Tax risk analysis services for enterprises: a solution for preventing errors and optimizing legal compliance

In the context of increasingly stringent tax administration, tax risk analysis services for enterprises have become an important tool to help enterprises promptly identify potential violations, control tax obligations, and minimize the risk of tax inspections and tax arrears. The article below will clarify the concept, relevant legal regulations, as well as the issues that enterprises commonly pay attention to when conducting tax risk analysis.

I. Current situation related to tax risk analysis services for enterprises

In recent years, tax authorities have paid increasing attention to tax risk management for enterprises, as reflected in the strengthening of inspections and audits based on risk assessment criteria. However, in practice, many enterprises still do not give adequate attention to tax risk analysis services for enterprises, or they only conduct formal reviews that lack systematic and in-depth analysis.

Many enterprises only discover errors in tax declarations, deductions, and tax finalization when they have already entered the tax inspection stage, leading to risks of tax arrears, administrative sanctions, and significant financial costs. In addition, the frequent changes in tax policies, together with the characteristics of multi-sector business operations, further increase risks if enterprises are not supported by a professional team in analyzing and evaluating such issues.

This reality shows that the need for enterprises to use tax risk analysis services in a systematic and proactive manner is becoming increasingly urgent.

II. Concept of tax risk analysis services for enterprises

1. What are tax risk analysis services for enterprises?

Tax risk analysis services for enterprises refer to the comprehensive review and assessment of issues related to tax declaration, accounting, and the performance of tax obligations in accordance with legal regulations. Through the analysis of accounting records, supporting documents, contracts, and internal management processes, such services aim to promptly identify potential risks that may lead to tax arrears, administrative sanctions, or disputes with tax authorities.

Based on the analysis results, enterprises will be advised on appropriate corrective solutions, helping improve compliance with tax laws, minimize errors, and proactively prevent legal and financial risks during business operations.

2. What types of tax risks commonly arise in business operations?

During production and business activities, enterprises may face various types of tax risks arising from both legal factors and practical operations. Some common tax risks include:

• First is the risk arising from the incorrect application of tax laws, as the legal system changes frequently and many regulations may be interpreted differently, leading to tax declarations and calculations that do not comply with the guidance of tax authorities.
• Next is the risk in tax declaration and tax finalization, such as under-declaration or incorrect declaration of revenue, expenses that do not qualify for deduction, or incorrect accounting of the timing for recognizing tax obligations, resulting in risks of tax arrears and sanctions.
• In addition, risks related to invoices and supporting documents are also very common, including the use of invalid invoices, invoices containing incorrect information, or the failure to ensure continuity and transparency in accounting and tax records.
• Furthermore, enterprises may also encounter risks regarding tax obligations in specific transactions, such as related-party transactions, transfer pricing, business cooperation contracts, mergers and acquisitions, or operations across multiple industries and locations.
• Finally, risks may arise during tax inspections and audits due to the enterprise’s failure to anticipate the issues that tax authorities focus on, resulting in tax assessments, administrative sanctions, or long-term impacts on business operations.

Because of these potential and difficult-to-control tax risks, proactively conducting tax risk analysis for enterprises is necessary to help enterprises promptly identify errors, make appropriate adjustments before inspections and audits take place, and thereby minimize legal consequences and financial losses.

III. Legal regulations related to tax risk analysis services for enterprises

1. When should enterprises conduct tax risk analysis?

Enterprises should not wait until the end of the year or until they are labeled as “high-risk taxpayers” by tax authorities before reviewing their tax obligations. An effective approach is to conduct tax risk analysis periodically and proactively, for example, at the end of each quarter or before important tax declaration and tax finalization deadlines, in order to promptly detect and correct errors before filing deadlines or before tax finalization periods.

It helps enterprises minimize the risk of tax arrears, administrative sanctions, or being classified as high-risk enterprises under modern tax administration criteria.

In addition, when there are special transactions, changes in business operations, or amendments to tax policies, enterprises should also conduct tax risk analysis to ensure legal compliance and minimize future legal consequences.

2. How does current law regulate tax risk management for enterprises?

Vietnamese law currently provides a fundamental framework for risk management in tax administration, helping tax authorities assess and classify taxpayers according to their level of risk in order to apply appropriate management measures. Specifically:

According to Clause 14, Article 3 of the 2019 Law on Tax Administration: “Tax risk means the possibility of taxpayers failing to comply with tax laws, leading to losses of state budget revenues”. Accordingly, “tax risk” is understood as the possibility of non-compliance with tax laws by taxpayers resulting in losses to the State budget.

Under Circular No. 31/2021/TT-BTC regulating the application of risk management in tax administration, it includes the establishment of criteria, collection and processing of taxpayer-related information, assessment of legal compliance, and classification of risk levels in order to determine appropriate management measures in tax procedures such as tax declaration, tax payment, and tax inspection.

In addition, there are other related regulations involved in the tax risk management process. These provisions form the legal basis for tax authorities to carry out risk management, while also serving as reference materials for enterprises to understand how tax authorities assess and classify risks, thereby proactively conducting internal tax risk analysis and control.

3. What does the result of tax risk analysis usually include?

Based on the spirit of Article 10 of Circular No. 31/2021/TT-BTC, the results of tax risk analysis for enterprises usually include the following key contents:

• Classification of the enterprise’s level of compliance with tax laws: The enterprise is classified into one of four groups: High compliance, medium compliance, low compliance, or non-compliance. Such a classification reflects the enterprise’s overall tax risk level during each period.
• Identification of tax risk criteria used as the basis for assessment: The analysis results will indicate specific criteria affecting the level of compliance, such as declaration behavior, tax payment, invoice usage, tax refunds, tax finalization, etc., according to the criteria system issued by tax authorities.
• Assessment of the nature of the enterprise’s tax behavior: Not only classification, but the analysis also clarifies the nature of behaviors leading to risks, thereby identifying the causes of errors and violations (if any).
• Recommendations for management measures and compliance improvement: Based on the risk level, enterprises may be subject to supervision, inspection, or audit, or be provided with support and guidance measures to improve compliance with tax laws.

Thus, the results of tax risk analysis not only help enterprises understand their current “safety level” but also serve as an important basis for proactively making adjustments and preventing risks before tax authorities apply in-depth management measures.

4. Does the law require enterprises to conduct internal tax risk analysis?

Currently, Vietnamese law does not directly require enterprises to conduct internal tax risk analysis at a specific time or in a specific form as a mandatory legal obligation.

Instead, regulations such as Circular No. 31/2021/TT-BTC on risk management in tax administration focus on tax authorities assessing, classifying, and managing tax risks for taxpayers based on collected data and risk criteria in order to allocate inspection and audit resources more effectively.

Enterprises are classified according to their compliance level so that tax authorities can determine corresponding management measures, but there is no provision requiring enterprises to independently conduct internal tax risk analysis as a mandatory obligation under law.

However, proactively conducting internal tax risk analysis is a very useful governance measure for enterprises to self-assess compliance and avoid being classified as high-risk taxpayers, especially as tax authorities increasingly apply technology and data analysis in taxpayer classification and management.

IV. Questions related to tax risk analysis services for enterprises

1. Do multi-sector enterprises need in-depth tax risk analysis?

Enterprises operating across multiple sectors often have to apply different tax policies such as tax rates, tax incentives, methods of accounting for costs, revenue recognition, and declaration obligations for each business field. It increases the risk of mistakes in applying tax laws or systematic compliance errors.

Conducting in-depth tax risk analysis helps enterprises review each business segment, identify areas with high-risk potential, and promptly adjust records, accounting books, and compliance plans. At the same time, it is also an important basis for enterprises to proactively prevent the risk of tax inspections and audits and limit unnecessary legal and financial consequences.

2. Can tax risk analysis services for enterprises be conducted before or after the tax finalization period?

In practice, tax risk analysis services can be conducted both before and after the tax finalization period, depending on the objectives and compliance status of each enterprise.

Analysis before the tax finalization period helps enterprises proactively review accounting and tax records and promptly correct potential errors before submitting finalization dossiers, thereby minimizing the risk of being classified as high-risk by tax authorities.

Meanwhile, analysis after the tax finalization period is usually conducted when enterprises wish to reassess their compliance level, prepare for possible tax inspections or audits, or use it as a basis for adjusting internal tax management procedures for future periods.

Therefore, the timing of implementation should be carefully considered based on the enterprise’s governance needs and actual situation.

3. What legal and financial consequences may arise if enterprises do not conduct tax risk analysis?

Failure to proactively conduct tax risk analysis makes enterprises more likely to commit errors in tax declaration, accounting, and the use of invoices and supporting documents, thereby facing serious legal and financial consequences during tax inspections and audits.

In practice, many violations arising from the lack of internal review may be considered tax evasion under Article 17 of Decree No. 125/2020/ND-CP.

Depending on the nature, seriousness, and aggravating or mitigating circumstances, enterprises may be subject to fines ranging from one to three times the amount of evaded tax for acts such as: failure to submit tax declaration dossiers or late submission beyond deadlines; failure to fully record revenue in accounting books; incorrect declarations resulting in insufficient tax payable; creation or use of illegal invoices and documents; misuse of tax-exempt or non-taxable goods; or continuing business operations during temporary suspension without notifying tax authorities.

In addition to fines, enterprises are also required to fully pay the evaded tax amount into the state budget, together with late payment interest, and must adjust losses and deductible input VAT in tax dossiers (if any). Even where the statute of limitations for administrative sanctions has expired, the obligation to fully pay outstanding taxes and late payment interest still applies under the law.

Therefore, failure to conduct tax risk analysis not only increases the risk of severe financial penalties but also directly affects the reputation, operations, and long-term legal stability of the enterprise. This is precisely why enterprises need to proactively implement tax risk analysis as an effective compliance management measure.

4. Do tax risk analysis services for enterprises ensure information confidentiality?

During implementation, consulting units and lawyers are obliged to keep confidential all records, financial data, accounting books, transaction information, and trade secrets provided by the enterprise, except where otherwise provided by law.

Enterprise information may only be used for the purpose of analyzing and assessing tax risks and advising on compliance solutions and may not be disclosed to third parties without the enterprise’s consent.

In practice, confidentiality provisions are usually clearly recorded in service contracts, together with commitments regarding access scope, storage, and data processing, in order to ensure the lawful rights and interests of enterprises throughout the consultation process.

V. Why should enterprises seek legal advice from NPLaw regarding tax risk analysis services?

When facing complex issues related to tax risk analysis, enterprises need a legal service provider that not only has in-depth knowledge of tax law but also practical experience in working with tax authorities.

NPLaw is an appropriate choice because its lawyers not only provide advice based on legal regulations but also assess risks based on the actual nature of business operations and the real tax records of each enterprise.

NPLaw supports enterprises in comprehensively reviewing tax obligations, identifying potential risk points, proposing corrective and preventive measures, and accompanying enterprises throughout the explanation process and dealings with tax authorities when necessary.

Should you require detailed consultation regarding your specific case, please contact NPLaw Firm for immediate assistance.