How long does it take for tax debts to be subject to enforcement measures in Vietnam?

Is owing tax considered tax evasion in Vietnam?

Based on Article 143 of the Law on Tax Administration 2019, 11 acts are considered tax evasion under the law as follows:

[1] Failing to submit the taxpayer registration documents; failing to submit tax return documents; submitting tax return documents more than 90 days from the due date of the tax return submission or from the extended due date of the tax return submission.

[2] Not recording in the accounting books the amounts related to determining the tax amount payable.

[3] Not issuing invoices when selling goods or services as per legal regulations, or recording the value on the sales invoice lower than the actual payment value of the sold goods or services.

[4] Using illegal invoices or documents, unlawfully using invoices to account for goods and input materials in tax-obligated activities, thereby reducing the payable tax amount or increasing the tax-exempt amount, reduced tax amount, deductible tax amount, refundable tax amount, or the tax not required to be paid.

[5] Using documents or records that do not reflect the true nature of the transaction or the actual transaction value to incorrectly determine the payable tax amount, tax-exempt amount, reduced tax amount, refundable tax amount, or tax not required to be paid.

[6] Incorrectly declaring actual export and import goods without submitting additional tax declaration documents after the goods have been cleared.

[7] Intentionally not declaring or misdeclaring taxes on export and import goods.

[8] Collaborating with the sender to import goods with the aim of tax evasion.

[9] Using goods subject to non-taxation, tax exemption, or tax examination in ways not according to the legal purposes without declaring the change of use purpose to the tax administration agency.

[10] The taxpayer conducting business activities during a period of business suspension or temporary cessation but does not notify the tax administration agency.

[11] Taxpayers not penalized for tax evasion may be penalized according to Clause 1, Article 141 of the Law on Tax Administration 2019 in the following cases:

+ Failing to submit taxpayer registration documents, failing to submit tax return documents, submitting tax return documents after 90 days but no tax amount arises;

+ Submitting tax return documents after 90 days with arising payable tax, and the taxpayer has fully paid the tax amount and late payment interest to the state budget before the tax authority announces the tax inspection or audit decision, or before the tax authority records the late tax return submission act.

Tax evasion can be understood as the intentional act of not declaring, incorrectly declaring, or not paying the payable tax amount, with the intent to evade tax obligations.

Thus, according to the above regulations, owing tax is not one of the 11 acts considered as tax evasion and therefore will not be classified as tax evasion under the regulations.

How long does it take for tax debts to be subject to enforcement measures in Vietnam? (Image from the Internet)

How long does it take for tax debts to be subject to enforcement measures in Vietnam?

According to the provisions at Article 2 of Circular 215/2013/TT-BTC, the cases subject to tax enforcement are as follows:

Cases subject to enforcement

1. For taxpayers

a) Taxpayers who owe tax, late tax payment interest past 90 (ninety) days from the tax payment due date,* the extended tax payment deadline as prescribed by the Law on Tax Administration and the competent state authority.*

b) Taxpayers who owe tax, fines, late tax payment interest, with acts of absconding or asset dissipation.

c) Taxpayers failing to comply with the decision on administrative sanctions for tax violations within 10 (ten) days from the receipt of the decision will be subject to enforcement of the administrative sanction decision. In cases where the tax violation administrative sanction decision has a compliance period longer than 10 (ten) days and the taxpayer fails to comply within the period specified in the decision, the administrative sanction decision will be enforced (except for cases of delay or suspension of tax violation administrative sanction enforcement).

2. Credit institutions failing to comply with the decision on administrative sanctions for tax violations as prescribed by the Law on Tax Administration and the Law on Handling Administrative Violations.

3. Organizations guaranteeing tax payment for taxpayers: if they fail to pay fully into the state budget within 90 (ninety) days from the tax payment deadline, fines, late tax payment interest according to the tax authority's approval document, the guarantor will be enforced according to the Law on Tax Administration and the Law on Handling Administrative Violations.

4. The State Treasury, provincial state treasury, district state treasury (hereinafter collectively referred to as the state treasury) failing to deduct money from the account of the enforced subject at the state treasury to pay into the state budget according to the tax authority's administrative sanction decision.

5. Related organizations and individuals failing to comply with administrative sanction decisions on tax violations from competent authorities.

Thus, according to the regulations, it can be simply understood that tax debt occurs when a taxpayer has not paid the tax and other amounts into the state budget after the legal deadline. When a taxpayer owes tax for over 90 days, enforcement measures will be applied.

What are the regulations on tax enforcement measures in Vietnam?

According to the provisions at Article 3 of Circular 215/2013/TT-BTC, which have been replaced by Clause 2, Article 2 of Circular 87/2018/TT-BTC, the regulations are as follows:

- Measures for enforcing tax administrative decisions (hereinafter collectively referred to as enforcement measures):

+ Deduct money from the account of the enforced subject at the state treasury, credit institution; require account freezing.

+ Deduct a part of wages or income.

+ Notify that the invoice is no longer valid for use.

+ Confiscate assets, auction seized assets in accordance with the law to collect tax debts, fines, late tax payment interest, and late penalty payments into the state budget.

+ Collect money and other assets of the enforced subject held by other organizations or individuals.

+ Withdraw the business registration certificate, enterprise registration certificate, establishment and operation license, practice license.

- The application of the above enforcement measures is carried out according to the provisions at Articles 11, 12, 13, 14, 15, and 16, Section 2 of Circular 215/2013/TT-BTC.

In cases where a decision to enforce the next measure has been issued but there is information or conditions to implement the previous enforcement measure, the issuer of the enforcement decision has the right to decide to terminate the ongoing enforcement measure and issue a decision to implement the previous enforcement measure to ensure full collection of tax, fines, and late tax payment interest.