Is carrying on business operation during the suspension period considered tax evasion in Vietnam?

Is carrying on business operation during the suspension period without informing the tax authority an act of tax evasion in Vietnam?

Pursuant to Clause 10, Article 143 of the Law on Tax Administration 2019, regulations on acts of tax evasion are stipulated as follows:

Acts of Tax Evasion

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10. The taxpayer conducts business activities during the period of suspension or suspension of business activities but does not notify the tax authority.

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From the above regulation, it can be inferred that if a taxpayer operates a business during the period of suspension of business without notifying the tax authority, it is considered an act of tax evasion.

Is carrying on business operation during the suspension period considered tax evasion in Vietnam? (Image from the Internet)

What is the basis for determining the business suspension time of a taxpayer in Vietnam?

According to the provisions of Clause 1, Article 4 of Decree 126/2020/ND-CP, the basis for determining the business suspension time of a taxpayer is as follows:

- For taxpayers who register their taxpayer registration alongside business registration, cooperative registration, or business operation registration as prescribed in Clause 1, Article 37 of the Law on Tax Administration 2019, it is the period of temporary business suspension of the enterprise or cooperative recorded by the business registration authority or cooperative registration authority in the National Business Registration Information System.

+ The business registration authority and cooperative registration authority must electronically transmit business suspension registration information of the enterprise or cooperative to the tax authority within one working day, or at the latest, the next working day after the business registration authority or cooperative registration authority records it in the National Business Registration Information System.

- For taxpayers approved, notified, or instructed by the competent State authority to temporarily suspend operations or business activities as prescribed in Clause 1, Article 37 of the Law on Tax Administration 2019, it is the period recorded in the document issued by the competent State authority.

+ The competent State authority shall send the document to the directly managing tax authority of the taxpayer within three working days from the date of issuance of the document.

- For taxpayers who are organizations, business households, or individual businesses not required to register business operations according to Clause 2, Article 37 of the Law on Tax Administration 2019, they must notify the managing tax authority of the suspension at least one working day before they intend to suspend operations or business.

+ The tax authority shall issue a confirmation notice to the taxpayer regarding the registration of suspension of operations or business within two working days from the date of receipt of the taxpayer's notification.

+ The taxpayer is allowed to temporarily suspend operations or business for no more than one year per registration. If the taxpayer is an organization, the total period of suspension of operations or business shall not exceed two years for two consecutive registrations.

Is the taxpayer required to submit a tax declaration during business suspension time in Vietnam?

Pursuant to Point a, Clause 2, Article 4 of Decree 126/2020/ND-CP, the regulations are as follows:

Tax Administration for Taxpayers During Suspension of Operations or Business

Taxpayers notify about their suspension of operations or business in accordance with Article 37 of the Law on Tax Administration and the following provisions:

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2. During the period when the taxpayer temporarily suspends operations or business:

a) The taxpayer is not required to submit a tax declaration, except in cases where the taxpayer temporarily suspends operations or business not covering an entire calendar month, quarter, year, or fiscal year. In such cases, the taxpayer still has to submit monthly, quarterly tax declarations, and annual settlement reports.

b) Business households and individual businesses paying tax by the presumption method that temporarily suspends operations or business are reassessed by the tax authority for fixed tax obligations as per regulations by the Minister of Finance.

c) The taxpayer must not use invoices and is not required to submit reports on the use of invoices. In cases where the taxpayer is permitted by the tax authority to use invoices following legal invoice regulations, they must submit tax declarations and reports on the use of invoices as required.

d) The taxpayer must comply with decisions and notifications by the tax authority regarding debt collection, coercive enforcement of administrative decisions on tax management, inspection, examination concerning tax law compliance, and handling administrative violations of tax management as stipulated by the Law on Tax Administration.

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According to the above regulations, during the period when a taxpayer temporarily suspends operations, they are not required to submit a tax declaration, except in cases where the suspension of operations or business is not for a full calendar month, quarter, year, or fiscal year. In such cases, the taxpayer still must submit monthly, quarterly tax declarations, and annual settlement reports.