Our tax compliance calendar article answers “when to file.” This article answers the harder question: “where in the company’s operations tax risks most likely arise.” A company can file returns on time for years yet still carry large tax risks — surfacing only when tax authorities conduct inspections.
The checklist below compiles the 7 most common tax risk groups for FDI enterprises in Vietnam, with early warning signs and priority levels for each group. This is a tool for management and in-house counsel to self-assess periodically, not a substitute for detailed file-by-file review.
This article is written from a practical perspective, does not guarantee any outcome, and does not replace specific advice.
Quick summary
| Topic | Checklist of 7 tax risk groups companies should self-review |
|---|---|
| Who this is for | Management, in-house counsel, and chief accountants of FDI enterprises. |
| Top 3 highest-priority risks | Related-party transactions; CIT incentives enjoyed without meeting conditions; contractor tax with foreign counterparties. |
| Treatment principle | Prioritize by the product of (detection probability × potential amount); voluntarily file supplementary returns before tax authorities announce inspection decisions. |
How to use this checklist
Each risk group below is assessed under two criteria: the probability of detection by tax authorities during inspection, and the amount potentially back-assessed (including tax, penalties, and late-payment interest). Prioritize risks with the highest product of these two criteria — not every risk deserves equal resources.
Companies should run this checklist once a year, ideally before the annual tax finalization, and after each major change (restructuring, changes in transaction models with the parent, expansion into new sectors). Implementers should combine accountants (who know the figures) with in-house counsel or lawyers (who assess the legal soundness of tax positions).
Risk 1: Related-party transactions and transfer pricing — HIGH PRIORITY
Warning signs: the company has purchase, loan, or cost-sharing transactions with its parent or group companies; the company’s Vietnam profits are unusually low relative to revenue scale or industry norms; no transfer pricing documentation has been prepared; or documentation exists but is thin, without comparability analysis.
Why it’s dangerous: transfer pricing has been the inspection focus for the FDI sector for many years. Without transfer pricing documentation, or with documentation that cannot prove arm’s-length pricing, tax authorities have grounds to re-determine taxable income — and the additionally imposed tax is usually very large compared to the cost of preparing proper documentation from the start.
Actions: check whether Appendix I on related-party transactions was declared with the CIT finalization; whether transfer pricing documentation was prepared before the finalization point (Decree 255/2026/ND-CP, effective 1 July 2026); review whether declaration and documentation exemptions are correctly applied. For details, see our article on related-party transaction risks in Vietnam.
Risk 2: CIT incentives enjoyed without meeting conditions — HIGH PRIORITY
Warning signs: the company enjoys CIT exemption, reduction, or preferential rates but has changed since the incentive was granted: project expansion, location change, sector adjustment, delayed investment disbursement, or merger, division of the company.
Why it’s dangerous: tax incentives are tightly tied to each investment project’s specific conditions. When the company no longer meets the conditions, all exempted or reduced tax may be back-assessed, plus penalties and late-payment interest — often the largest amount in back-tax assessments. Under the 2025 CIT Law (Law 67/2025/QH15), where incentive conditions are not met, the competent authority shall assess back taxes and impose penalties.
Actions: reconcile incentive conditions in the investment registration certificate and related documents against actual status; assess every project change under the incentive eligibility angle before implementing.
Risk 3: Contractor tax with foreign counterparties — HIGH PRIORITY
Warning signs: the company regularly pays foreign service providers and contractors (consulting, software licenses, technical services, foreign loan interest) but does not withhold and pay contractor tax on behalf; or withholds but does not check DTA application possibilities.
Why it’s dangerous: the withholding and payment obligation lies with the Vietnamese party (Circular 89/2026/TT-BTC, effective 1 July 2026, replacing Circular 103/2014/TT-BTC) — the foreign counterparty has received full payment and left, while the Vietnamese company remains to bear back assessments. Many companies discover this obligation only during tax inspections.
Actions: review all contracts and payments to foreign counterparties; identify withholding and payment obligations; check DTA application conditions and prepare the counterparty’s Certificate of Residence. For details, see our articles on foreign contractor tax in contracts with foreign partners and tax indemnity clauses in contracts.
Risk 4: VAT refunds — medium priority
Warning signs: the company has applied or is applying for large VAT refunds (exported goods, investment projects) but refund files are incomplete; transactions with invoice-risk suppliers; investment projects not yet fully contributing registered charter capital.
Why it needs attention: refunds are the most carefully examined operation — money has left the state budget. Under Article 15 of the 2024 VAT Law (Law 48/2024/QH15), investment projects not fully contributing registered charter capital at the refund application time are not entitled to refunds but only to carry forward tax to subsequent periods. Weak refund files may lead to recovery of refunded tax plus penalties.
Actions: review refund conditions before filing; ensure charter capital is fully contributed; check the validity of large-value input invoices. For details, see our article on VAT refunds for FDI enterprises.
Risk 5: Invoices and vouchers — medium priority
Warning signs: large-value expenses with thin contracts and acceptance minutes; input invoices from suppliers that have ceased operations or absconded; cash payments for large-value transactions; missing non-cash payment vouchers.
Why it needs attention: unlawful invoices mean losing input VAT credit rights and disallowed deductible expenses for CIT purposes — a “double hit” on the same expense. This is also the easiest risk group to fix: just better voucher discipline.
Actions: build a process to check input invoice validity before payment; periodically review suppliers; digitize and fully store vouchers. See our article on tax record keeping for companies.
Risk 6: Permanent establishment of foreign investors — medium priority
Warning signs: foreign investors operate in Vietnam through representative offices but actually conduct revenue-generating business activities; parent company experts and personnel are present and manage in Vietnam for extended periods; contracts are signed in the parent company’s name in Vietnam.
Why it needs attention: if the foreign investor’s activities constitute a permanent establishment in Vietnam under tax law and DTAs, arising income becomes taxable in Vietnam — while the investor may believe it has no tax obligations. The 2025 CIT Law has expanded the permanent establishment concept; companies need to review their presence models.
Actions: assess the foreign investor’s actual operating model in Vietnam under the permanent establishment angle; clearly delineate representative office functions (promotion only, no direct business). For details, see our article on permanent establishment risks for foreign investors.
Risk 7: Misapplied tax rates and policies — low to medium priority
Warning signs: the company applies preferential rates to income not entitled to incentives; e.g., applying the preferential 15%/17% rate to income from capital transfers, real estate transfers, or investment project transfers — while Article 10 of the 2025 CIT Law provides that such income is not entitled to preferential rates.
Actions: when finalizing CIT, separately identify non-incentive income and compute at correct rates; don’t let accounting software automatically apply one rate to all income.
How to handle discovered risks
Discovering risks is not for panic but for proactive treatment — because the law always “rewards” those who voluntarily remediate before inspection. Treatment principles:
File supplementary returns before inspection. Companies may supplement tax filings upon discovering errors, provided this is done before tax authorities announce inspection or examination decisions. Important note: from 01/7/2026, the 2025 Law on Tax Administration (Law 108/2025/QH15) shortens the supplementary filing window from 10 years to 5 years — the self-correction window is narrowing, so review early.
Quantify before deciding. For each risk, fully compute: potentially back-assessed tax + penalties + late-payment interest. Compare self-remediation costs (supplementary filing, additional tax payment) against costs when discovered through inspection (back assessment + heavier penalties + reputation impact). In most cases, self-remediation is significantly cheaper.
Fix the root cause, not just symptoms. If the risk comes from processes (e.g., nobody tracks contractor tax obligations), a one-time supplementary filing is insufficient — the process must be fixed to prevent recurrence. This should also be included in the company’s tax compliance calendar and tax record keeping procedures.
For overall advice, see our tax consulting services for FDI enterprises.
How FLAT LAW FIRM assists
FLAT LAW FIRM assists companies with tax risk reviews (tax health checks): assessing the 7 risk groups under the above checklist, quantifying potential tax obligations, proposing supplementary filing and remediation plans, and building internal control procedures to prevent recurrence. When a company has received inspection or examination decisions, we assist with preparing explanation files and protecting rights during work with tax authorities.
See also: Tax consulting for FDI enterprises | Preparing for tax inspections at enterprises | Tax due diligence in M&A transactions | Contact
Talk to FLAT LAW FIRM
If your company wants to review current tax risks before an inspection or annual finalization, FLAT LAW FIRM can assist with quick assessment and treatment plans. Please contact us for advice.
FAQ
How does a tax risk checklist differ from a tax compliance calendar?
The compliance calendar answers “when to file” (filing and payment deadlines). The risk checklist answers “where errors are likely” (whether tax positions would withstand inspection). Companies need both: filing on time but wrong in substance still leads to back assessments.
How often should tax risks be reviewed?
At least once a year, ideally before the annual tax finalization, and after each major change (restructuring, changes in transaction models with the parent, sector expansion).
Should discovered errors be voluntarily supplemented?
Yes, and as soon as possible. Supplementary filing before tax authorities announce inspection decisions significantly reduces penalties compared to inspection discovery. Note that from 01/7/2026 the supplementary filing window is shortened from 10 years to 5 years.
What are the largest tax risks for FDI enterprises?
Inspection practice shows the three largest groups are related-party transactions/transfer pricing, CIT incentives enjoyed without meeting conditions, and contractor tax with foreign counterparties — because back-assessed amounts in these three groups are usually the largest.
Is this article formal legal advice?
No. This article only provides general information; each case needs specific lawyer review.
Does FLAT LAW FIRM support Chinese and English?
Yes. We can assist with exchanges, document review, and explaining options in Vietnamese, Chinese, and English.
