Vietnam uses AI to control e-invoice fraud
Issuing invoices and tax reports is becoming easier for businesses when digitized, but all will leave traces and the tax industry’s artificial intelligence (AI) system as well as post-audit work will plug the loopholes of e-invoice fraud. The Vietnam General Department of Taxation said that the e-invoice database and management center will review and automatically identify all e-invoices issued by businesses to look for unusual signs.
1. Invoices are being sold widely
Just by surfing social networks or entering accounting groups, you can easily come across advertisements for public electronic invoices: red invoices, nationwide value-added tax (VAT), 5-year tax settlement, export for all industries, full contracts and documents, available on the same day… Some places even advertise full tax reports, with search links, QR code scanning, lifetime contract warranty…
According to S4B Vietnam, invoice trading is not new but has recently shown an increasing trend. The police have also continuously cracked down on large-scale invoice trading rings, typically the case of 524 enterprises recently cracked down by the Phu Tho Provincial Police.
The tax authority said that many subjects are taking advantage of the flexible regulations on enterprise establishment as well as tax declaration and issuance and use of electronic invoices to establish a series of enterprises for the purpose of buying and selling invoices and committing tax evasion acts.
According to Mr. Dang Khac Phuc – Head of the Tax Department of Binh Thanh District (HCMC), this district currently manages 22,000 enterprises, 16,000 households and individual businesses. From July 1, 2022 to June 30, 2023, more than 17.8 million electronic invoices with authentication codes from the tax authority were issued to buyers. The number of enterprises is very large and diverse in terms of industries, fields and business forms. Therefore, in reality, there has been a situation of illegal use of electronic invoices, Mr. Phuc said.
E-Invoices in Vietnam is being promoted more than ever
Some individuals exploit loopholes in the business registration system, whereby they only need to use the identity documents of any individual to register as a business representative without having to prove their identity, head office address or business establishment. The capital is virtual, like the 524 enterprises discovered by the Phu Tho Provincial Police, each enterprise declared 30 billion.
2. Promoting the application of invoice control technology
In Binh Dinh, the Electronic Invoice Management Center of the Binh Dinh Tax Department is responsible for regularly reviewing electronic invoices related to enterprises in the area. The system will automatically alert the center of cases where the frequency of issuing invoices is too high, the value of the invoices is too large, exceeding twice the equity of the enterprise… Then, this department will transfer the information to the tax branches for monitoring and tracking. Thanks to that, in the past, the Binh Dinh Tax Department has discovered and eliminated 62 newly established enterprises for invoice trading.
If an enterprise is found to issue invoices that exceed its equity by two times, or the frequency of issuing invoices is too high, unusual, or is found to issue invoices in a skipping manner (to hide revenue) to determine negative inventory (ie issuing fake invoices), to the most difficult problem of tracing invoices issued in a roundabout way, the system will automatically alert the tax authority.
3. The tax sector invests heavily in invoice data analysis technology
A representative of the General Department of Taxation said that in the past, enterprises have basically complied well with tax laws. However, there are still some enterprises that always find ways to cheat on taxes, buy and sell illegal invoices to evade taxes, and appropriate tax refunds from the state budget. To prevent tax fraud and illegal invoice trading, the General Department of Taxation has promoted the application of big data analysis and AI in tax management and invoice management, contributing to controlling and quickly detecting cases of invoice fraud.
At the end of April 2023, the General Department of Taxation officially operated and deployed the Electronic Invoice Management and Database Center.
This center will include automatic reconciliation functions between tax declarations and electronic invoices after the fifth day from the due date of submission of the declaration. The result of reconciliation between the declaration and invoice is a list of taxpayers with data discrepancies between the declared value and the actual value on the invoice.
Based on that list, the tax authority will take appropriate professional measures such as desk checks, inspections, and checks at the taxpayer’s headquarters. If necessary, the file can be transferred to the investigation agency.
At the same time, the General Department of Taxation officially operates the “Database analysis and electronic invoice management system”. Thereby, tax authorities at all levels will focus on reviewing and analyzing to promptly detect signs of risks in the issuance of electronic invoices, helping to prevent and handle violations of the law on invoices and documents in particular and on taxes in general.
If your business is not sure about regulations on tax declaration, issuance and use of electronic invoices, please contact S4B Vietnam for tax consulting service for foreigner investors and businesses.
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S4B Vietnam
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- Tel: + 84 24 3974 4181
- Email: service@s4b.com.vn
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