Shall an entity obliged to act on a taxpayer’s behalf to make tax payment be subject to administrative penalties for tax-related violations?

What is a tax-related violation in Vietnam?

According to Clause 1, Article 2 of Decree 125/2020/ND-CP, a tax-related violation is a wrongful act committed by an organization or individual that violates laws on tax administration, tax laws, and other collections, which is not a criminal act, and according to legal regulations, must be administratively sanctioned. Other collections include:

- Land use fees;

- Land rents, water surface rents;

- Fees for mining rights;

- Fees for water resource exploitation rights;

- The remaining post-tax profits after setting up enterprise funds held 100% by the State;

- Dividends, profits distributed to state-invested capital in joint-stock companies and two-member limited liability companies or more.

Shall an entity obliged to act on a taxpayer’s behalf to make tax payment be subject to administrative penalties for tax-related violations? (Image from Internet)

Shall an entity obliged to act on a taxpayer’s behalf to make tax payment be subject to administrative penalties for tax-related violations in Vietnam?

According to Article 3 of Decree 125/2020/ND-CP:

Entities subject to administrative sanctions for tax or invoice-related violations

1. Entities subject to administrative sanctions for tax or invoice-related violations include:

a) Taxpayers committing administrative tax, invoice violations.

In cases where taxpayers authorize other organizations or individuals to perform tax obligations under the tax laws, and the regulations assign the obligated party's responsibilities to the authorized party, if the authorized party commits an administrative violation specified in this Decree, then the authorized organization or individual is subject to sanctions under this Decree.

If according to tax laws and tax administration regulations, an organization or individual has the duty of taxpayer registration or filing, paying taxes on behalf of the taxpayer, and the organization or individual performing these duties commits an administrative violation as specified in this Decree, they are sanctioned for tax-related violations under this Decree.

b) Organizations, individuals related to administrative tax, invoice violations.

...

Thus, if the tax laws and tax administration require an individual responsible for taxpayer registration, filing, or paying taxes on behalf of the taxpayer, and that individual commits an administrative violation, they are sanctioned for tax-related violations.

What are sanctioning principles for tax-related violations in Vietnam?

According to Article 5 of Decree 125/2020/ND-CP, the principles governing administrative sanctions for tax-related violations and invoices are as follows:

- Administrative sanctions for tax, invoice violations are carried out according to laws on tax management and administrative violation handling.

- Organizations and individuals are only sanctioned for administrative tax, invoice violations when they commit such violations as prescribed in Decree 125/2020/ND-CP.

- Organizations and individuals performing multiple administrative violations are sanctioned for each violation, except in the following cases:

+ At the same time, if the taxpayer mistakenly declares one or more criteria on tax records of the same tax type, the violation of incorrect declaration under tax procedure violations is sanctioned for only one incorrect declaration with the highest penalty frame among the violations under Decree 125/2020/ND-CP, and it is considered an aggravating circumstance.

+ At the same time, if the taxpayer is late in submitting multiple tax declarations for various tax periods of the same tax type, they are only sanctioned for one late submission with the highest penalty frame among the violations under Decree 125/2020/ND-CP, and it is considered an aggravating circumstance.

In instances where late tax declaration submissions include cases of tax evasion, separate sanctions for tax evasion are applied.

+ At the same time, if the taxpayer delays in submitting multiple notifications, reports of invoices of the same type, they are sanctioned for one late notification/report with the highest penalty frame among the performed violations according to Decree 125/2020/ND-CP, with consideration as an aggravating circumstance.

+ Violations regarding the unlawful use of invoices and illegal invoice use which are sanctioned under Articles 16, 17 of Decree 125/2020/ND-CP are not sanctioned under Article 28.

- In one administrative procedure with multiple documents comprising various violations as per Decree 125/2020/ND-CP, the violating organization or individual is sanctioned for each violation committed.

- For the same administrative tax, invoice violation, the fine for an organization is twice the fine for an individual, except for fines prescribed under Articles 16, 17, and 18 of Decree 125/2020/ND-CP.