An FDI company receiving a PIT inspection decision often finds the scope runs far beyond monthly declarations: inspectors reconcile labour contracts, Vietnamese payroll, amounts paid by the parent on the company behalf, benefits in kind and dependent files. Knowing the focus areas in advance lets the company prepare precisely instead of printing every document in the building.
Legal basis
- Law on Tax Administration 108/2025: the tax authority may inspect tax files at the taxpayer premises, and the taxpayer must provide records, documents and explanations as required by the inspection decision and working minutes.
- Tax residence test: an individual present in Vietnam for 183 days or more in a calendar year or a continuous 12-month period, or having a regular place of abode in Vietnam, is a resident and is taxed on worldwide income under the progressive scale.
- Non-residents are taxed at 20% on salary and wage income arising in Vietnam; casual remuneration outside an employment contract is subject to withholding at source under the applicable rules.
- Money consequences: incorrect declaration leading to a tax shortfall draws a penalty of 20% of the shortfall under Decree 125/2020/ND-CP, plus late-payment interest of 0.03% per day under Law on Tax Administration 108/2025.
- Voluntary amendment: a taxpayer that detects an error itself and files a supplementary declaration before the tax authority announces an inspection decision at its premises is not penalised for the incorrect declaration, and only pays the shortfall plus late-payment interest.
Six areas inspectors concentrate on
Area one is income completeness: inspectors add up everything the company gives the expert, including salary, allowances, housing rent, children school fees, transport and extra insurance. Area two is amounts paid by the parent or an offshore affiliate on the company behalf, because income arising in Vietnam must be declared even when money never passes through a Vietnamese account.
Area three is gross-up and tax equalisation policy: tax borne by the company must be converted into taxable income of the expert. Area four is dependent files, especially dependents living abroad. Area five is treaty relief, including residence certificates and the conditions for exemption. Area six is consistency among monthly withholding returns, annual finalisation and salary costs recorded in the accounting books.
The file set to assemble before the first working day
Core records include each expert labour contract and salary annex, the assignment letter, monthly payroll details, withholding vouchers, returns and finalisations for the years under inspection, and vouchers for benefits in kind such as housing leases and school invoices. Key foreign-language documents should carry translations so inspectors can work quickly and avoid misreading the content.
Appoint one single contact point for document delivery and keep a signed handover list for each batch. In practice, many findings arise not from missing documents but from departments answering the same question inconsistently; a single contact point with a handover log controls that risk.
Self-review and how to handle errors found early
Before inspectors arrive, run a sample self-review: pick the experts with the most complex packages, recompute tax month by month and compare with amounts withheld. Frequent errors are leaving housing rent out of income, applying the progressive scale to a non-resident, and missing months in which the parent paid amounts on the company behalf.
If the self-review finds a shortfall and no inspection decision has been announced yet, file a supplementary declaration immediately to benefit from the no-penalty principle for incorrect declaration, paying only the shortfall and 0.03% daily late-payment interest. Once the inspection minutes record the error, that route closes and the 20% penalty on the shortfall applies on top.
Frequently asked questions
What does the tax authority examine in a PIT inspection at a company with foreign staff?
Inspectors review the expert whole income: salary and allowances in Vietnam, amounts paid by the parent on the company behalf, benefits in kind such as housing and school fees, gross-up policy, dependent files and treaty relief claims. They also reconcile monthly withholding returns against annual finalisation and payroll costs in the accounting books to find differences.
What documents should the company prepare?
Prepare labour contracts, salary annexes, assignment letters, monthly payroll, withholding vouchers and finalisations for the inspected years, housing leases, school invoices and dependent supporting papers. Important foreign documents should come with translations, and the company should keep a signed handover list for each batch of documents delivered.
What happens if the company does not cooperate?
The company is obliged to provide records and explanations under the inspection decision. Late, incomplete or unexplained submissions may lead the tax authority to assess tax on available data and to impose penalties for tax procedure violations under Decree 125/2020/ND-CP. An assessed position is usually worse than a declared one, because inspectors then lack the data needed to recognise the employee deductions.
Which years does an inspection usually cover, and should the company re-finalise beforehand?
The inspected years are set by the inspection decision and usually cover the most recent years not yet inspected. The company should self-review and supplement any self-detected errors before the inspection decision is announced, because at that point a supplementary filing avoids the incorrect-declaration penalty. After announcement, errors found by inspectors attract the 20% shortfall penalty plus late-payment interest.
This article has been quality-reviewed by the FLAW AI Legal Council