Warning Signs

Using game theory as the main theoretical framework for the study, along with expert interviews and surveys of accountants, the research team found that approximately 20% of participants attended training programs by tax agencies five times or more; 36.7% did not participate once; and 43.3% attended one to three times. These results indicate that accountants currently show little interest in training, which may lead to their inability to keep up with new tax regulations and decrees concerning corporate income tax (CIT), adversely affecting tax management. The percentage of businesses using the straight-line depreciation method reached 66.7%. Many companies incorrectly depreciated fixed assets over varying periods, adjusting costs to either increase or decrease as desired to commit tax fraud.

Identifying Common Corporate Income Tax Fraud

• Recording profits and losses in the wrong accounting period.
• Depreciating fixed assets faster or slower than regulated.
• Divide invoices into smaller amounts (under 20 million VND) and utilize cash payments to secure tax deductions while minimizing scrutiny from banks.
• Using fake documents to pay salaries to non-employees, or recording salaries for employees higher than what was paid.
• Combining service costs with personal expenses like cars, phones, fuel, and meals, complicating tax authority's ability to differentiate these costs.
• Incorrectly accounting for and allocating long-term expenses.
• Underreporting revenue.
• Recording sales prices not aligned with market rates.
• Failing to recognize financial revenues and capital transfers.
• Misapplying regulations regarding loss transfers.
• Incorrectly determining the period for loss transfers.

Managing Corporate Income Tax Fraud Behavior

• Strengthening both the quality and quantity of tax inspections at businesses.
• Mandating that payments be made through banks.
• Increasing penalties for non-compliance with tax regulations by businesses.
• Adjusting the corporate income tax rate to a reasonable level.
• Recognizing that tax incentives in Vietnam are relatively high and apply to a wide range of industries.
• Establishing regulations for issuing VAT invoices.
• Expanding the tax base.
• Regulating loss transfers.
• Promoting educational efforts.

>>> VNU UNIVERSITY OF ECONOMICS AND BUSINESS
Dr. Đỗ Kiều Oanh