Does the Head of the Tax Sub-Department in Vietnam have the authority to impose taxes?

Does the Head of the Tax Sub-Department in Vietnam have the authority to impose taxes?

Pursuant to Article 16 of Decree 126/2020/ND-CP on the authority, procedures, and tax determination decisions as follows:

Authority, procedures, and decisions for tax determination

1. Authority to impose taxes

The Director General of the General Department of Taxation; the Director of the Tax Department; the Head of the Tax Sub-Department have authority to impose taxes.

2. Procedures for tax determination

a) When imposing taxes, the tax authority shall notify the taxpayer in writing about the tax determination and issue a tax determination decision. The tax determination decision must state clearly the reasons for tax determination, the basis for tax determination, the determined tax amount, and the deadline for tax payment.

b) In cases where the tax authority conducts tax determination through tax inspection or audit, the reasons for tax determination, the basis for tax determination, the determined tax amount, and the deadline for tax payment must be recorded in the tax inspection report, tax audit report, and tax handling decision of the tax authority.

c) In cases where taxpayers are subjected to tax determination as prescribed, the tax authority shall impose administrative penalties and calculate late payment interest according to the law.

3. Tax determination decision

a) When imposing taxes, the tax authority must issue a tax determination decision according to Form No. 01/ADT in Appendix III issued together with this Decree, and send it to the taxpayer within 3 working days from the date of signing the tax determination decision;

In cases where the taxpayer is subject to tax payment according to the tax authority's notice, the tax authority is not required to issue a tax determination decision as prescribed in this clause.

b) The taxpayer must pay the determined tax amount according to the tax handling decision of the tax management authority. If the taxpayer does not agree with the tax determined by the tax authority, the taxpayer must still pay the tax while having the right to request the tax authority to explain or to file a complaint, or initiate a lawsuit regarding the tax determination.

Thus, it can be seen that the Head of the Tax Sub-Department fully has the authority to determine taxes.

Does the Head of the Tax Sub-Department in Vietnam have the authority to impose taxes? (Image from the Internet)

Does the incomplete reflection of data on accounting books lead to tax determination by the tax authority in Vietnam?

Based on Article 14 of Decree 126/2020/ND-CP, taxpayers are subjected to tax determination in the following cases:

Cases of tax determination

Taxpayers are subjected to tax determination by the tax authority in the following cases:

1. No taxpayer registration as prescribed in Article 33 of the Law on Tax Administration.

2. Failure to declare tax or incomplete, untruthful, inaccurate tax declaration as prescribed in Article 42 of the Law on Tax Administration.

3. Failure to submit additional tax declarations as requested by the tax management authority or having submitted additional tax declarations but not fully, truthfully, accurately the bases for tax calculation to determine the tax payable.

4. Non-reflection or incomplete, untruthful, inaccurate reflection of data on accounting books to determine tax obligations.

5. Failure to present accounting books, invoices, vouchers, and necessary documents related to the determination of determining factors for tax calculation; determining the tax payable within the prescribed time limit or after the expiration of the tax inspection, tax audit period at the taxpayer's office.

6. Failure to comply with the tax inspection decision within 10 working days from the date of signing the decision, except in cases where the inspection time is postponed according to regulations.

7. Failure to comply with the tax audit decision within 15 days from the date of signing the decision, except in cases where the audit time is postponed according to regulations.

8. Buying, selling, exchanging, and accounting the value of goods, services not according to the usual market transaction value.

9. Purchasing, exchanging goods, services using illegal invoices, or using illegal invoices where the goods, services are real according to the determination of the investigative, audit, and inspection bodies and have been declared for revenue, expenses for tax calculation.

10. Having signs of fleeing or dispersing assets to avoid tax obligations.

11. Conducting transactions that are not consistent with the economic substance, not consistent with actual occurrences to reduce the taxpayer's tax obligations.

12. Non-compliance with the obligation to declare, determine the price of related party transactions, or failure to provide information according to the tax management regulations for businesses having related party transactions.

Thus, it can be seen that the case of incomplete reflection of data on accounting books will be subjected to tax determination by the tax authority.

What are the bases for tax determination in Vietnam?

According to Article 15 of Decree 126/2020/ND-CP on the bases for tax determination as follows:

Bases for tax determination

1. Taxpayer subjected to determination of each factor related to the determination of tax payable

a) Organizations and individuals subjected to determination of each factor related to the determination of tax payable when belonging to one of the following cases:

a.1) Through reviewing tax declaration dossiers, the tax authority finds evidence that the taxpayer has not fully or accurately declared the bases for determining the tax payable, has requested supplementary declarations, but the taxpayer fails to supplement or supplements not accurately, untruthfully as requested by the tax authority.

a.2) Through inspecting accounting books, invoices, vouchers related to the determination of tax payable by the taxpayer or through verification, comparison, and verification of accounting books, invoices, vouchers of related organizations, individuals, the tax authority has grounds to prove that the taxpayer accounted incorrectly, untruthfully the factors related to the determination of tax payable.

a.3) Accounting the selling price of goods, services not in accordance with the actual payment price, reducing the revenue for tax calculation or accounting the purchase price of goods, raw materials for production, business not following the actual payment price in line with the market, increasing expenses, increasing deductible VAT, reducing tax obligations.

a.4) Taxpayers submit tax declaration dossiers but cannot determine the bases for tax calculation, or even if the bases are determined, they cannot self-calculate the tax payable.

a.5) Belonging to one of the cases stipulated in Clause 10, 11, 12 of Article 14 of this Decree.

b) Bases for tax determination

b.1) For taxpayers being organizations

Based on the database of the tax management authority and commercial databases; documents and effective inspection, audit results; verification results; the minimum average tax payable of 03 business establishments of the same product, industry, scale at the locality; in cases where there is no or insufficient information on products, industry, scale of business establishments at the locality, information from business establishments at other localities is taken to perform determination according to each factor.

b.2) For individuals transferring, accepting inheritance, gifts as real estate

The tax authority shall determine the assessed tax price in case it is identified that the individual declares and pays tax at a price lower than the usual transaction price in the market. The assessed tax price determined by the tax authority must ensure compatibility with the usual market transaction price but not lower than the price specified by the People's Committee of the province or city at the time the tax price is assessed.

c) Based on each determined factor, the tax authority determines the tax payable according to the current tax laws.

2. Taxpayer subjected to determination of tax payable as a percentage on revenue according to the law, as follows:

a) Organizations paying VAT by the direct method, business individuals paying tax by the declaration method subjected to determination of tax payable as a percentage on revenue when belonging to one of the cases stipulated in Clause 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, and 11 of Article 14 of this Decree.

b) Bases for tax determination

Based on the database of the tax management authority and commercial databases; documents and effective inspection, audit results; verification results; the minimum revenue of 03 business establishments of the same product, industry, scale at the locality; in cases where there is no or insufficient information on products, industry, scale of business establishments at the locality, information from business establishments at other localities with the same natural conditions and economic development is taken to perform revenue determination according to each determined revenue.

c) Based on the determined revenue, the tax authority determines the tax payable according to the current tax laws.

Thus, the taxpayer is subjected to determination of each factor related to the determination of tax payable or the taxpayer is subjected to determination of tax payable as a percentage on revenue according to the law as prescribed above.