Is failiing to apply for first-time taxpayer registration subject to tax liability imposition in Vietnam?

Is failiing to apply for first-time taxpayer registration subject to tax liability imposition in Vietnam?

Based on Article 14 of Decree 126/2020/ND-CP, the tax authority shall impose the payable tax amount on the taxpayers in the following cases:

[1] Failure to conduct taxpayer registration as stipulated in Article 33 of the Law on Tax Administration 2019.

[2] Failure to declare tax or incomplete, untruthful, and inaccurate tax declarations as prescribed in Article 42 of the Law on Tax Administration 2019.

[3] Failure to submit supplementary tax files as required by the tax administration or submission of supplementary tax files that are incomplete, untruthful, and inaccurate regarding the tax calculation grounds to determine the payable tax amount.

[4] Failure to reflect or insufficiently, untruthfully, and inaccurately reflect data in accounting books to determine tax obligations.

[5] Failure to present accounting books, invoices, and vouchers, and relevant documents necessary for determining tax calculation elements; failing to determine the payable tax amount within the stipulated timeframe, or when the tax inspection/audit period at the taxpayer's office has expired.

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

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

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

[9] Purchasing, exchanging goods, and services using illegal invoices; using illegal invoices while the goods and services actually exist as determined by the investigative authority and have been declared for revenue and tax calculation cost.

[10] Showing signs of absconding or dispersing assets to evade tax obligations.

[11] Conducting transactions contrary to actual economic essence, contrary to the actual arising to reduce taxpayer's tax obligations.

[12] Failing to comply with regulations on declaration obligations, determining linked transaction prices, or failing to provide information as stipulated for tax administration concerning enterprises with related transactions.

Referring to Article 33 of the Law on Tax Administration 2019, the timeline for initial taxpayer registration is regulated as follows:

Timeline for Initial Taxpayer Registration

1. Taxpayers conducting taxpayer registration together with enterprise registration, cooperative registration, or business registration shall follow the enterprise registration, cooperative registration, or business registration timeline as per the law.

2. Taxpayers registering directly with the tax authority must adhere to a 10-working day timeline from the following dates:

a) Issuance of the business household registration certificate, establishment and operation license, investment registration certificate, or the issuance of a formation decision;

b) Commencing business activities for organizations not subject to business registration or business households, individual businesses subject to business registration but not yet issued a business registration certificate;

c) Arising obligation to withhold tax and pay tax on behalf of others; organizations paying on behalf of individuals based on business cooperation contracts or agreements;

d) Signing a contractor contract for foreign contractors and sub-contractors who directly declare and pay taxes to the tax authority; signing oil and gas contracts and agreements;

dd) Arising personal income tax obligations;

e) Arising refund requirements;

g) Arising other fiscal obligations.

3. Organizations and individuals paying income are responsible for registering taxpayers on behalf of individuals having income obligations within 10 working days from the day the tax obligation arises in cases where the individual does not have a tax code; registering taxpayers on behalf of the dependents of the taxpayer within 10 working days from the day the taxpayer registers for family circumstance deduction as prescribed, if the dependents do not have a tax code.

Thus, in comparison with the above regulations, the case of initial taxpayer registration not within the prescribed timeframe will fall under the cases subject to tax liability imposition.

Is failiing to apply for first-time taxpayer registration subject to tax liability imposition in Vietnam? (Image from the Internet)

Will the taxpayer be notified in case of tax liability imposition in Vietnam?

Based on point a clause 2 Article 16 of Decree 126/2020/ND-CP, the regulation on authority, procedures, and decisions for tax liability imposition is as follows:

Authority, Procedures, and Decisions for tax liability imposition

1. Authority for tax liability imposition

The General Director of the General Department of Taxation; the Directors of the Departments of Taxation; the Heads of the Sub-Departments of Taxation have the authority to impose taxes.

2. Procedures for tax liability imposition

a) When imposing taxes, the tax authority shall issue a written notice to the taxpayer about the tax liability imposition and make a tax liability imposition decision. The tax liability imposition decision must state the reasons for the tax liability imposition, the grounds for tax liability imposition, the imposed tax amount, and the tax payment deadline.

b) In case the tax authority implements the tax liability imposition through a tax inspection or audit, the reasons for tax liability imposition, the grounds for tax liability imposition, the imposed tax amount, and the tax payment deadline must be stated in the tax inspection/audit report and the tax handling decision of the tax authority.

c) In case the taxpayer is subject to tax liability imposition as regulated, the tax authority shall impose administrative penalties and calculate late tax payment interest as prescribed by law.

3. Decision on tax liability imposition

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

In cases where the taxpayer belongs to a category that pays tax based on the tax notification from the tax authority, the tax authority does not need to issue a tax liability imposition decision according to this clause.

b) The taxpayer must pay the imposed tax amount as per the tax handling decision of the tax administration authority. If the taxpayer disagrees with the imposed tax amount, the taxpayer must still pay the tax amount and has the right to request the tax authority for an explanation or lodge a complaint or lawsuit concerning the tax liability imposition.

Thus, according to the regulations on tax liability imposition procedures, the tax authority will notify the taxpayer in writing about the tax liability imposition.

Simultaneously, the tax authority must issue a tax liability imposition decision.

What are bases for tax liability imposition on an organization in Vietnam?

According to point b clause 1 Article 15 of Decree 126/2020/ND-CP, the basis for tax liability imposition is regulated as follows:

Basis for tax liability imposition

1. Taxpayers are imposed with individual factors related to determining the payable tax amount.

...

b) Basis for tax liability imposition

b.1) For taxpayers being organizations

Based on the database of the tax administration and the commercial database; the valid documents and inspection/audit results; investigation results; the minimum average tax payable of 03 business establishments of the same goods, industries, business scales in the locality; in case there is not enough information on goods, industries, and business scales in the locality or if there are no or insufficient information of business establishments at the local level, the information of business establishments in other localities shall be used for tax liability imposition based on individual factors.

Therefore, when an organization is subject to tax liability imposition, the tax authority must base on the following:

[1] The database of the tax administration and commercial database;

[2] Valid documents and inspection/audit results;

[3] Investigation results;

[4] Minimum average tax payable of 03 business establishments of the same goods, industries, business scales in the locality;

[5] In case there is no or insufficient information of business establishments at the local level, information of business establishments from other localities shall be used for tax liability imposition based on individual factors.