How to handle the case where the tax evasion is suspected during the tax audit in Vietnam?

How to handle the case where the tax evasion is suspected during the tax audit in Vietnam?

Based on the provisions of Article 108 of the Law on Tax Administration 2019 as follows:

Handling tax audit and inspection results

1. Based on the results of tax audits and inspections, the head of the tax administration authority shall decide on tax handling, recover unlawfully refunded tax amounts, impose administrative penalties on tax administration according to their authority, or recommend a person with competent authority to impose administrative penalties on tax administration. In cases where an administrative violation is clearly identified in the tax inspection and audit report, said report can be considered as the record of an administrative violation.

2. In cases where tax audits and inspections reveal tax evasion with criminal indications, the tax administration authority shall transfer the dossier to a competent investigation agency for investigation following the provisions of the law; the tax administration authority is responsible for cooperating with judicial bodies during the investigation, prosecution, and trial in accordance with legal regulations.

Thus, if tax evasion with criminal indications is detected during a tax audit, the tax administration authority must transfer the dossier to a competent investigation agency for due process under the law.

Note: The tax administration authority is required to cooperate with judicial bodies during the investigation, prosecution, and trial according to legal regulations.

How to handle the case where the tax evasion is suspected during the tax audit in Vietnam? (Image from Internet)

What is the time limits for imposition of penalties for tax evasion in Vietnam?

According to Article 137 of the Law on Tax Administration 2019, the time limits for imposition of penalties for tax administrative offences violations are stipulated as follows:

Time limits for imposition of penalties for tax administrative offences

1. For violations of tax procedures, the time limit for penalties is two years from the date of the violation.

2. For tax evasion acts not amounting to criminal responsibility, wrong declarations leading to a deficit in the payable tax amount or increase in exempted, reduced, refunded, or non-collected tax amounts, the time limit for penalties is five years from the date of the violation.

3. After the Time limits for imposition of penalties for tax administrative offences, the taxpayer shall not receive penalties but must still pay the full amount of tax deficit, evaded tax amount, incorrectly exempted, reduced or refunded tax amounts, and late payment interest to the state budget within 10 years from the date of violation identification. In cases where the taxpayer is not registered, they must pay the full deficit, evaded tax amount, and late payment interest for the entire period before the violation was detected.

Thus, for tax evasion not amounting to criminal liability, wrong declarations leading to a deficit in the payable tax amount or increase in exempted, reduced, refunded, or non-collected tax amounts, the time limit for penalties is five years from the date the violation is committed.

What are the administrative penalties for tax evasion in Vietnam?

According to Article 17 of Decree 125/2020/ND-CP, the penalties for tax evasion are stipulated as follows:

(1) A fine equal to one time the amount of evaded tax for taxpayers with one or more mitigating circumstances when committing any of the following violations:

- Failure to file taxpayer registration documents; failing to file tax declaration dossiers or filing tax declarations after 90 days from the deadline for filing tax dossiers or the extended deadline, except for cases prescribed in points b, c, clause 4, and clause 5 of Article 13 of Decree 125/2020/ND-CP;

- Not recording in accounting books revenues for determining the payable tax amount, incorrect declarations, leading to a deficit in tax or increased refunded, exempted, or reduced tax, except for acts prescribed in Article 16 of Decree 125/2020/ND-CP;

- Not issuing invoices when providing goods or services, except in cases where the taxpayer declared tax on the sold or provided goods and services in the corresponding tax period; incorrect invoice figures leading to tax being lower than actually payable amounts discovered after the tax declaration period;

- Using illegal invoices; using illegal invoices to declare tax reducing the payable tax amount or increasing refunded, exempted, or reduced amounts;

- Using illegal documents; using illegal documents; using documents, records not reflecting true transaction nature or real transaction value to incorrectly determine the payable tax, exempted, or reduced amount, and refunded amounts; submitting incorrect material or goods disposal procedures reducing payable tax or increasing refundable, exempted amounts;

- Using goods subjected to non-taxation, tax exemption, and tax consideration not for prescribed purposes without declaring the change of use purposes, tax declarations to tax authorities;

- Taxpayers conducting business during the period of requesting suspension, temporary suspension of business activities without notifying tax authorities, except cases specified in point b clause 4 Article 10 of Decree 125/2020/ND-CP.

(2) A fine equal to 1.5 times the evaded tax amount for taxpayers committing any act specified in (1) without aggravating or mitigating circumstances.

(3) A fine equal to 2 times the evaded tax amount for taxpayers committing any act specified in (1) with one aggravating circumstance.

(4) A fine equal to 2.5 times the evaded tax amount for taxpayers committing any act specified in (1) with two aggravating circumstances.

(5) A fine equal to 3 times the evaded tax amount for taxpayers committing any act specified in (1) with three or more aggravating circumstances.

(6) Remedial measures:

- Enforce full payment of evaded tax into the state budget for violations stipulated in (1), (2), (3), (4), and (5) of this section.

If the tax evasion acts stipulated in (1), (2), (3), (4), and (5) have exceeded the penalty prescription period, the taxpayer shall not be fined for tax evasion acts but must pay the full evaded tax, late payment interest calculated on the evaded tax amount into the state budget within the prescribed time limit stated in clause 6 Article 8 Decree 125/2020/ND-CP.

- Enforce adjustments to the loss amount, deductible value-added tax input recorded on the tax dossier (if any) for acts specified in (1), (2), (3), (4), and (5) of this section.

(7) The violations prescribed in points b, d, e clause 1 Article 17 Decree 125/2020/ND-CP discovered after the deadline for filing tax declarations but not reducing the payable tax amount or has not been refunded, not increasing the exempted, reduced tax amounts, shall be subject to administrative penalties prescribed in clause 3 Article 12 Decree 125/2020/ND-CP.

Note: The above-mentioned penalties for tax evasion apply to individual taxpayers according to clause 4 Article 7 Decree 125/2020/ND-CP.

Additionally, based on clause 5 Article 5 Decree 125/2020/ND-CP, it is stipulated as follows:

Principles for imposing administrative fines on tax and invoice violations

...

5. For the same administrative violation involving tax and invoices, the fine for organizations is twice the fine for individuals, except for fines related to acts prescribed in Article 16, Article 17, and Article 18 of this Decree.

Therefore, for tax evasion, the administrative fines applied to individuals and organizations for the same violation are equivalent.