Data-driven tax administration raises compliance bar for enterprises

Data-driven tax administration raises compliance bar for enterprises

Tax considerations should be incorporated throughout business processes, from procurement and contracting to sales, payment, acceptance of goods and services, and invoice issuance.

Lê Yến, founder of HanoiTax and a tax consultant, speaks at the conference on Tuesday morning in Hà Nội. — VNS Photo Ly Ly Cao

Businesses are being urged to rethink tax compliance as changes to value-added tax (VAT) and electronic invoice regulations coincide with a broader shift towards data-driven tax administration, making internal controls increasingly important in managing tax risks.

The changes were discussed at a dialogue on 'VAT and invoices: New regulations and impacts on businesses' organised by the Hanoi Support Center for Enterprise and Investment Promotion (SCE) under the Hà Nội Department of Finance on August 18.

Experts and regulators at the conference said companies needed to move beyond treating tax as an accounting requirement performed at the end of a reporting period. 

Instead, tax considerations should be incorporated throughout business processes, from procurement and contracting to sales, payment, acceptance of goods and services, and invoice issuance.

The regulatory framework has undergone substantial changes, covering VAT legislation as well as tax administration rules, including the 2025 Law on Tax Administration and implementing decrees and circulars issued in 2026. 

Lê Thị Duyên Hải, vice chairwoman and general secretary of the Vietnam Tax Consultants' Association (VTCA), highlighted several changes to VAT declarations, refunds and electronic invoices. 

Among the notable changes effective from July 1 are rules determining when taxpayers must switch from quarterly to monthly VAT declarations.

Newly established businesses may file VAT declarations quarterly during their first year. They may continue quarterly filing in the following year unless revenue generated in their first calendar year exceeds VNĐ50 billion (US$1.9 million), even when the business operated for less than 12 months. In that case, monthly declarations are required from the following year. 

Rules also address cases where supplementary VAT declarations push annual revenue above the VNĐ50 billion threshold. Businesses may be required to switch to monthly filing and resubmit monthly VAT declarations for previous quarters, calculate monthly liabilities and pay late-payment interest. 

VAT already paid under quarterly declarations can be offset against the recalculated monthly liabilities. 

Beyond individual technical changes, experts emphasised that the more significant shift is taking place in how tax authorities manage taxpayers.

Tax starts with the transaction

Lê Yến, founder of HanoiTax and a tax consultant, said traditional practices in which businesses sold products before considering invoices, collected money before completing contracts or waited until the end of a month or quarter to assemble accounting documents were becoming increasingly risky.

Businesses also should not assume that possession of an input invoice automatically guarantees VAT deductibility, she said. 

"VAT does not start with the tax declaration. VAT starts with the economic transaction," she said in her presentation.

An invoice reflects and provides evidence of a transaction, while the underlying transaction establishes VAT rights and obligations. 

Lê Yến, founder of HanoiTax and a tax consultant, speaks at the conference on Tuesday morning in Hà Nội. — VNS Photo Ly Ly Cao

On the sales side, invoices determine output VAT obligations and must reflect the correct timing, transaction value and applicable tax rate. For purchases, an invoice is important for input VAT deduction but is not the only condition that must be satisfied. 

This distinction can also have implications for corporate income tax.

For example, under rules discussed at the conference concerning cancelled services and deposits, where a customer places a genuine deposit but subsequently cancels the service and part or all of the deposit is retained, VAT is not imposed because no goods or services have been supplied.

However, the retained amount, when treated as a contractual penalty or compensation, constitutes taxable income for corporate or personal income tax purposes. 

The growing use of electronic data by tax authorities is also increasing the ability to cross-check transactions and identify inconsistencies.

According to Yến, VAT can directly affect invoices, cash flow and tax deductions. Companies may have to pay output VAT before receiving payment from customers, while questionable invoices or high-risk suppliers can create difficulties for purchasers when they are required to explain transactions to tax authorities. 

The shift means tax risk increasingly originates outside accounting departments. Businesses need consistent internal procedures covering purchases, sales, contracts, pricing, acceptance, payments and invoice issuance so that commercial documents, accounting records and tax information correspond with one another.

For sectors selling directly to consumers, data-based supervision can also make previously difficult-to-detect transactions more visible.

The conference materials identified areas including food and beverage, spas, cosmetics and dentistry as examples where cash receipts or payments into personal bank accounts could present risks under increasingly data-orientated tax supervision. 

Nghiêm Thị Hoàng Anh, deputy director of the SCE, said the centre would regularly compile feedback raised through the dialogue, submit periodic reports and advise the Hanoi People's Committee on measures to address difficulties facing businesses.

She said dialogue between authorities, businesses and investors would also help enterprises adapt proactively to changes in tax and invoice policies, while proper compliance could reduce tax and invoice risks and strengthen transparency and corporate governance.

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