The integration of AI in tax invoice monitoring has significantly improved the detection of fraudulent activities.

In 2024, tax authorities identified 79,000 businesses requiring invoice inspections, discovered over 4,400 inactive companies, and investigated 501 firms, resulting in the recovery of more than $191 million (4.7 trillion VND) in unpaid taxes.

At the online seminar “Key considerations in tax finalization for corporate income tax, value-added tax, and personal income tax” on February 11, Le Thi Thuy, CEO of Bach Khoa Consulting Services Co., Ltd., shared insights into AI applications in electronic invoice monitoring and tax data analysis.

Through AI-driven monitoring, authorities detected cases where businesses sold identical products at highly inconsistent prices.

Companies unable to provide proper documentation or justifications for such discrepancies were flagged as high-risk for tax fraud. Any business using invoices issued by these flagged entities also became subject to scrutiny.

“With AI capabilities, tax authorities can analyze invoices at deeper levels, tracking transactions through multiple layers. Thanks to this technology, 79,000 businesses have been flagged for review, more than 4,400 companies were found inactive at their registered addresses, and over 501 firms were investigated, leading to tax recoveries exceeding $191 million in 2024,” Thuy reported.

AI-enhanced tax audits improve enforcement

According to current regulations, a valid tax invoice must comply with legal standards regarding format and content. Each invoice must include essential details such as company name, address, tax identification number, product descriptions, unit prices, and quantities.

However, in practice, many invoices that were initially deemed valid at the time of transaction have later been disqualified from tax deduction eligibility.

Discussing this issue, Thuy explained, “Many businesses engage in real transactions but fail to sign contracts and invoices directly with the actual buyers. Instead, they formalize their documents through intermediaries to legitimize their records.

Years later, if these intermediaries are investigated for illegal invoice trading or are no longer in business, the purchasing company finds itself with invalid invoices. This makes them ineligible for VAT deductions, leading to serious financial consequences.”

Key conditions for VAT deductions

As per Article 15 of Circular 210 (2013), amended by Circular 26 (2015) and Circular 173 (2016), two primary conditions must be met for a company to claim VAT deductions on input costs:

A valid VAT invoice for purchased goods and services or tax payment documents for imported goods, including cases where tax is paid on behalf of foreign entities operating in Vietnam.

Non-cash payment documentation for transactions exceeding $800 (20 million VND), including both domestic purchases and imports.

Binh Minh