Preventing e-invoice fraud amid e-commerce boom

	Investigate a company showing signs of illegally invoice trading
	Tax authority handles 9.6 billion of e-invoices
	Tax authorities and Police join forces to crack down on e-invoice fraud

Operations at the Phu Nhuan District Tax Department, Ho Chi Minh City. Photo: T.D

Strongly handling violations

Recently, many cases of electronic invoice fraud have been strongly handled by the authorities.

At the recent Southern Business Dialogue Conference, Mr. Mai Son, Deputy Director General of the General Department of Taxation, said that tax authorities at all levels have strengthened the work of preventing invoice fraud, especially coordinating with the police to clarify and handle invoice trading cases.

Mr. Mai Son cited that at the end of 2023, through the investigation of the police, the People's Court of Phu Tho province held a first-instance trial of the case of illegal invoice trading that occurred in Phu Tho province and many other provinces and cities across the country with more than 100 defendants.

This case has up to 637 enterprises, illegally issuing 1,025,712 VAT invoices to 88,053 enterprises with a turnover of more than VND64,000 billion; deducted VND 3,115 billion in taxes.

According to the General Department of Taxation, recently, tax-related crimes have tended to increase, with the increasing invoice trading, causing difficulties for authorities.

Subjects have taken advantage of the development of social networks to set up many associations, groups, and accounts on social networking platforms with the aim of selling value-added invoices of "bogus" enterprises with many different types of goods to make illegal profits.

Mr. Nguyen Tien Dung, Deputy Director of the Ho Chi Minh City Tax Department, said that the main reason for the above situation is that the current procedures for establishing a business are quite simple.

Many individuals and organizations have taken advantage of the open policy to establish "bogus" enterprises, using and illegally buying and selling invoices.

There are even cases where individuals suddenly discover that they are the founders of enterprises because their personal information has been stolen from their identity cards or citizen identification cards.

Since the beginning of 2024, the Ho Chi Minh City Tax Department has strengthened the work of reviewing, comparing data and inspecting businesses at risk to prevent electronic invoice fraud.

As a result, the unit has handled 1,510 illegal invoices of 219 enterprises, with a total of VND15.5 billion in tax arrears and fines. Of which, there were 984 cases of illegal invoice use/illegal use of invoices were detected and handled, with 9.5 billion VND in additional tax and fines.

During this time, the Ho Chi Minh City Tax Department transferred 6 cases to the police to investigate (5 cases for criminal prosecution and 1 case in the form of a report).

In particular, in cases where taxpayers used invoices of 524 fraudulent enterprises (according to Official Dispatch No. 1798/TCT-TTKT of the General Department of Taxation), the Ho Chi Minh City Tax Department also handled 154,853 illegal invoices with the total amount of tax arrears and fines reaching nearly VND963 billion.

Invoice risk warning

According to the Ho Chi Minh City Tax Department, the number of taxpayers in the area is increasing, invoice fraud is becoming more and more sophisticated and complicated, while the Tax authority does not have the authority to investigate and accurately conclude the violations of those who buy and sell VAT invoices to profit and cheat on taxes.

Therefore, the Ho Chi Minh City Tax Department has recommended that the General Department of Taxation promote the upgrading of information technology applications, perfect the invoice risk management process, prioritizing the review of high-risk subjects to improve the effectiveness and efficiency of tax management, and eliminate fraudulent acts regarding electronic invoices.

In addition, the Ho Chi Minh City Tax Department has also deployed the automatic warning function of issuing invoices exceeding the risk threshold to support taxpayers as well as serve data exploitation in tax inspection and examination.

According to statistics from the Ho Chi Minh City Tax Department, as of early October 2024, the whole area had about 11,684 taxpayers with a K coefficient exceeding the threshold, with 959,876 warnings. Of which, the Tax Department has transferred 97 cases to the Police Investigation Agency; issued 53 notices of risky enterprises, stopped using invoices or forced to stop using invoices and listed some cases in the tax inspection and examination plan, issued decisions to collect tax arrears.

In addition, the Ho Chi Minh City Tax Department has deployed the application "Management of warning information by taxpayer" to update risk warning documents from Tax authorities of other localities as well as from Tax agencies in Ho Chi Minh City. To date, more than 13,006 risk warning documents have been integrated into the application to support the collection and analysis of risky enterprise data during tax inspection and examination.

However, the number of enterprises and electronic invoices that need to be reviewed and compared is very large, leading to a backlog of work.

In addition, many enterprises register to do business in multiple industries but only apply the K coefficient to the main industry, especially enterprises that both do business and provide services, making the K coefficient warning not really accurate.

In this situation, Ho Chi Minh City Tax Department has proposed that the General Department of Taxation build risk warning functions that are more suitable for the actual operations of taxpayers, such as adjusting the K coefficient to suit many types of businesses and target groups, through big data analysis.

The application also needs to accurately identify the items on the sales invoice as goods or services to provide more accurate warnings. The proposal includes using data from customs declarations to determine the K coefficient more accurately...