Strategizing Multinational Tax Risks

Effective as of 4 February 2016, Vietnam’s circular outlines how it determines levels of tax risk for a taxpayer, thereby having a direct impact upon the likelihood of an audit.

• Tax risk methodologies will apply for all levels of tax administration activities.
• Internal and external sources of risk will be evaluated.
• Six different levels of risk will be used to rate taxpayers.
• A low compliance rating can result from accumulated losses exceeding 50% of equity, or its VAT amounts are above the average of similar sector based companies.

A detailed summary of the new rules commences on page 15 of the referenced Deloitte’s World Tax Advisor.

Click to access dtt-tax-worldtaxadvisor-160226.pdf

A tax risk framework policy is essential for every MNE, as additional countries employ a risk-based approach to compliance and audits.  The country-by-country reports to be provided via the OECD’s BEPS Action 13 guidelines will also become a risk tool used by many countries around the world.

Accordingly, all tax departments should be thinking of the post-BEPS world with risk-focused lenses that will yield insights previously not envisioned.