by Apra Law

Capital tax is considered an important source of revenue, mainly of the State budget because this source of revenue is stable, ensuring national autonomy and independence. In Vietnam, taxes have really become the main source of revenue of the State budget, playing a decisive role in the State apparatus, and at the same time a tool to regulate the economy and society. As for businesses to protect their own profits while unable to reduce inputs, they often find ways to cheat taxes. Therefore, currently in our country, the amount of tax loss is very large, which mainly comes from tax evasion and tax fraud. The following article gives an objective view of the current state of corporate tax evasion fraud.

Some forms of tax fraud

Firstly, fraud on tax revenue declaration: businesses often declare wrong revenue or hide revenue to reduce pre-tax profit. According to Article 16 of the 2008 Law on Corporate Income Tax, which regulates loss transfer, “…an enterprise with a loss may carry forward a loss to the next year, this loss shall be deducted from taxable income, and the time for carrying forward the loss shall not exceed 5 years from the date on which the loss is carried forward. from the year following the year of the loss…” However, according to the experience of the tax authorities, a business enterprise that has suffered losses for 3 consecutive years has shown signs of bankruptcy due to its inability to bear the costs and expenses. This business will have to fix taxes or check the settlement. In order to avoid the inspection of tax authorities, businesses often try to declare losses every year or declare profits less, so the amount of corporate income tax to be paid is less than it actually is.

Second, fraud on reasonable costs to determine taxable income: For businesses, reasonable costs play an important role because it is a component to determine taxable income, thereby calculating the amount of taxable income. corporate income tax payable. Due to the limitation on the proportion of reasonable expenses allowed to declare, businesses often overstate reasonable expenses to reduce the amount of corporate income tax payable.

Thirdly, fraud on using illegal invoices and documents to overstate expenses: There are many forms of fraud on invoices and documents, including purchase and sale invoices, fake invoices, etc. false vouchers, etc., such as: Using expired, used or fake invoices; Selling goods without issuing invoices, invoices with differences in value of goods and services; The selling price on the invoice is lower than the actual selling price to the customer,…

Fourth, increase cost of goods sold: businesses seek to increase cost of goods sold. Some businesses do not evaluate products, do not allocate purchasing costs for inventory, tools and tools, but transfer them all to expenses in the period, in order to maximize the cost of goods sold. For manufacturing enterprises, the cost of goods is also raised through the trick of building a higher material norm for a product unit than it actually is, in order to increase the cost of raw materials, or not building a material norm. accounting for the cost of consuming raw materials for production in excess of the norm

Fifth, fraud on salary costs: often, businesses push the cost of wages to pay employees much higher than they actually pay workers or post virtual job postings. The addition of a few false titles for those who do not directly manage production and business in order to account remuneration costs into salary increases costs.

Sixth, depreciation shall be included in expenses exceeding the prescribed limit: Wrong depreciation rate, wrong rate of depreciation; there are businesses that dodge by calculating depreciation on a monthly basis, not a day, or a loss-making business still depreciates quickly; Depreciation is not right for the type of asset and nature, depreciation of assets that do not have ownership papers of the enterprise (lease and borrowed assets). Some businesses still depreciate cars, including the original cost exceeding the value of 1.6 billion dong.

Seventh, some businesses calculate the costs of services purchased from outside: Accounting for expenses for personal consumption such as cars, telephones, gasoline, meals… also makes it difficult for tax authorities to determine define, distinguish and separate.

Eighth, financial operating expenses fraud: Enterprises have fraudulent financial expenses (loan interest) in contravention of regulations, accounting for interest expenses on loans to contribute capital to the company’s charter (in companies capital contribution); accounting for interest expense in excess of the control rate of 150% of the basic interest rate announced by the State bank; accounting for loan interest expenses not serving the enterprise’s production and business activities; accounting for loan interest expenses during capital construction investment; formation of fixed assets into expenses; accounting for profit and loss on exchange rate differences due to re-evaluation of receivables and monetary items of foreign currency origin into financial operating expenses in contravention of regulations.

Ninth, many businesses make records; Private short-loan escrow: Increases financing costs and reduces taxable income. The misuse of loan capital is also used by many private business owners when borrowing from banks for personal consumption (buying a house, buying a car, investing in stocks, etc.), but still accounting for loan interest as an expense. reasonable and valid.

In addition, there are other expenses: Many businesses also record other expenses that are not in accordance with regulations, such as expenses for vacation money, Lunar New Year bonuses and other holidays not stated in the contract. labor or collective bargaining agreement.

Besides, there is also fraudulent cost allocation: enterprises do not account and allocate long-term costs in accordance with regulations; Checking these businesses shows that there are tools and tools of great value, which can be used for at least 2 or 3 years, but enterprises still put all the money into expenses once through the Expense Account. short-term prepayment. At the same time, large advance deductions such as warranty costs, repair costs of fixed assets are not fully spent or are actually not spent later on, but the enterprise still does not reverse, increasing other income for calculation of corporate income tax. Karma.

Enterprises legalize dossiers on: Provision for bad debts, provision for devaluation of inventories, provision for financial investment; provision for bad debts; provision for product warranty that is not in accordance with regulations. This is fraud on a sophisticated level. There are enterprises that make provision for bad debts but do not have a debt reconciliation record, do not have a debt collection document, or cheat on debt age in order to set aside 100% of the provision for bad debts into expenses. . There are businesses that have no income (losses) and still make the above provisions not in accordance with regulations.

Other incomes such as: Liquidation of fixed assets; Scrap; waste; payable debt but the creditor cannot be identified; The collection of fines for breach of contract was also ignored by the enterprise, not recorded in other income. Through checking the detailed books of cash accounts and bank deposits, the tax authorities discovered that there was an increase in the amount of the taxpayers. this account. In the form of self-settlement declaration of corporate income tax in the year the enterprise has “manipulated” to increase or decrease taxable income without basis; Some businesses even put the arrears and penalties of the previous inspection period in the adjustment to reduce the taxable income of this period, or include penalties and contract violations in these indicators. significantly reduce the amount of tax payable.

There are also a number of other forms of fraud as well…

Above is the consulting article on “Some types of corporate income tax evading fraud” of Apra Law firm. If you still have questions about the above issues and need to be answered, please contact the hotline for advice and support.


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