Factors Affecting Tax Audits for Businesses

1.2.3. Factors affecting tax audits of businesses

During the implementation process, the effectiveness of tax inspection work of tax authorities is affected by many factors, both objective and subjective. Specifically:

a. Subjective factors

Subjective factors are factors that belong to the CQT itself. Mainly the following factors:

 Tax inspection process: Building and organizing implementation according to the correct process is a factor affecting the effectiveness of tax inspection work. A process that is clearly and transparently built, covering all steps of tax inspection work, helps inspectors to perform more easily, impartially and objectively.

 Quality of planning and preparation for the inspection : Proper planning helps to select the right tax audit subjects. Proper planning helps to select the right time to conduct the inspection. The more carefully prepared the tax audit is, the higher the effectiveness of the tax audit and vice versa.

 Organization of the tax authority: To effectively implement the mechanism of taxpayers self-declaring, self-paying and self-responsible before the law, the tax authority apparatus has been reformed and organized according to a specialized functional model (Propaganda-support; declaration management; Inspection, examination; tax debt management), in which the inspection function is the key task in the functional model. Currently, the organization of the tax inspection work is organized into 02 levels (the Tax Department level has an inspection room; the Tax Branch level has an inspection team).

 Database system and application of information technology to exploit and analyze information about taxpayers : Information is one of the prerequisites for all management decisions. In tax audit, information is the basis for selecting the right audit object; the basis for selecting the method and scope, focus of the audit; the basis for determining whether or not there is a violation of tax law by the audit object. The more complete, accurate and timely the information database is, the more effective the tax audit will be.

 Qualifications and ethics of the head of the tax authority: The leader plays a particularly important role in every management system and tax management is no exception. The talent, ethics and reputation of the head of the tax authority have an important impact on the quality and effectiveness of tax inspection work.

 Professional qualifications and integrity of tax inspectors : People are the decisive factor in the success or failure of all economic and social activities. People are the central factor of all management systems. The tax inspection field is no exception. The higher the professional qualifications and professional ethics of tax inspectors, the better the quality of inspection work and vice versa.

 Strictness in handling violations : Sanctions are one of the three basic components of a legal norm. Sanctions have the function of applying penalties to violations of the law. This function will not be fully implemented when the organization of law enforcement is not strict. When violations are not handled strictly, both inspectors and taxpayers will become indifferent to the law; reducing the warning and preventive impact of tax inspection work.

The influence of each factor has two sides, both positive and negative. Therefore, the tax authority must have measures and solutions to limit negative impacts and promote positive effects to improve the efficiency and quality of tax inspection work.

b. Objective factors

Objective factors are factors that do not belong to the tax authority but belong to other agencies and organizations in society. Specifically:

 Legal corridor on tax management and tax inspection : The more complete the tax law is, the more it creates a clear, complete, and solid legal basis, making tax inspection activities more convenient. If the tax law lacks transparency, the basis for determining violations is not solid, which can cause endless debates about the level of right and wrong in the behavior of taxpayers and tax authorities. Law

If not complete, there is no legal basis to conduct some necessary tax audits...

 The level of education and awareness of tax law compliance of taxpayers : People have an impact on tax inspection activities in two aspects: (i) They are taxpayers, the subjects of tax inspection; (ii) They are the masses with information about the subjects of inspection. On the first aspect, with a high level of education and good awareness of law compliance, taxpayers will cooperate well with the inspection agency; creating favorable conditions for inspection work. On the second aspect, the higher the level of education, the more proactive people are in fighting against violations of the law in general and tax law in particular, and people will actively help tax authorities during the tax inspection process.

 Socio-economic development level: Socio-economic development level is one of the factors that directly affects tax management in general and tax inspection in particular. Along with socio-economic development in the current integration period, the legal system, including tax law, will gradually be improved, technical facilities and equipment will be increasingly modernized, the number of taxpayers will continuously increase rapidly... All of the above changes affect the effectiveness of tax inspection.

 Coordination of relevant state agencies : To conduct tax inspections, tax authorities need the coordination of state management agencies such as: police, market management, inspection, treasury, bank... Coordination is important in determining information about business activities and tax law compliance of taxpayers.

 Facilities and working means of the tax authority : The state's investment in facilities and working means has a significant impact on the efficiency and quality of tax inspection work. Modern facilities and working means help improve the working efficiency of tax inspectors.

 Remuneration regime for tax inspectors : Remuneration regime for tax inspectors is part of the overall salary regime.

salaries and incomes of officials and civil servants. A satisfactory treatment regime will create good working motivation for each official and civil servant in general and each tax inspector in particular. A satisfactory treatment regime, ensuring the lives of officials will contribute to reducing the motivation for corruption.

Chapter 1 Conclusion:

In chapter 1, the thesis focuses on clarifying the general theory of tax inspection in terms of the role, principles, methods and forms of tax inspection. This contributes to clarifying the theory and practical significance of the objective necessity in implementing tax inspection for enterprises so that we can better understand the inspection process and criteria for evaluating tax inspection results. This helps us to detect errors in the process of enterprises performing their obligations to the state and the people in order to have timely solutions and handling.

Chapter 2

CURRENT STATUS OF TAX AUDITS FOR ENTERPRISES AT NINH BINH PROVINCE TAX DEPARTMENT

2.1. Socio-economic characteristics of Ninh Binh province and tax management organization at Ninh Binh provincial tax department

2.1.1. Socio-economic characteristics

Ninh Binh is a province located in the southernmost part of the Red River Delta, belonging to the Northern key economic region. It borders Ha Nam province to the north, Nam Dinh province to the east, the East Sea to the southeast, Thanh Hoa province to the west and southwest, and Hoa Binh province to the northwest.

The total natural land area of the province is 1,390 km2 with alluvial soils favorable for aquaculture and sedge cultivation, favorable for intensive crop cultivation and high-quality food crops; Surface water resources are quite abundant, favorable for irrigation, agricultural production development and water transport services. Ninh Binh has an average density of river and stream systems with a total length of main rivers of over 496 km, covering an area of 3,401 ha, a density of 0.5 km/km2. In addition, the province also has 21 large reservoirs, an area of 1,270 ha, with a capacity of 14.5 million m3 of water, irrigation capacity for 4,438 ha. Ninh Binh is the province with the largest forest area with about 19,033 ha, accounting for 23.5% of the region's forest area, accounting for 13.3% of the province's natural area. Natural forest: Total area is 13,633.2ha, wood reserve is 1.1 million m3. Limestone resources: Limestone is the largest mineral resource of Ninh Binh. With quite large limestone mountain ranges, running from Hoa Binh, northwest - southeast direction, through Nho Quan, Gia Vien, Hoa Lu, Tam Diep town, Yen Mo, to the East Sea, more than 40km long, area over 1,2000ha, reserves of tens of billions of cubic meters of limestone and tens of millions of tons of dolomite. This is a large source of raw materials for the production of cement and construction materials and some other chemicals; Clay resources: Scattered in low mountainous areas of Yen Son and Yen Binh communes (Tam Diep city),

Gia Vien and Yen Mo districts, used to produce bricks, tiles and raw materials for the casting industry; Mineral water resources: Ninh Binh mineral water of good quality. Mud resources: Small reserves, about 2 million tons, distributed in Gia Son, Son Ha (Nho Quan), Quang Son (Tam Diep city) communes, can be used to produce microbial fertilizers, serving agricultural production.

- Population and employment: With a population size of more than 900,000 people in 2016. Compared to the population of the Red River Delta region, the population of Ninh Binh province accounts for 5.6% and is equal to 1.2% of the national population. The population density of the province (about 675 people/km2) is lower than the average density of the region, expected to be less than 1 million people by 2020 and is in the "golden population period", which is a great advantage in providing labor resources, convenient in management and does not put great pressure on economic development;

Administrative organization: Ninh Binh province has 08 administrative units including: 02 provincial cities and 06 districts.

The above mentioned economic and social conditions of Ninh Binh province have had a significant impact on tax inspection work in all aspects, both advantages and challenges in the coming time.

2.1.2. Tax management organization of Ninh Binh Provincial Tax Department

Ninh Binh Provincial Tax Department was established in 1992 under the leadership of the Provincial Party Committee - People's Council - Provincial People's Committee, the direction of professional expertise and human resource management according to the vertical structure of the General Department of Taxation - Ministry of Finance, the apparatus includes 1 Director, 3 Deputy Directors, 12 specialized departments, 08 district and city tax branches under the Tax Department with 505 civil servants. Regarding the party organization, there is 01 Party Committee of the Tax Department Office under the Party Committee of the Ninh Binh Provincial Party Civil Affairs Bloc, there is 01 Party Committee and 17 Party cells of the Sub-departments under the Party Committees of districts and cities with a total of 360 party members.

Regarding professional qualifications: 50 civil servants have master's degrees, accounting for 9.9%, 309 civil servants have university degrees, accounting for 61.2%, and the remaining 146 civil servants have intermediate qualifications, accounting for 28.9%.

The Tax Department is organized into 12 divisions and 08 Tax Branches.

DIRECTOR and

3 DEPUTY DIRECTORS

ROOMS

1. Administration - Management -

Talent

2. Support Propaganda Department

3. Personal Income Tax Department

4. Debt Management and Enforcement Department

5. Tax Inspection Department

6. Internal Audit Department

7. Accounting and Declaration Department

8. Personnel Department

9. Budget Synthesis Department

10. Tax Inspection Department No. 1

11. Tax Inspection Department No. 2

12. Computer room

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BRANCHES

1. Ninh Thuan City Tax Department

Jar

2. Nho Quan District Tax Department

3. Gia Vien District Tax Department

4. Hoa Lu District Tax Department

5. Yen Khanh District Tax Department

6. Yen Mo District Tax Department

7. Kim Son District Tax Department

8. Tam Diep Town Tax Department

2.2. Tax inspection for enterprises at Ninh Binh Provincial Tax Department

2.2.1. Tax inspection at tax authority headquarters

In the period of 2015-2017, Ninh Binh Provincial Tax Department directed to closely and regularly monitor tax declarations, especially tax refund dossiers, tax exemption and reduction preferential dossiers, dossiers with goods export activities, natural resource tax declaration dossiers, environmental fees, and unusual and sudden tax declaration dossiers to detect violations right on taxpayers' tax declaration dossiers to make timely adjustments and supplements, prevent acts of tax evasion and avoid tax loss of the state budget;

In the period of 2015 - 2017, the number of taxpayers at the Ninh Binh Provincial Tax Department grew rapidly in both quantity and quality, which had a significant impact on the organization and implementation of tax tasks in the area. To clearly see the current status of desk inspection work at the Ninh Binh Provincial Tax Department office, it is necessary to specifically consider each content of this work, including: planning activities and organizing the implementation of tax inspection plans.

2.2.1.1. Work on developing a tax inspection plan at the tax authority's headquarters

a) Results achieved

Planning is extremely important. A correct and reasonable plan ensures that the work is always on track and achieves the desired results. At the Ninh Binh Provincial Tax Department, the process of developing a desk inspection plan is always carried out in accordance with regulations. The annual inspection plan has been developed since December of the previous year. From the beginning of December until December 20 every year, the tax inspection department reports to the head of the agency the list of taxpayers whose tax declarations must be inspected according to the risk assessment.

The analysis, assessment and selection of businesses with tax risks to create a list of businesses that must have their tax records checked is conducted based on monitoring the tax declaration and payment process of taxpayers from the present time forward. Some criteria for assessing tax risks for taxpayers are:

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