Businesses in Vietnam face a complex and constantly changing tax environment. New regulations – such as the 2024 VAT Law (effective July 2025) and the 2025 CIT Law (effective October 2025) – continue to reshape compliance obligations. In this context, a tax health check is one of the most effective ways for SMEs and corporations to stay compliant. It is a structured review of a company’s tax filings, records, and procedures, helping identify potential risks and hidden exposures before they escalate.
A tax health check typically assesses key areas such as VAT, CIT, PIT, and foreign contractor tax to ensure accuracy and completeness. By detecting issues early, businesses can avoid penalties, interest, and missed incentives. This has become increasingly important as Vietnam’s tax authorities intensify enforcement with e-invoice audits, analytics-based inspections, and more frequent cross-checks.
With even minor errors capable of triggering an audit, a timely tax health check works like a medical exam for your company’s tax system—highlighting weaknesses and guiding corrective actions to protect the business.
Need help with taxation in Vietnam? Explore InCorp Vietnam’s Tax Advisory Services today!
Overview of Key Taxes for Vietnamese Businesses
Vietnamese companies must comply with several major taxes. A tax health check typically reviews all of these to ensure full compliance.
Corporate Income Tax (CIT).
Standard CIT is 20%. Under the 2025 CIT Law (effective Oct 2025), preferential rates of 10%, 15%, or 17% apply to high-tech, R&D, clean-energy, and other priority sectors, while location-based incentives are now more limited. A tax health check verifies correct profit calculations, allowable deductions, capped interest, proper loss carry-forward, and whether any preferential incentives are applied in line with the rules.
Value Added Tax (VAT).
Standard VAT is 10% (5% for certain goods and 0% for many exports). Businesses file monthly or quarterly depending on turnover. Vietnam now requires strict e-invoicing and digital signatures. A tax health check reviews output VAT, supporting VAT invoices, and eligibility of input VAT credits. Common issues include claiming VAT on non-deductible expenses, mismatched customs documents, and missing e-invoices—any of which can result in disallowed credits or penalties.
Personal Income Tax (PIT).
Employers must withhold PIT monthly or quarterly and file an annual payroll reconciliation by March 31. Progressive rates range from about 5–35%. A tax health check assesses payroll withholding, dependent deductions, insurance contributions, and whether all taxable benefits and bonuses are properly declared to avoid penalties from under-reporting.
Foreign Contractor Tax (FCT).
FCT applies to payments to foreign suppliers without a Vietnamese entity. It combines VAT and income tax, often at 5% VAT plus 5–10% CIT for corporate vendors (or up to 10% PIT for individuals). A tax health check reviews all cross-border service and software payments to confirm correct withholding and treaty relief where applicable.
Other industry-specific taxes.
Some sectors face special consumption tax (alcohol, tobacco, gasoline, luxury cars), environmental taxes, land rental, and various fees. A tax health check also checks these obligations where relevant.
Vietnam’s tax system involves multiple filings—VAT monthly/quarterly, CIT prepayments, annual CIT finalization, PIT withholdings, and more. Missing a single deadline can lead to fines. A tax health check starts by mapping all taxes applicable to the business and building a compliance calendar, ensuring each periodic and annual obligation has been met accurately and on time.
Why Every SME Needs a Tax Health Check
Even a well-run company can accumulate small compliance gaps over time. Without regular review, these gaps can compound or go unnoticed until an audit exposes them. Here are some compelling reasons to conduct a tax health check:
Evolving Tax Laws.
Vietnam updates tax rules frequently. The new VAT Law (effective July 2025) and new CIT Law (effective Oct 2025) change VAT treatments, incentives, and FCT guidance. In-house teams often struggle to keep up. A tax health check brings expert, up-to-date knowledge to detect regulatory changes before they create errors.
Preventing Costly Penalties.
Common issues—late VAT/CIT filings, missing invoices, underpaid tax—carry significant fines. Filing 30 days late can cost 2–5 million VND; beyond 90 days with tax due can reach 15–25 million VND. Even small mistakes can trigger 0.5–2.5 million VND penalties. A tax health check helps companies avoid these risks by identifying problems before deadlines.
Ensuring Deductions and Credits.
A tax health check can reduce tax liabilities by confirming that allowable deductions (travel, depreciation, R&D, insurance) and VAT input credits are properly documented. Many businesses discover missed deductions or disallowed expenses that can be corrected with better records.
Preparing for Audits.
Having a recent tax health check strengthens your position in case of a tax inspection. Self-review often uncovers issues that can be fixed early, reducing exposure and showing regulators that the company is proactive. Advisors can also support meetings and explanations during an audit.
Strengthening Reputation with Tax Authorities.
Clean filings create trust. A tax health check helps remove inconsistencies, making the company appear reliable and transparent—an advantage during future audits or compliance reviews.
Saving Management Time.
SMEs often lack dedicated tax teams. A tax health check streamlines the process and helps decide whether to handle tax functions internally or outsource them.
Given these benefits, many experts recommend performing a tax health check at least once a year—especially before audits, fundraising, or major board reviews. It is far more cost-effective to fix issues early than to face penalties or lose valid deductions later.
Common Tax Issues Found in a Tax Health Check
During a tax health check, advisors typically look for specific red-flag issues. Some of the most frequent findings include:
Incorrect or Missing VAT Invoices.
Vietnam strictly enforces VAT invoice rules. Errors such as wrong buyer tax ID, typos, or invoices not transmitted on time can cause customers to lose input VAT and expose the seller to fines of 10–20 million VND. A tax health check often discovers unissued invoices or invoices that don’t match actual transactions. For example, a vendor invoice using an outdated letterhead or blank company name would be flagged for correction before it leads to denied VAT credits.
Non-Deductible Expenses Treated as Deductions.
Entertainment beyond limits, undocumented meals, personal travel, and fines are all non-deductible. A tax health check reviews ledgers to identify such expenses—like a business-class ticket without justification or an event lacking receipts—so they can be reclassified. This prevents VAT rejections and CIT adjustments.
Underreported or Late Corporate Income.
Some businesses unintentionally omit small revenue items, export invoices, or foreign-sourced income. A tax health check reconciles bank deposits, invoices, and ledgers to reported revenue, ensuring all taxable income (including grants or interest) is declared. Fixing gaps early avoids significant back taxes and penalties.
Weak Transfer Pricing Documentation.
Companies with related-party transactions must maintain arm’s-length pricing and proper TP files. A tax health check identifies missing local files, incorrect service fees, or pricing that deviates from market standards. This reduces the risk of TP adjustments during inspections.
Payroll and PIT Irregularities.
Common issues include missing dependent declarations, bonuses paid without PIT withholding, or mismatched payroll records. A tax health check reviews all payroll data to ensure correct PIT calculations and timely filing, preventing back taxes with interest.
Foreign Contractor Tax (FCT) Errors.
Many companies overlook FCT on payments for overseas software, services, or consulting. A tax health check reviews all cross-border payments to ensure correct VAT and CIT withholding (or PIT for individuals) and verifies VAT self-assessment on imported services.
Out-of-Scope Activities.
Operating outside registered business lines—such as a trading company doing manufacturing—can lead to violations. A tax health check compares actual operations to business registration so the company can amend its license before an inspection.
Poor Documentation and Recordkeeping.
Missing ledgers, incomplete Vietnamese-language books, or inconsistencies between audited financial statements and tax returns are common. A tax health check ensures records exist, align with filings, and can be produced during an audit.
Penalties and Risks of Non-Compliance
Failing to address tax issues can trigger serious penalties. Vietnam’s tax laws impose both fixed fines and interest. Some important examples:
Late Filing Fines.
Vietnam imposes strict penalties for delayed VAT or CIT returns. Filing more than 90 days late (with tax due) results in a 15–25 million VND fine per return, and unpaid tax accrues interest at 0.03% per day. A tax health check helps prevent these issues by reviewing deadlines and detecting missing filings early.
Underpayment and Audit Adjustments.
If provisional CIT is underpaid, interest applies until corrected in the annual return. During audits, underreported income—intentional or not—can lead to reassessment, penalties, and in severe cases fines equal to one to three times the tax evaded. A tax health check calculates underpayments and ensures corrections before inspectors arrive.
Invoice and Documentation Fines.
Not issuing a required VAT invoice can incur a 10–20 million VND fine. Failure to maintain or present accounting books, audited financials, or Vietnamese-language records also carries penalties. A tax health check verifies that audit reports match tax filings and that documentation meets legal standards.
Other Administrative Penalties.
Seemingly small errors—late address changes, outdated business lines, or operating outside registered scope—lead to fines of 1–5 million VND. A tax health check flags outdated registrations so the company can update them before an inspection.
Reputation and Secondary Risks.
Repeated mistakes attract stricter scrutiny, more audits, and even multi-year reviews. Errors that cause financial statement restatements can also affect investor confidence or bank financing. A tax health check mitigates these risks by cleaning up compliance gaps before they escalate.
Vietnam’s tax enforcement is increasingly strict. Even minor mismatches in invoices, timing, or bookkeeping can trigger heavy administrative penalties. A proactive tax health check helps businesses spot and fix issues early—avoiding fines, interest, and reputational damage.
Read More: An Essential Guide of Taxation & Compliance Deadlines in Vietnam
How to Conduct a Tax Health Check
At InCorp Vietnam, we apply a structured and transparent methodology to ensure every tax health check is thorough, objective, and aligned with the latest regulations. Our process typically includes the following steps:
1. Define scope and timeline.
We begin by meeting with management to clarify concerns, agree on which tax types and periods to review, and outline the objectives and schedule. Depending on the company’s needs, we may focus on one fiscal year, several years, or specific high-risk quarters.
2. Collect documents and data.
Our team works with your finance staff to gather all relevant documents: VAT, CIT, PIT, and FCT returns; e-invoices; financial statements; accounting books; contracts; payroll records; bank statements; customs files; and any correspondence with tax authorities. We ensure we have both the filings submitted to the tax office and the underlying source documents supporting them.
3. Review tax filings for accuracy.
We perform a detailed review of each tax return to confirm completeness and consistency. This includes reconciling VAT returns with ledgers, matching CIT figures with audited financial statements, and verifying that PIT declarations include all employees. Any miscalculations, omissions, or mismatches are flagged immediately.
4. Check supporting documents.
For a selected sample of transactions, we test the underlying documentation to ensure tax positions are fully supported. This may involve validating VAT invoices, checking expense records, reviewing contracts for deductibility, and confirming compliance for incentives, imports, or cross-border services. Any missing or non-compliant documents are identified so they can be corrected before they pose a risk.
5. Identify issues and quantify exposures.
Throughout the review, our specialists compile all discrepancies—such as under-declared revenue, ineligible deductions, missing invoices, or incorrect withholding. We quantify the potential additional tax and interest for each item and prepare adjusted calculations so management can clearly understand the financial impact.
6. Advise, report, and recommend improvements.
At the end of the review, InCorp Vietnam prepares a comprehensive tax health check report. This typically includes:
• an overview of your compliance status for each tax type;
• detailed observations and risks identified;
• recommended adjustments and estimated tax/interest amounts;
• practical process improvements (such as invoice controls, documentation standards, training needs, or software enhancements).
We then meet with management to walk through the findings, answer questions, and discuss next steps. If required, we also support the company in preparing amended filings or settling additional tax to close out the issues proactively.
Internal vs. external review.
Some companies conduct internal checks, but many SMEs and FDI businesses prefer an external review from InCorp Vietnam for independent insight, updated regulatory expertise, and unbiased evaluation. Our team brings the perspective of experienced accountants and tax advisors who work daily with the latest Vietnamese tax laws.
Timelines and follow-up.
Most tax health checks take 1–3 weeks, depending on complexity. The real value comes from acting on the results—correcting filings, paying any differences voluntarily, and strengthening internal controls. Addressing issues early often reduces penalties and prevents larger adjustments during a future audit.
Benefits of Performing a Tax Health Check
The advantages of a comprehensive tax review go beyond avoiding fines. Summarizing, some key benefits include:
Penalty avoidance.
The most immediate benefit is catching compliance issues early—late filings, missing invoices, incorrect declarations—so the company avoids fines and interest.
Tax savings and optimization.
A tax health check often uncovers missed deductions, unused tax losses, or incentives that were not fully applied. With proper documentation, businesses can reduce taxable income and ensure all valid VAT credits are claimed.
Stronger processes and controls.
The review highlights where internal procedures have failed (such as incomplete documentation or weak invoice checks). Companies usually update their controls, checklists, and compliance plans as a result, improving long-term accuracy and reducing recurring errors.
Greater confidence and stronger reputation.
Management gains assurance that tax filings are accurate—useful during financing, M&A discussions, or board reviews. Having evidence of a recent tax health check also reflects positively if tax authorities ask about compliance history.
Better audit readiness and support.
If an audit occurs, the findings from a tax health check help the company respond confidently. Advisors who conducted the review can support meetings, clarify issues, and help defend positions, ensuring continuity and minimizing disruptions.
Maintaining Compliance After the Health Check
A tax health check is not a one-time “fix-and-forget” exercise. After addressing the report’s findings, businesses should integrate the lessons learned:
Regular internal reviews.
Perform quarterly or semi-annual mini-checks on high-risk areas—such as VAT invoices, major expenses, and payroll—to catch issues before they accumulate.
Updated policies and training.
Revise SOPs based on the health check results. If invoice errors were common, require a second-level review before issuing sales invoices. Provide refresher training as VAT, CIT, and PIT rules change.
Better technology and tools.
Adopt accounting software, e-invoicing solutions, and automated reconciliation tools. Using Vietnam’s e-tax platforms and integrating ERP systems reduce manual mistakes and improve accuracy.
Stronger documentation practices.
Keep tax files well-organized—contracts, invoices, bank statements, and audit reports should be easy to retrieve. Many findings in a tax health check relate to weak recordkeeping, so closing these gaps is essential.
Consulting experts when business changes.
Significant shifts—new business lines, cross-border activities, reorganizations, or new tax laws—may require another tax health check. Many companies schedule a review before major transactions or regulatory changes to stay fully compliant.
Why choose InCorp Vietnam for your tax health check
We conduct a full-service tax health check, reviewing all VAT, CIT, PIT, FCT filings, invoices, accounting records, payroll data, and financial statements to detect risks like missing invoices, under-declared income, or non-deductible expenses.
We deliver a clear, actionable report with recommendations — from corrected filings and required tax payments to improvements in internal controls and accounting processes — to help you avoid penalties, optimize deductions, and ensure compliance with Vietnamese tax laws.
After the review, we remain available to support your company with updated policies, regular filings, and strategic advice on tax-saving opportunities as laws evolve, removing the burden of complex procedures from your team.
By partnering with us, you free your internal team to focus on growth, while we handle tax compliance, minimize audit risk, and safeguard your business against regulatory exposure.
