Tax inspector closes important role in ensuring transparency and financial fairness of enterprises. By checking and reviewing accounting records, tax inspectors help detect errors and fraud in the process of declaring and paying taxes. This not only helps the state collect correct and sufficient taxes but also encourages enterprises to comply with legal regulations, thereby contributing to creating a healthy and transparent business environment.
Tax compliance plays a vital role in the development and reputation of a business. Not only does it avoid heavy financial penalties, but it also helps businesses build a professional image and create trust with partners and customers.
In this article, we will provide businesses with a comprehensive view of the factors that tax inspectors will be interested in, thereby helping businesses better prepare to ensure business operations comply with the law and limit risks when being inspected.
Factors that tax inspectors are interested in
Accounting records and financial documents
One of the first things a tax inspector will examine is a business’s accounting records and financial documents. Important documents include invoices, receipts, accounting books, and financial statements. These documents should accurately reflect the business’s revenues, expenses, and taxes paid.
Inspectors will pay particular attention to whether businesses comply with regulations on issuing and storing invoices, as well as transparency in accounting for transactions. Incomplete or unclear financial documents can lead to suspicions of tax reporting errors.
Therefore, businesses need to store and update complete accounting records in accordance with regulations, ensuring accuracy and transparency in all financial transactions to avoid being penalized and protect their reputation during inspection.
VAT (Value Added Tax)
VAT is one of the important taxes that tax inspectors often focus on closely. Businesses are required to declare and pay VAT based on their business revenue. Inspectors will check whether businesses have fully declared and paid the correct amount of VAT as prescribed.
The audit will include a comparison between actual revenue and declared VAT. The matching of output and input invoices will also be reviewed to ensure that the business is not engaging in tax evasion or tax fraud. If there is a discrepancy between revenue and VAT paid, the business may face additional tax collection, administrative fines or more severe penalties.
Therefore, ensuring that VAT invoices are issued and stored in accordance with regulations, as well as being declared honestly and accurately, is very important for businesses to avoid legal risks related to VAT.
Corporate income tax
Tax inspectors also pay special attention to corporate income tax (CIT), one of the key taxes that businesses must pay. During the inspection, tax authorities will check the declared corporate income and CIT paid to ensure that businesses comply with regulations.
One of the key points in the audit is the assessment of how the business calculates and accounts for income. The inspector will consider whether the business has applied the correct accounting methods as prescribed, as well as ensuring that expenses are deducted reasonably and legally. Inaccurate accounting or dishonest declarations can lead to tax arrears, fines or administrative sanctions.
Therefore, businesses need to maintain a clear, accurate and transparent accounting process, and fully archive relevant documents to be ready for tax inspections. Accuracy in income tax declaration not only helps businesses comply with the law but also protects the reputation and sustainable development of the business.
Labor management and personal income tax
Another important factor that tax inspectors will examine is labor management and personal income tax (PIT) obligations. Inspectors will review the number of employees of the business, labor contracts and PIT payments to ensure that the business is properly fulfilling its responsibilities to its employees.
The inspection will focus on checking the accuracy of employment contracts, ensuring that all employees have clear and complete contracts. In addition, the inspection will also check whether the enterprise has fully deducted personal income tax from employees' salaries and paid it to the tax authorities on time.
In addition, compliance with regulations on social insurance (SI) and health insurance (HI) is also an important point. The inspector will consider whether the enterprise fully performs its obligations to pay SI and HI for employees, in order to protect the legitimate rights of employees.
Therefore, businesses need to manage labor records seriously and transparently, fully perform personal income tax obligations as well as social and health insurance payments to avoid possible legal risks.
Reasonable cost
During a tax audit, one of the important issues that the tax authority will consider is the reasonableness of the expenses declared by the enterprise for tax deduction. Determining reasonable expenses not only helps the enterprise optimize its tax obligations but also ensures compliance with legal regulations.
The inspector will check to see if the business can prove the reasonableness of these expenses. Expenses such as equipment purchases, outsourcing costs, or business expenses must be fully and properly documented. Invoices, receipts, and service contracts are necessary documents to prove the expenses that the business has incurred.
If the business does not have sufficient documents to support these expenses, or if the expenses are unreasonable, the inspector may ask the business to adjust the declarations and may result in the business being charged back taxes.
Therefore, businesses need to pay attention to storing and managing documents related to expenses to ensure that all expenses are reasonable and comply with tax laws.
Tax debt and tax reduction policy
Another important factor that will be considered is the tax status of the business. The inspector will check to see if the business has any outstanding tax debts and assess the business’s ability to pay its tax debts. These tax debts may include VAT, corporate income tax, and other taxes that the business is required to pay under the law.
In addition to checking tax arrears, the inspector will also consider whether the business is applying for tax reductions or tax incentives. This includes reviewing records related to tax policies that the business has enjoyed, such as tax incentives for encouraged industries, special zones, or development investment programs.
Businesses need to prepare complete documents to prove that they are complying with tax debt regulations and have fulfilled their tax obligations. Failure to have sufficient documents to prove or owe taxes can result in financial penalties and affect the business reputation.
Therefore, businesses need to closely monitor tax debt status and tax reduction policies to ensure that all tax obligations are performed on time and in full.
Tips on what to prepare when your business is subject to a tax audit
In this section, we will share important things that businesses need to prepare for when being audited by a tax authority. This information will help businesses improve their legal compliance and limit risks that arise during the audit process.
Prepare complete documents and certificates
When a business is subject to a tax audit, it is important to have all of your records and documents ready. Businesses need to ensure that their financial records are kept in a neat, systematic manner and are easily accessible when needed. Documents such as invoices, receipts, contracts, and financial statements must be organized in a logical manner to help the audit process run smoothly.
In addition, businesses should also regularly check and compare records with reality to ensure that all data is accurate and up-to-date. This not only helps businesses better prepare for inspections but also contributes to improving transparency and reliability in financial operations. This initiative will help businesses minimize risks and create a positive impression with tax authorities.
Tax Compliance from the Start
Businesses should comply with tax regulations from the time of establishment to minimize future risks. Understanding tax obligations and complying with regulations not only helps businesses avoid financial penalties but also protects their reputation and sustainable development.
In addition, using accounting software to automate tax processes is an effective solution. This software not only helps businesses manage tax records easily and accurately, but also supports the automation of timely tax declaration and payment. This not only saves time but also minimizes the possibility of errors in the process of fulfilling tax obligations.
Conclude
Understanding the factors that tax inspectors will examine is very important for the sustainable development of businesses. Careful preparation not only helps businesses ensure compliance with the law but also limits unnecessary risks, such as being subject to tax arrears or administrative fines.
Businesses should be proactive in preparing financial records, maintaining accuracy and transparency, and applying technological tools to optimize accounting and tax processes. In this way, businesses can build a professional image, create trust with partners and customers, and contribute to the development of a healthy and sustainable business environment.
