Is the failure to record the revenues relevant to calculation of tax payable in the accounting books considered tax evasion in Vietnam?

Is the failure to record the revenues relevant to calculation of tax payable in the accounting books considered tax evasion in Vietnam?

Based on Clause 2, Article 143 of the Law on Tax Administration 2019 regarding acts of tax evasion, it is stipulated as follows:

Acts of Tax Evasion

1. Failing to submit taxpayer registration files; failing to submit tax declaration files; submitting tax declaration files more than 90 days after the deadline for submitting tax declaration files or the deadline for extended submission of tax declaration files as prescribed by this Law.

2. Failing to record in accounting books the revenues related to determining the amount of tax payable.

3. Not issuing invoices when selling goods or services as prescribed by law or recording an amount on the sales invoice lower than the actual payment for goods or services sold.

4. Using illegal invoices or documents, illegally using invoices to account for goods, and input materials in activities incurring tax obligations which reduce the payable tax amount or increase exempted tax, reduced tax, deductible tax, refunded tax, or tax not payable amounts.

5. Using documents or materials that do not accurately reflect the nature or actual value of transactions to incorrectly determine the payable tax amount, tax exemption, reduced tax, refunded tax, or tax not payable amounts.

6. Incorrectly declaring the facts about exported or imported goods without submitting additional tax declaration files after goods have cleared customs.

7. Intentionally failing to declare or incorrectly declaring taxes on exported or imported goods.

8. Colluding with the consignor to import goods for the purpose of tax evasion.

9. Using goods that are not subject to tax, exempted from tax, or considered for tax exemption for purposes not in accordance with the prescribed purposes without declaring the change of use with the tax authority.

10. Taxpayers engage in business activities during the period of cessation or temporary cessation of business activities without notifying the tax authority.

11. Taxpayers are not penalized for acts of tax evasion but are penalized in accordance with Clause 1, Article 141 of this Law for the following cases:

a) Failure to submit taxpayer registration files, non-submission of tax declaration files, submission of tax declaration files after 90 days, but no tax amount is incurred;

b) Submitting tax declaration files after 90 days with incurred tax amounts, and the taxpayer has fully paid the tax amount, late payment interest into the state budget before the tax authority announces the tax inspection decision, tax examination or before the tax authority sets a record on the act of late submission of the tax declaration file.

In comparison with the regulations, the action of not recording in accounting books the revenues related to determining the payable tax amount is considered one of the acts of tax evasion.

Therefore, according to the above regulations, failing to record revenues in accounting books related to determining tax amounts is considered tax evasion.

Is the failure to record the revenues relevant to calculation of tax payable in the accounting books considered tax evasion in Vietnam? (Image from the Internet)

What are regulations on penalties for acts of tax evasion in Vietnam?

Based on Article 17 of Decree 125/2020/ND-CP regulating penalties for acts of tax evasion as follows:

- A fine equivalent to the amount of tax evaded is imposed on taxpayers who have one mitigating circumstance or more when committing one of the following violations:

+ Failing to submit taxpayer registration files; not submitting tax declaration files or submitting tax declaration files after 90 days from the deadline for submitting tax declaration files or from the deadline for extending the submission of tax declaration files, except for the cases defined at points b, c, Clause 4 and Clause 5, Article 13 of Decree 125/2020/ND-CP;

+ Failing to record in accounting books revenues related to determining the amount of tax payable, failing to declare or declaring incorrectly leading to a deficit in payable tax amounts or an increase in tax amounts refundable, exempted, or reduced, except for acts prescribed in Article 16 of Decree 125/2020/ND-CP;

+ Failing to issue invoices when selling goods or services, except where the taxpayer has declared tax based on the value of the goods or services sold, provided in the corresponding tax period; issuing sales invoices that misstate the quantity or value of goods, services to declare tax lower than actual and detected after the deadline for submitting tax declaration files;

+ Using illegal invoices; using illegally invoices to declare tax in order to reduce payable tax amounts or increase amounts for tax refunds, tax exemption, reduction;

+ Using illegal documents; using documents for non-legal purposes; using documents or materials that do not correctly reflect the transaction nature or actual transaction value to miscalculate the payable tax amount, tax exemption, reduction, refundable tax; preparing procedures, documents to void materials, goods that do not reflect reality to reduce payable tax or increase refundable, exempted, reduced tax;

+ Using goods that are not subject to tax, exempted from tax, or fit the criteria for tax exemption for non-prescribed purposes without declaring the change in purpose of use, declaring tax with tax authorities;

+ Taxpayers conducting business activities during a period of requested cessation or temporary cessation without notifying tax authorities, except for cases defined at point b, Clause 4, Article 10 of Decree 125/2020/ND-CP.

- A fine of 1.5 times the amount of tax evaded is imposed on taxpayers committing one of the acts specified in Clause 1 of this Article without any aggravating or mitigating circumstances.

- A fine of twice the amount of tax evaded is imposed on taxpayers committing one of the acts specified in Clause 1 of this Article with one aggravating circumstance.

- A fine of 2.5 times the amount of tax evaded is imposed on taxpayers committing one of the acts specified in Clause 1 of this Article with two aggravating circumstances.

- A fine of triple the amount of tax evaded is imposed on taxpayers committing one of the acts specified in Clause 1 of this Article with three or more aggravating circumstances.

- Measures for remedial actions:

+ Compelling payment of the full amount of tax evaded into the state budget for violations stipulated in Clauses 1, 2, 3, 4, 5 of this Article.

In cases where acts of tax evasion stipulated in Clauses 1, 2, 3, 4, 5 of this Article have exceeded the statute of limitations for penalization, the taxpayers are not penalized for acts of tax evasion but must pay the full amount of evaded tax, late payment interest calculated on evaded tax into the state budget within the specified time limit set out in Clause 6, Article 8 of Decree 125/2020/ND-CP.

+ Compelling adjustments to losses, input VAT deductible amounts on tax files (if any) for the acts stipulated in Clauses 1, 2, 3, 4, 5 of this Article.

- Violations stipulated in points b, d, e, Clause 1 of this Article detected after the deadline for submitting tax declaration files but not reducing the payable tax amount or not yet refunded tax, not increasing amounts of tax exempted or reduced shall be subject to administrative penalties according to Clause 3, Article 12 of Decree 125/2020/ND-CP.

Can the head of the tax authority demand individuals with information related to acts of tax evasion to provide information in Vietnam?

Based on Article 121 of the Law on Tax Administration 2019, it is regulated as follows:

Collection of Information Related to Acts of Tax Evasion

1. The head of the tax authority has the right to request agencies, organizations, or individuals with information related to acts of tax evasion to provide information in writing or respond directly.

2. In cases requiring information provision in writing, the agency, organization, or individual is responsible for providing the information correctly according to the requested content, deadline, and address, and is responsible for the accuracy and truthfulness of the provided information; if unable to provide, they must respond in writing and state the reason.

3. In cases requiring information provision through direct response, the individual required to provide information must appear at the stated time and location in the document to provide information according to the requested content, and is responsible for the accuracy and truthfulness of the provided information; if unable to appear, information provision is conducted in writing.

During the process of collecting information through direct response, members of the inspection team must prepare a working record and audio and video recording must be done openly.

Therefore, according to the above regulations, the head of the tax management agency has the authority to require individuals with information related to acts of tax evasion to provide information in writing or respond directly.