In the context where tax administrative procedures are increasingly stringent and requirements for explanation to regulatory authorities are becoming more in-depth, authorizing a representative to work with tax authorities has become an effective solution for enterprises to ensure compliance with legal regulations, reduce administrative pressure, and mitigate legal risks in the processes of tax declaration, tax finalization, and tax refund.
I. Current situation regarding corporate representation in working with tax authorities
In current business operations, the appointment of a representative to work with tax authorities has become a common and inevitable need, especially as the tax legal framework is continuously amended and supplemented toward stricter compliance and enhanced risk management. Tax authorities no longer merely receive tax declarations but frequently conduct inspections and audits, request explanations, reconcile electronic invoice data, cash flows, and enterprises’ tax obligations.
In practice, many enterprises have considerable difficulties when working directly with tax authorities, particularly small and medium-sized enterprises, newly established enterprises, or enterprises with foreign elements. The primary causes arise from insufficient understanding of tax regulations, lack of experience in handling arising situations, or failure to timely update new tax policies. It results in explanations lacking legal grounds, inadequately prepared dossiers, prolonged working time, and potential risks of tax arrears assessment and administrative sanctions for tax violations.
Furthermore, during tax inspections and audits or in the course of tax refund and tax finalization procedures, tax authorities often require enterprises to provide a substantial volume of dossiers and documents and to give detailed explanations regarding the substance of transactions. If enterprises do not have a representative well-versed in tax law and procedures for working with tax authorities, their lawful rights and interests may not be adequately safeguarded.
Therefore, the trend of authorizing lawyers or tax consultancy service providers to represent enterprises in working with tax authorities is increasingly prevalent. It not only professionalizes enterprises’ engagement with state administrative authorities but also contributes to minimizing legal risks, ensuring compliance with tax laws, and stabilizing long-term business operations.
II. Concept of corporate representation in working with tax authorities
Given the numerous issues arising in tax declaration, finalization, inspection, and explanation processes, properly identifying the corporate representative working with tax authorities is of significant importance to ensure accurate and consistent communications and to safeguard the lawful rights and interests of enterprises before tax administration authorities.
1. What is corporate representation in working with tax authorities?
Corporate representation in working with tax authorities refers to an individual or organization lawfully authorized by an enterprise to act on its behalf in performing tax-related tasks, including: Submitting dossiers, working with tax authorities, providing explanations, supplying documents, receiving notices, and participating in tax inspections, audits, and tax finalization procedures.
Such representative may be an internal person of the enterprise (e.g., accountant, financial manager) or a third party such as a lawyer or a tax consultancy firm, based on a valid power of attorney.
2. Is an enterprise required to appoint a representative to work with tax authorities?
Tax laws do not mandate enterprises to designate a specific position solely to work with tax authorities. However, in practice, all dealings with tax authorities must be conducted through the lawful representative of the enterprise.
Enterprises may directly appoint their legal representative or authorize another individual or organization to participate in dealings with tax authorities. Authorization is necessary in cases where the legal representative cannot directly participate or where specialized tax law expertise is required to handle complex matters.
3. How does a corporate representative working with tax authorities differ from the enterprise’s legal representative?
The legal representative is the subject recorded in the enterprise registration dossier and is authorized to represent the enterprise in all transactions in accordance with the Law on Enterprise 2020.
By contrast, a corporate representative working with tax authorities only performs specific tax-related tasks within the scope of authorization. Such a representative does not automatically possess the full powers of the legal representative; rather, the authority is strictly determined by the power of attorney, including its scope, duration, and assigned tasks.
III. Legal regulations on corporate representation in working with tax authorities
For corporate representation in working with tax authorities to be legally recognized and to ensure legal validity in tax administrative procedures, enterprises must comply with specific regulations regarding the authorized subject, form of authorization, scope of work, and arising legal liabilities.
1. Legal conditions applicable to individuals authorized to act as corporate representatives in working with tax authorities
Pursuant to civil law and tax law, an individual authorized by an enterprise to act as a representative in working with tax authorities must have full civil act capacity as prescribed in Article 20 of the Civil Law 2015.
In addition, such an individual must be lawfully authorized in writing by the enterprise. Tax laws do not require the authorized person to be an employee of the enterprise; accordingly, enterprises may authorize outsourced accountants, lawyers, or tax service providers in accordance with Article 104 of the Law on Tax Administration 2019.
2. Does the law require a specific form for the power of attorney authorizing corporate representation in working with tax authorities?
Currently, the law does not prescribe a specific mandatory form for the power of attorney authorizing corporate representation in working with tax authorities.
In the tax sector, the power of attorney is commonly executed in the form of a letter of authorization or an authorization contract, clearly stating the details of the authorizing party and the authorized party, the scope of work, the term of authorization, and the lawful signatures of the parties. In certain electronic tax procedures, tax authorities may also require enterprises to complete authorization on the electronic system in accordance with the instructions of the directly managing tax authority.
3. What does the scope of work of a corporate representative in working with tax authorities include?
Pursuant to Article 104 of the Law on Tax Administration 2019, the scope of services provided by tax agents to taxpayers under a contract includes:
- Implementing tax registration procedures, tax declaration, tax payment, tax finalization, preparation of dossiers for tax exemption, tax reduction, tax refund, and other tax-related procedures on behalf of taxpayers;
- Tax consultancy services;
- Accounting services for micro-enterprises as prescribed in Article 150 of the same Law. Micro-enterprises are determined in accordance with the law on support for small and medium-sized enterprises.
Clearly defining the scope of work is necessary to avoid acting beyond authority and to prevent legal risks for enterprises.
4. What are the legal liabilities of corporate representatives in working with tax authorities under the law?
Authorized representatives working with tax authorities are obliged to perform within the scope of authorization, provide truthful and complete information, and cooperate with tax authorities in the course of handling tax procedures.
Where a representative commits violations such as providing false information, falsifying dossiers, or acting beyond the scope of authorization causing damage to the enterprise, depending on the nature and severity of the violation, the representative may be subject to administrative sanctions or criminal liability in accordance with law.
Pursuant to Clause 4 Article 28 of Circular 10/2021/TT-BTC, sanctions for violations include suspension of tax procedure service business, revocation of the certificate of eligibility for tax procedure services of tax agents, and suspension or termination of practice of tax agents’ employees. Criminal liability of tax agents is prescribed in the Penal Code 2015 (as amended and supplemented in 2017). Two main provisions relevant to the field of tax agency services are Article 200 (Tax Evasion) and Article 223 (Collusion or concealment for taxpayers causing serious consequences).
IV. Questions regarding corporate representation in working with tax authorities
In practice, corporate representation in working with tax authorities raises numerous questions concerning authority, forms of authorization, and legal liability. Below are the issues most frequently raised by enterprises.
1. Must the corporate representative working with tax authorities be the legal representative?
The law does not require the corporate representative working with tax authorities to be the legal representative. Enterprises may authorize other individuals or organizations to work with tax authorities, provided that such authorization is lawfully established. However, the legal representative remains the subject bearing the highest level of responsibility for the enterprise’s tax obligations.
2. In case of termination of authorization, how should the enterprise notify the tax authority?
Upon termination of authorization, the enterprise should prepare a written notice of termination of authorization and submit it to the directly managing tax authority.
Notification may be made in hard copy or via the tax authority’s electronic portal, depending on the applicable administrative procedure. Timely notification helps prevent the occurrence of transactions or dossier submissions by persons who no longer have authority.
3. Is a corporate representative working with tax authorities permitted to sign tax dossiers and documents?
A corporate representative working with tax authorities may sign tax dossiers and documents if such authority is expressly stipulated in the power of attorney. The signing authority is legally valid only within the scope of authorization and does not fully replace the authority of the legal representative, unless otherwise permitted by law or under comprehensive authorization.
4. May an enterprise appoint multiple representatives to work with tax authorities?
The law does not limit the number of persons authorized by an enterprise to act as representatives in working with tax authorities. Enterprises may appoint multiple representatives, each responsible for different scopes of work or jointly coordinating on the same matter, provided that the scope and authority of each representative are clearly stipulated in the power of attorney to avoid overlap or exceeding authority.
5. How is legal liability handled if the corporate representative exceeds the scope of authorization?
In principle, where a representative exceeds the scope of authorization, the enterprise is not responsible for the portion of acts exceeding such authority, unless the enterprise knew and did not object or accept the outcome. However, with respect to lawfully arising tax obligations, the enterprise remains the primary liable subject before the tax authority.
V. Why seek legal counsel from NPLaw for issues related to corporate representation in working with tax authorities
Lawyers at NPLaw possess practical experience in representing enterprises in working with tax authorities at various stages, from tax declaration and finalization to inspections, audits, and tax dispute resolution. Engaging NPLaw enables enterprises to receive in-depth legal support, develop appropriate working strategies, safeguard lawful rights and interests, and minimize risks arising in relations with tax authorities.
