An FDI company has money compulsorily debited from its account to enforce a corporate income tax reassessment. Months later, a superior authority annuls the reassessment because a location-based incentive was applied wrongly. The tax is refunded, but by then the company has taken emergency loans to keep paying wages, lost a contract after a partner flagged its financial risk, and incurred penalty interest at its bank. The question is no longer about the refund: can the State be made to compensate the losses beyond the tax itself, and through which procedure?
The legal framework: State compensation is a procedure separate from the tax complaint
Compensation for organizations and individuals damaged by unlawful acts of public officials is governed by the Law on State Compensation Liability No. 10/2017/QH14. In the tax field, the law covers damage arising from unlawful administrative decisions and acts in tax administration, including reassessment and assessment decisions and the enforcement measures used to execute them. One point must be understood correctly: a compensation claim does not arise automatically when a tax decision is annulled. The company first needs an official basis establishing unlawfulness, typically a complaint-resolution decision, a court judgment, or a competent authority’s conclusion that the original tax decision was unlawful.
In practice the route has three stages. Stage one: complain against the tax decision under the Law on Complaints No. 02/2011/QH13 within the 90-day period in Article 9, or file an administrative lawsuit under the Law on Administrative Procedures No. 93/2015/QH13, to obtain annulment or amendment. Stage two: recover the tax and late-payment amounts under the Law on Tax Administration No. 108/2025/QH15. Only at stage three does the company file a compensation claim under Law No. 10/2017/QH14 to the agency directly managing the official who caused the damage, with an itemized loss schedule and evidence. If negotiation fails, the company may sue for compensation before the courts.
Applying the framework: only provable losses are compensated
Litigation experience shows that compensation bodies most readily accept direct losses that are documented and clearly caused by the unlawful decision: interest actually paid on loans taken to replace the debited funds, bank guarantee fees, credit-contract penalties triggered by frozen accounts, and warehousing costs or late-delivery penalties where the chain back to the enforcement measure is proven. By contrast, claims for reputational harm, lost business opportunities or speculative profits are usually rejected for want of a quantifiable basis, however real they feel to management.
A second technical point: losses must fall within the compensable scope of Law No. 10/2017/QH14, and the company bears a duty to mitigate its own damage. If the company saw signs the decision was unlawful yet let interest accrue without complaining in time, seeking suspension of enforcement or refinancing at a lower rate, the avoidable portion will be hard to recover. A persuasive compensation file therefore tells a complete story: where the decision went wrong, how the company reacted promptly and in good faith, and exactly which link in the chain produced each item of loss.
Checklist for building the compensation file from day one
- Keep the reassessment decision, enforcement records, statements of the debited account and every freeze and release notice in a dedicated file from the moment events unfold.
- Build the loss schedule item by item, tying each item to a document: loan agreements, interest receipts, bank penalty notices, partner correspondence.
- Finish the complaint or administrative lawsuit first so a written conclusion establishes that the tax decision was unlawful; this is the foundation document of the claim.
- Record mitigation steps in writing: suspension requests, refinancing options explored, notices given to affected partners.
- Identify the correct liable agency, meaning the direct managing agency of the official concerned, before filing, so the claim is not lost to a wrong-address detour.
Frequently Asked Questions
How do we claim compensation when an unlawful tax decision caused damage?
First obtain an official conclusion that the tax decision was unlawful, through complaint resolution or an administrative judgment. Then file a compensation claim under the Law on State Compensation Liability No. 10/2017/QH14 with the agency directly managing the official who issued the decision, attaching an itemized schedule and evidence of loss. If that agency refuses or negotiation fails, sue for compensation before the competent people’s court.
Which losses are compensable?
The principle is actual, direct and documented loss: interest paid because funds were compulsorily debited, guarantee fees, penalties owed to third parties because of the enforcement measure, and reasonable costs of remedying the consequences. Speculative items such as expected profits or pure reputational harm are very hard to recover, because Law No. 10/2017/QH14 requires losses to fall within its compensable scope and to be specifically substantiated.
What is the time limit for a compensation claim?
The claim must be brought within the limitation period prescribed by the Law on State Compensation Liability No. 10/2017/QH14, running from when the company has the official basis establishing unlawfulness and knows its loss. Because the clock is tied to the document concluding the tax decision was unlawful, do not wait until the tax refund is complete before preparing: the loss schedule and evidence should be assembled during the complaint itself so the claim is ready the moment conditions mature.
Which court hears a compensation lawsuit?
If negotiation with the liable agency fails, the company sues before the competent people’s court under the rules on civil jurisdiction over compensation claims against State agencies. Distinguish this from the administrative case annulling the tax decision: they are two separate proceedings that usually run in sequence, the administrative win first to establish the basis, then the compensation suit for the quantified loss.
This article has been quality-reviewed by the FLAW AI Legal Council
