Why Accounting Errors Are Costly in Vietnam
Vietnam's tax administration system has become increasingly automated and data-driven. The General Department of Taxation (GDT) cross-references e-invoice data, bank transactions, and tax declarations in real time. Errors that went unnoticed a few years ago are now flagged automatically, resulting in penalties under Decree 125/2020/ND-CP on administrative penalties for tax violations.
Understanding the most common mistakes helps businesses stay compliant and avoid unnecessary costs.
Mistake 1: Invalid or Incorrectly Issued Invoices
The problem: Invoices missing mandatory fields — such as the buyer's tax code, incorrect unit prices, or wrong VAT rate — are invalid for input VAT deduction under Circular 78/2021/TT-BTC and Decree 123/2020/ND-CP.
How to fix it:
- Train staff on mandatory e-invoice fields before issuing
- Use accounting software with built-in validation
- For already-issued incorrect invoices, issue a cancellation notice and replacement invoice within the same tax period where possible
- For cross-period corrections, use an adjustment invoice (hóa đơn điều chỉnh)
Mistake 2: Missing Non-Cash Payment Evidence for Deductible Expenses
The problem: Under Article 9 of the Law on Corporate Income Tax, expenses of VND 20 million or more paid in cash are not deductible for CIT purposes, even with a valid invoice.
How to fix it:
- Establish a company policy requiring bank transfers for all supplier payments of VND 20 million or above
- Reconcile payment records against invoices monthly
- Where cash payments were made in error, these must be added back to taxable income in the CIT finalization
Mistake 3: Incorrect Fixed Asset Depreciation
The problem: Many businesses apply wrong depreciation periods or methods, or fail to register fixed assets with the tax authority, leading to disallowed depreciation deductions. Circular 45/2013/TT-BTC specifies minimum and maximum useful life ranges by asset category.
How to fix it:
- Cross-check each asset category against the depreciation schedule in Circular 45
- Depreciation begins from the month the asset is put into use, not the month of purchase
- Ensure fixed asset handover records (biên bản bàn giao) are signed before depreciating
- Re-assess the fixed asset register annually during the CIT finalization process
Mistake 4: Incorrect Employee Income Classification
The problem: Businesses often misclassify taxable personal income, omitting allowances that are subject to Personal Income Tax (PIT) or failing to correctly exempt items allowed under Circular 111/2013/TT-BTC. Common errors include treating meal allowances above VND 730,000/month as non-taxable, or failing to withhold PIT on third-party service payments to individuals.
How to fix it:
- Review all salary components against the PIT exemption list in Circular 111
- Note that the VND 730,000/month meal allowance cap is set by the Ministry of Finance — amounts above this are taxable income
- Register dependents correctly and maintain updated dependent deduction forms (Mẫu 02/ĐK-NPT-TNCN)
Mistake 5: Late or Incorrect VAT Declaration
The problem: Filing VAT declarations after the deadline or with incorrect figures results in penalties ranging from VND 2 million to VND 25 million under Decree 125/2020/ND-CP, plus late payment interest of 0.03% per day on any unpaid tax.
How to fix it:
- Set calendar reminders: the 20th of the following month for monthly filers, the last day of the first month of the following quarter for quarterly filers
- Use accounting software that auto-populates declaration forms from e-invoice data
- If an error is discovered after submission, file an amended declaration (tờ khai bổ sung) promptly — voluntary amendment before a tax audit significantly reduces penalties
Prevention Is Better Than Correction
The most effective strategy is a monthly internal review covering:
- Invoice validity check
- Payment method verification for expenses ≥ VND 20 million
- Payroll and PIT withholding reconciliation
- VAT declaration cross-check against e-invoice system data
H&T Bay offers monthly accounting health checks and compliance reviews to keep your business penalty-free.