Applying coefficient K: Preventing tax loss, improving competitiveness

(GLO)- Applying the K coefficient along with support solutions from tax authorities will help businesses avoid risks and violations, increase reputation and enhance competitiveness. This is also one of the solutions to improve management efficiency, tax collection and prevent tax losses.

Many business households and enterprises came to the tax office to provide additional information about their business operations. Photo: T.Sy

The K coefficient is a risk warning index used by tax authorities in electronic invoice management. The K coefficient is calculated based on the formula: The K coefficient is equal to the total value of goods sold/total value of inventory, plus the total value of purchased goods. The risk warning threshold for the manufacturing industry and sector is K greater than 4 times, meaning the value of goods sold is 4 times greater than the value of goods purchased plus the value of goods in inventory. The risk warning threshold for the commercial sector is K greater than 2 times. Based on the calculation and risk warning threshold mentioned above, the tax authority determines the correlation ratio between the total value of goods sold and the total value of inventory along with the purchased goods of business households and enterprises.

“Every day, when sellers or service providers send invoices to the tax sector's electronic invoice system, the system automatically analyzes and evaluates, immediately detecting abnormal K coefficients (too high or too low). This is a sign of issuing fake invoices or declaring incomplete information, which poses many risks. At the same time, the system sends warnings to both tax authorities and buyers, service and goods providers,” said Mr. Nguyen Duong Han, Deputy Head of Department of Management and Support for Enterprises No. 1 (Provincial Tax).

On that basis, the tax authority checks the validity of the invoice, compares it with the business line of the enterprise, determines the validity of the quantity of goods in stock at the facility and requests an explanation from the enterprise. If the enterprise cannot explain, the tax authority will conduct an actual inspection at the business facility to verify the status of the goods in stock and compare it with the information on the invoice, to determine whether the enterprise has issued invoices in accordance with regulations or not, or has issued fake invoices or not. In case the enterprise is found to have issued fake or fraudulent invoices, the tax authority can use the measure of temporarily suspending the use of electronic invoices of the relevant enterprise to prevent further violations.

In the first 7 months of 2025, there were 2,781 cases of invoices for the sale of goods and provision of services and goods that were warned of coefficient K in the province, of which 2,525 cases were handled by the tax authority. At the request of the provincial tax authority, the above cases promptly explained the reasons for being warned of coefficient K and provided additional relevant information to the tax sector's electronic invoice system. After the enterprise supplemented the information, the tax sector's electronic invoice system no longer warned of risks.

Mr. Vu Hong Quan, Chairman of Binh Dinh Young Entrepreneurs Association, said: In the context of many entities establishing "ghost" enterprises for the purpose of illegally buying and selling invoices for profit, the application of coefficient K by tax authorities will help enterprises avoid risks, create a healthy investment and business environment, and ensure the rights of enterprises that comply with the law. Moreover, coefficient K is also a useful tool to help enterprises self-control risks, contributing to improving reputation and competitiveness.

Tax authorities review electronic invoices on the tax sector's electronic invoice system. Photo: T.Sy

Some other enterprises also believe that violations of invoices not only cause financial losses but also affect the reputation of the enterprise. Therefore, enterprises themselves must comply with the law in the field of tax, including proactively applying the K coefficient, considering this an important solution to minimize risks and build the image and reputation of the enterprise.

On the tax authority side, Mr. Le Minh Nhut, Head of Gia Lai Province Tax, said: Applying coefficient K is one of the solutions contributing to modernizing the tax sector, improving management efficiency and preventing tax losses. Therefore, the provincial tax authority will continue to maintain coefficient K and strengthen measures to support businesses, helping them avoid unnecessary risks and violations, improve the efficiency of investment in production and business, increase revenue, and voluntarily fulfill tax obligations.

Source: https://baogialai.com.vn/ap-dung-he-so-k-chong-that-thu-thue-nang-cao-nang-luc-canh-tranh-post567280.html