The COVID-19 storm has, is, and is predicted to continue causing severe damage to the global economy in general and the domestic economy in particular. While businesses are still struggling to recover from the crisis and dealing with concerns about new COVID-19 variants, another existing worry is giving them headaches: tax audits.
1. Tax Audits during the Covid Era - When one burden compounds another
After a 5-month of being suspended due to the pandemic, many businesses that have recently resumed operations are now burdened with the fear of penalties for late tax payments. In the context of the ongoing and complex pandemic situation with continuous emergence of new variants, businesses find it difficult to predict their annual profits and tax obligations. This leads to an ongoing concern about potential penalties for late tax payments if regulations remain unchanged.
Many businesses, particularly medium and large ones, are facing the burden of multiple tax audits and checks, especially in the ongoing COVID-19 environment. These businesses are struggling, as they've had to continue paying employee salaries, maintain operational costs, and fulfill tax obligations during nearly six months of lockdown. Even more concerning, the COVID-19 crisis has severely impacted their financial health, affecting their cash flow for tax payments. If businesses have to allocate funds for tax payments as a precaution against penalties, it means these funds are being tied up. If they don't pay, they face the risk of fines for late payments.
Furthermore, to effectively collaborate with tax authorities during tax audits and inspections, businesses need to possess extensive knowledge and practical experience. This requirement can be challenging for business owners and even the organization's chief accountants. Moreover, there are many other critical factors that influence the outcomes of tax audits and inspections that businesses may find difficult to anticipate in advance.
2. How can medium and large businesses rid themselves of the fear of tax audits and inspections?
Getting rid of the fear of tax audits and inspections is not solely about businesses understanding tax laws. Given the continuously changing nature of tax laws and the presence of many unclear provisions that can be interpreted in various ways, grasping the law itself is challenging enough. Understanding it thoroughly, accurately, and applying it correctly is even more difficult.
According to Mr. Nguyen Thanh Lam, Deputy General Director of RSM Vietnam Audit and Consulting Company, tax audits and inspections are essential activities in a business's operations and help both businesses and tax authorities gain a better mutual understanding. Through tax audits and inspections, companies can have an objective, detailed view of their tax compliance and the overall perspective of the local tax authority.
So how can businesses rid themselves of this fear? This is a common question for many medium and large businesses, as simply understanding tax laws may not be enough to anticipate all potential outcomes. The answer lies in businesses recognizing the risks associated with tax audits and inspections, which allows them to take preventive measures and prepare thoroughly. For businesses where "tax refunds are painful, and tax inspections are feared," risk prevention to ensure compliance with tax laws can help them avoid this pain and reduce their fear.
To support medium and large businesses in the upcoming tax audits and inspections, RSM Vietnam Audit and Consulting Company, in collaboration with the General Department of Taxation, is organizing an online seminar with the theme: "Prevention and Risk Alert in Tax Audits and Inspections in 2021." In this seminar, Mr. Nguyen Van Phung, Director of the Large Enterprises Department at the General Department of Taxation, will help businesses identify common risks and risk management strategies in tax audits and inspections. Additionally, businesses will have the opportunity to engage in direct dialogue with experts to get answers to their questions and address their concerns.
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