Does failure to comply with a decision on tax audit result in tax liability imposition in Vietnam?

Does failure to comply with a decision on tax audit result in tax liability imposition in Vietnam?

According to Article 14 of Decree 126/2020/ND-CP, the tax authority shall impose the amount of tax payable by taxpayers in the following circumstances:

[1] Not registering as a taxpayer as stipulated in Article 33 of the Law on Tax Administration 2019.

[2] Failing to file tax returns or filing tax returns incompletely, dishonestly, or inaccurately as stipulated in Article 42 of the Law on Tax Administration 2019.

[3] Not supplementing tax dossiers as requested by the tax authority or have supplemented tax dossiers but incompletely, dishonestly, or inaccurately the tax calculation bases to determine the tax payable.

[4] Not reflecting or reflecting incompletely, dishonestly, or inaccurately data in accounting books to determine tax obligations.

[5] Failing to present accounting books, invoices, documents, and necessary materials related to determining tax calculation bases or the tax payable within the specified period or upon the expiration of the tax inspection, tax audit at the taxpayer's office.

[6] Not complying with the decision on tax audit within 10 working days from the date of signing the decision, except in cases where the inspection time is delayed as prescribed.

[7] Not complying with the tax audit decision within 15 days from the date of signing the decision, except in cases where the audit time is delayed as prescribed.

[8] Purchasing, selling, exchanging, and recording the value of goods, services not according to the usual market transaction value.

[9] Purchasing, exchanging goods, services using illegal invoices, using invoices illegally where the goods, services are actual as determined by the investigating, inspecting, auditing agency and have been declared for tax calculation revenue and costs.

[10] Showing signs of fleeing or spreading assets to evade tax obligations.

[11] Conducting transactions not in line with economic essence, not truly occurring to reduce taxpayer’s tax obligations.

[12] Not complying with the regulations on the obligation to declare, determine related party transaction pricing or not providing information as stipulated on tax management for enterprises with related party transactions.

Thus, under the above regulations, the case of not complying with the decision on tax audit will lead to tax liability imposition by the tax authority.

Does failure to comply with a decision on tax audit result in tax liability imposition in Vietnam? (Image from Internet)

What are the grounds for tax liability imposition on organizational taxpayers in Vietnam?

Based on Article 15 of Decree 126/2020/ND-CP regarding grounds for tax liability imposition as follows:

Grounds for tax liability imposition

1. Taxpayers are imposeed on each factor related to determining the amount of tax payable.

a)** Organizations, individuals are imposeed on each factor related to determining the amount of tax payable if they fall under one of the following cases:***

a.1) Through checking tax declaration dossiers, the tax authority has grounds to believe that the taxpayer has not sufficiently or accurately declared factors as the basis for determining the amount of tax payable, has requested the taxpayer to declare additionally but the taxpayer does not declare additionally or declares inaccurately, dishonestly as requested by the tax authority.

a.2) Through checking accounting books, invoices, documents related to determining the amount of tax payable by the taxpayer or through checking, reconciling, verifying accounting books, invoices, documents of related organizations, individuals, the tax authority has grounds to prove that the taxpayer has accounted for inaccurately, dishonestly the factors related to determining the amount of tax payable.

a.3) Recording sales prices of goods, services not in accordance with the actual payment price reduces the taxable revenue or recording purchase prices of goods, materials used for production, business not in accordance with the actual payment price suitable with the market increases costs, increases deductible value-added tax, reduces tax obligations payable.

a.4) Taxpayers file tax declaration dossiers but cannot determine factors as the basis for determining the tax calculation base or can determine factors as the basis for determining the tax calculation base but cannot self-determine the amount of tax payable.

a.5) Falling into one of the cases stipulated in clauses 10, 11, 12 of Article 14 of this Decree.

b) The grounds for tax liability imposition

b.1) For organizational taxpayers

The basis is the database of the tax management agency and commercial databases; materials and inspection, audit results still in force; verification results; the average minimum tax amount payable of 03 business establishments with the same goods, sectors, sizes in the locality; if the locality does not have or does not have enough information about goods, sectors, sizes of business establishments, then take information of business establishments in another locality to perform imposition on each factor.

b.2) For individuals transferring, receiving inheritance, gifts being real estate

The tax authority shall determine the tax calculation price in case it is determined that individuals declare and pay taxes with a tax calculation price lower than the normal transaction price on the market. The tax calculation price determined by the tax authority must be suitable with the normal transaction price on the market but not lower than the price prescribed by the People's Committee of the province, city at the time of determining the tax calculation price.

c) Based on each imposeed factor, the tax authority determines the amount of tax payable in accordance with the current tax law.

2. Taxpayers are imposeed the amount of tax payable on the basis of the revenue ratio according to the law, as follows:

a) Organizations paying value-added tax by the direct method, individual entrepreneurs paying tax by the declaration method are imposeed the amount of tax payable on the basis of the revenue ratio if they fall under one of the cases stipulated in clauses 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 and 11 of Article 14 of this Decree.

b) The grounds for tax liability imposition

Based on the database of the tax management agency and commercial databases; materials and the inspection, audit results still in force; verification results; the minimum revenue of 03 business establishments with the same goods, sectors, sizes in the locality; if the locality does not have or does not have enough information about goods, sectors, sizes of business establishments, then take information of business establishments in another locality with similar natural and economic development conditions to perform the determination of tax calculation revenue.

c) Based on the imposeed revenue, the tax authority determines the amount of tax payable in accordance with the current tax law.

Thus, the grounds for tax liability imposition for organizational taxpayers are:

[1] The database of the tax management authority and commercial database; effective inspection, audit documents and results; verification results; the minimum average tax payable of 03 business establishments with the same items, industries, sizes in the locality.

[2] In case the locality does not have or has insufficient information about items, industries, sizes of business establishments, information of business establishments from other localities is used to perform the imposition for each factor.

Does the Head of the Taxation Department in Vietnam have the authority to impose tax?

According to Article 16 of Decree 126/2020/ND-CP regarding authority, procedures, tax liability imposition decisions as follows:

Authority, Procedures, tax liability imposition Decisions

1. Authority to impose tax

The Director-General of the General Department of Taxation; the Director of the Taxation Bureau; the Head of the Taxation Department has the authority to impose tax.

2. Procedures for tax liability imposition

a) When imposeing tax, the tax authority shall notify the taxpayer in writing regarding the tax liability imposition and issue a tax liability imposition decision. The tax liability imposition decision must specify the reason for tax liability imposition, the basis for tax liability imposition, the imposeed amount of tax, and the tax payment deadline.

b) In cases where the tax authority performs tax liability imposition through tax inspection, tax audit, the reasons for tax liability imposition, the basis for tax liability imposition, the imposeed amount of tax, and the tax payment deadline must be recorded in the tax inspection minutes, tax audit minutes, and the tax authority’s tax handling decision.

c) In cases where the taxpayer is imposeed for tax under the regulations, the tax authority shall impose administrative penalties and calculate late payment interest as per the law.

3. tax liability imposition decision

a) When imposeing tax, the tax authority must issue a tax liability imposition decision according to Form 01/ADT in Appendix III promulgated with this Decree, and send it to the taxpayer within 03 working days from the date of signing the tax liability imposition decision;

In cases where the taxpayer falls under the tax payment category as notified by the tax authority, the tax authority is not required to issue a tax liability imposition decision according to the provisions in this clause.

b) The taxpayer must pay the imposeed tax amount according to the tax handling decision of the tax management authority. If the taxpayer does not agree with the tax imposeed by the tax authority, they must still pay the imposeed tax while having the right to request an explanation from the tax authority or to appeal, litigate about the tax liability imposition.

Based on the above regulation, the authority to impose tax belongs to the Director-General of the General Department of Taxation; the Director of the Taxation Bureau; the Head of the Taxation Department.

Thus, the Head of the Taxation Department has the full authority to impose tax.