time complaint resolver.

3. Consequences if a complaint by a foreign company against a tax inspection decision cannot be resolved

If a complaint is not resolved or if the enterprise fails to comply with the prescribed procedures and time limits, the enterprise may be subject to enforcement of the tax decision. It may result in the payment of assessed tax arrears, sanctions, and late payment interest in significant amounts, placing serious pressure on the enterprise’s cash flow and financial planning.

Beyond financial losses, prolonged or unsuccessful complaints may negatively affect production and business operations, damage the enterprise’s reputation, increase legal risks, and adversely impact the investment environment and the foreign company’s ability to expand operations in Vietnam.

IV. Questions regarding foreign companies filing complaints against tax inspection decisions

1. Which rights and interests of foreign companies may be affected when they file complaints against tax inspection decisions?

During the complaint process, certain lawful rights and interests of foreign companies may be affected, such as cash flow, financial planning, and relationships with regulatory authorities and partners, particularly if disputes are prolonged or temporary tax obligations must be executed. 

During the period in which a complaint regarding tax amounts, late payment interest, or penalties calculated or imposed by the tax authority is being resolved, the enterprise is still required to fully pay such tax amounts, late payment interest, and sanctions, unless a competent state authority decides to temporarily suspend the enforcement of the tax assessment or tax imposition decision (Clause 1, Article 61 of the Law on Tax Administration 2019).

2. What steps should a foreign company take to ensure that its complaint against a tax inspection decision is accepted?

To increase the likelihood that a complaint is accepted by the competent authority, the enterprise should proactively follow these steps:

• Step 1: Reviewing the tax inspection decision and conclusions to identify inaccuracies in legal grounds, tax calculation methods, accounting figures, or application of tax policies.
• Step 2: Preparing complete accounting records, transaction documents, contracts, transfer pricing reports, explanatory materials, and relevant legal documents to substantiate the complaint.
• Step 3: Clearly identifying inaccurate aspects of the tax inspection decision, presenting arguments, supporting evidence, and relevant legal grounds to protect the enterprise’s interests.
• Step 4: Submitting the complaint application together with supporting documents and evidence to the competent authority in accordance with Clause 1, Article 7 of the Law on Complaints 2011, ensuring compliance with statutory time limits.

Thorough preparation, clear legal grounds, and proper procedural compliance will significantly enhance the likelihood that the enterprise’s lawful rights and interests are protected.

3. What procedures apply if there is no response from the tax authority after a complaint is filed?

If a foreign company has filed a valid first-time complaint but the statutory time limit has expired without resolution, it has the right to file a second-time complaint with the immediate superior of the person competent to resolve the first-time complaint, or to initiate an administrative lawsuit before a court in accordance with the Law on Administrative Procedures, pursuant to Clause 1, Article 7 of the Law on Complaints 2011.

Accordingly, where no response is received from the competent tax authority despite the expiry of the statutory time limit, the company may proceed with a second-time complaint or initiate an administrative lawsuit in accordance with the law.

4. What measures may foreign companies adopt to protect their interests during the complaint process?

During the complaint process against a tax inspection decision, foreign companies may proactively adopt a combination of measures to effectively protect their lawful rights and interests, including:

• Engaging lawyers or tax experts to accurately assess legal risks and develop a robust law-compliant strategy;
• Actively communicating, providing explanations, and supplementing documents upon request to clarify disputed issues;
• Preparing contingency plans, including the possibility of filing a second-time complaint or initiating administrative litigation, and arranging cash flow to meet tax obligations during the complaint resolution period.

Timely implementation of these measures not only enhances the effectiveness of the complaint but also demonstrates legal compliance and a cooperative attitude, thereby ensuring optimal protection of the enterprise’s interests in its relationship with tax authorities.

5. How may related parties participate in the complaint process?

During the complaint process against a tax inspection decision, complaint law provides for the participation of multiple parties to ensure objective and transparent resolution and comprehensive protection of the enterprise’s interests, including:

• The foreign company as the complainant, directly submitting the complaint, providing documents and evidence, presenting explanations, and defending its claims;
• The authority or individual issuing the tax inspection decision as the respondent, responsible for explaining the legal basis for issuing the decision and coordinating in the complaint resolution process;
• The authority or individual competent to review the complained decision as the complaint resolver (including first-time and second-time complaints);
• Other organizations or individuals whose rights and interests may be affected by the resolution outcome, participating as persons with related rights and obligations to present their opinions.

In addition, during the complaint resolution process, parties may engage lawyers to participate as authorized representatives of the parties or as defenders of lawful rights and interests in the case of litigation before the court.

V. Are you seeking a reputable lawyer to handle issues related to foreign companies filing complaints against tax inspection decisions?

The process of filing a complaint against a tax inspection decision by a foreign company is legally complex and requires in-depth knowledge of tax law and its practical application. Working alongside a reputable and experienced lawyer enables foreign companies to accurately assess risks, develop effective complaint strategies, and optimally protect their lawful rights and interests in Vietnam.

With a team of experienced lawyers and legal professionals, NPLaw provides reputable and professional legal services, ensuring the best possible protection of clients’ lawful interests. Should you require legal assistance, please contact NPLaw for consultation and support.

The above information is provided for reference purposes only. For detailed advice tailored to specific circumstances, please contact NPLaw for prompt consultation.