That is a comment of Acting Director General of General Department of Taxation Mr. Mai Xuan Thanh at the online conference on “Launching the system of electronic invoice (E-invoice) database analysis and management” held on 24th April 2023.
The intensive analysis applied
Reporting at the Launching Ceremony a representative from General Department of Taxation informed the adoption of E-invoice has been a trend in the modern society and in Vietnam it has obtained positive achievements. Up to now more than 4 billion E-invoices were issued in the economy. From observing, however, General Department of Taxation has recognized that there have been cases where some entities and individuals have cheated in issuing and using the E-invoice to usurp tax monies. To cope with such a situation, General Department of Taxation has established a center of E-invoice database with analyzing functions to serve risk-based management of E-invoice in the entire tax administration.
Accordingly, regarding the monitoring of E-invoice data, the system will perform the function of crosschecking the E-invoice data with tax returns. The crosschecking results will be a “List of taxpayers having the difference between the value filed in tax return and the value of E-invoices issued”. Based on such a List, the tax authority will take necessary professional methods (conducting examinations either at tax offices or at taxpayers’ premises, or even sending dossiers to investigation agencies) to estimate the law performance and compliance of taxpayers.
In addition, the system has a function of analyzing the usage of E-invoices of taxpayers in each month. As a result, at the ending month, before a taxpayer submits its tax return, the tax authority can analyze the information on such a taxpayer, including its legal status (date of establishment, legal representative, registered capital,…) as well as data on input and output E-invoices in adjacent periods to detect sudden changes and therefore, to adopt timely and relevant management measures.
Also, the system will conduct based on the set of E-invoice risk indexes the analysis. Before that on 2nd February 2023, General Department of Taxation had issued the Decision no 78/QĐ-TCT providing a set of E-invoice risk indexes used to analyze and identify taxpayers having risk signals of E-invoice usage and management. This would help the tax authority to analyze the information and to detect taxpayers with high risk signals those will be either forced to use the E-invoice with authentic of tax authority or put under the examination of E-invoice usage and management.
Regarding the application of intensive analysis to E-invoice management, the system will identify abnormal trading prices. According to a representative from Risk Management Department (under General Department of Taxation), the artificial intelligence technology is applied to process the natural language of E-invoices of the same category of traded goods and services to detect E-invoices with abnormal trading prices. Thus, despite of the existence of billions of E-invoices (with diversified categories of goods and services) in the economy, if it is necessary to focus on monitoring the certain high-risk categories of goods, the system will help the tax authority to select E-invoices of focused goods for purposes of intensive analysis. Regarding the VAT refund frauds in export stage (by artificially increasing the sale price of export goods by dozens times), the monitoring and detecting of abnormal trading prices will help screening cases must be monitored in order to timely prevent VAT refund frauds. On the other hand, by applying the Bayesian Belief Bayes, the system will be able to establish the chain of enterprises engaged in the same trading chain with each other, helping the tax authority to trace the origin of goods and the value added at each stage in the chains.
Based on the intensive chain analysis, chains with abnormal characteristics will be detected such as a chain with the first button and the last being the same, a chain with purchase activities only, a chain with many enterprises those have escaped from their business addresses and so on They are dubious clues of illegal acts of E-invoice trading.
One more step forward in modernizing and reforming of the tax administration
Speaking at the launching ceremony, the Acting Director General Mai Xuan Thanh recommended that the launching such a system reflects a more step forward that in modernizing and reforming of the tax administration in general, and in applying the information technology to monitor and fight against E-invoice-related frauds, frauds in filing taxes as well as other tax avoidance and tax evasion acts.
By officially putting the system into operation, tax authorities at all levels will concentrate in reviewing, analyzing in order to timely detect risk signals in issuing E-invoice, thereby, to efficiently prevent and handle violation cases of invoice law in particular, and tax law in general.
According to the Acting Director General Mai Xuan Thanh, however, it is only an initial implementing step of the direction of Minister of Finance in the Project on developing an E-invoice database and applying the artificial intelligence to analyzing, detecting and handling E-invoice-related frauds. In the current practice, taking advantages of social networks, many groups with hundreds members who are accountants and corporate managers have been established for a sole purpose of illegally trading in E-invoices. Therefore, the Acting Director General considered that based on results of system’s operation and professional methods reported from grassroots, General Department of Taxation will be more proactive and absolutely able to identify types of fraud.
At the ceremony, the Acting Director General has assigned specific tasks to each unit under General Department of Taxation. Accordingly, Risk Management Department and Information Technology Department shall be responsible for organizing, operating, observing analyzing, and ensuring the system to operate smoothly, stably and to regularly upgrade the last data in service of the analyzing the data in the entire administrative in the most efficient manner. The Risk Management Department and other units and province tax departments concentrate in studying for applying in practice and developing, upgrading functions of analysis and automatic processing to early detect transactions of illegally trading in E-invoice and VAT refund fraud in the entire administration. Especially, the Risk Management Department has to summarize handling results done by tax authorities at all levels in the management process of E-invoices to analyze the implementing results, and to detect issues and problems, thereby to continue improving both IT applications and policies, meeting management requirements in the best manner.
Also, the Acting Director General has requested heads of units under General Department of Taxation as well as heads of province tax departments to assign the task of reviewing, analyzing the data on E-invoices to each division, each district tax department, each tax team, and each tax official. In addition, they have to be proactive in mining the national data on E-invoices in accordance with their mining assigned (mining the data based on the risk trace across the country instead of mining the data by region or business sector). In addition, they have to be proactive in reviewing, crosschecking, and screening risks to establish a List of enterprises with abnormal risk signals to timely implement professional measures in order to quickly prevent and strictly handle violation acts in relation to E-invoice. Finally, they have to strengthen the cooperation with related relevant government agencies in managing the E-invoice.
Regarding the Propaganda and Taxpayer Services Department, Office of General Department of Taxation and province tax departments, the Acting Director General has requested them to concentrate in promoting the propaganda of system of E-invoice database analysis and management in parallel with the publicizing taxpayers who have committed violation acts in order to send a strong warning to the business community, contributing to early prevent the illegal usage of E-invoices.
By Thuy Nga
The content was copied from “https://www.gdt.gov.vn”