Shall tax liability be imposed for failing to submit adequate supplementary tax documents in Vietnam?

Shall tax liability be imposed for failing to submit adequate supplementary tax documents in Vietnam?

Pursuant to Article 14 of Decree 126/2020/ND-CP, taxpayers may be subject to tax liability imposition by tax authorities in the following cases:

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

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

[3] Failure to submit supplementary tax documents upon the request of tax authorities or submission of incomplete, untruthful, or inaccurate supplementary documents used for determining payable taxes.

[4] Failure to accurately or fully reflect data on accounting books to determine tax obligations.

[5] Failure to present accounting books, invoices, and necessary documentation related to the determination of tax calculation factors; failing to determine the payable tax amount within the prescribed time frame or when the timeframe for tax inspection or audit at the taxpayer's office has expired.

[6] Failure to comply with the tax inspection decision within 10 business days from the signing date of the decision, except in cases where the inspection time is deferred as stipulated.

[7] Failure to comply with the tax audit decision within 15 days from the signing date of the decision, except in cases where the audit time is deferred as stipulated.

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

[9] Purchasing, exchanging goods, or services using unlawful invoices or improperly using invoices where the goods and services are real according to the determination of investigative, audit, or inspection agencies and have been declared for tax calculation.

[10] Indicative signs of absconding or dispersing assets to avoid tax obligations.

[11] Conducting transactions not in accordance with the economic nature or actual occurrences to reduce tax obligations.

[12] Not complying with the obligations to declare and determine transfer pricing or not providing information as required for tax management concerning enterprises with transfer pricing transactions.

Thus, if supplementary tax documents are incomplete, it may fall under one of the cases in which the tax authority will impose the tax.

What are cases of tax liability imposition in Vietnam? (Image from the Internet)

What are bases of tax liability imposition in Vietnam?

Pursuant to Article 15 of Decree 126/2020/ND-CP on the basis for tax liability imposition as follows:

- Taxpayers are subject to the imposition of each factor related to determining the payable tax amount.

+ Organizations and individuals will have each factor related to determining the payable tax amount imposed when they fall into one of the following cases:

++ Through tax return inspection, the tax authority has grounds to believe that the taxpayer has not fully or accurately declared the factors to determine the payable tax amount. The tax authority has requested the taxpayer to declare supplementary information, but the taxpayer fails to declare or declare inaccurately or untruthfully according to the tax authority's request.

++ Through inspection of accounting books, invoices, and related documents determining the taxpayer's payable tax amount. Or through the inspection, verification, and matching of accounting books, invoices, and documents of related organizations or individuals, the tax authority has grounds to prove that the taxpayer does not accurately or truthfully record the factors used to determine the payable tax amount.

++ Accounting for the selling price of goods and services not according to the actual payment price reduces taxable revenue, or accounting for the purchase price of goods and raw materials for production and business not according to the actual payment price suitable for the market increases expenses, increasing deductible VAT, reducing payable tax obligations.

++ Taxpayers submit tax returns but cannot determine the factors used to calculate taxes or can determine them but cannot self-calculate the payable tax amount.

++ Falling into one of the cases stipulated in clauses 10, 11, 12, Article 14 Decree 126/2020/ND-CP.

+ Basis for tax liability imposition

++ For taxpayers that are organizations

The basis is the tax authority’s database and commercial database; valid documentation and audit inspection results; verification results; the minimum average payable tax amount of three similar business establishments in the same locality, industry, and scale;

If the locality lacks sufficient information on similar business establishments, the information from similar establishments in other localities will be used for imposition per each factor.

++ For individuals transferring, inheriting, or receiving real estate as gifts

The tax authority imposees the taxable value if the declared value is lower than the normal market transaction value.

The tax-imposed value must match the normal market transaction value but not be lower than the price set by the provincial or municipal People's Committee at the time the taxable value is determined.

+ For each imposed factor, the tax authority determines the payable tax according to current tax law regulations.

- Taxpayers subject to tax liability imposition by revenue percentage in accordance with the law, as follows:

+ Organizations paying VAT by direct method and business individuals paying tax by declaration method are subject to imposed payable tax by revenue percentage when they fall into one of the cases specified in clauses 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, Article 14 Decree 126/2020/ND-CP.

+ Basis for tax liability imposition

The basis is the tax authority’s database and commercial database; valid documentation and audit inspection results; verification results; the minimum average revenue of three similar business establishments in the same locality, industry, and scale;

If the locality lacks sufficient information on similar business establishments, the information from similar establishments in other localities with the same natural and economic development conditions will be used to impose taxable revenue.

+ Based on the imposed revenue, the tax authority determines the payable tax according to current tax law regulations.

Who has the authority to impose tax liability in Vietnam?

Pursuant to Article 16 of Decree 126/2020/ND-CP on authority, procedures for tax liability imposition, and issuing tax liability imposition decisions as follows:

Authority, procedures, and tax liability imposition decisions

1. Authority for tax liability imposition

The General Director of the General Department of Taxation, Directors of Tax Departments, and Heads of Tax Sub-Departments have the authority to impose tax liability.

2. Procedures for tax liability imposition

a) When imposing a tax liability imposition, the tax authority notifies the taxpayer in writing and issues a tax liability imposition decision. The tax liability imposition decision must state the reason for the imposition, the basis for the imposition, the imposed tax amount, and the tax payment deadline.

b) When a tax liability imposition is made through tax inspection or audit, the reason for the imposition, the basis for the imposition, the imposed tax amount, and the tax payment deadline must be stated in the tax inspection or audit report and the tax authority’s handling decision.

c) If a taxpayer is imposed according to regulations, the tax authority will impose administrative penalties and calculate late payment interests according to the law.

3. tax liability imposition decisions

a) When determining a tax liability imposition, 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 three working days from the signing date of the tax liability imposition decision;

In cases where taxpayers are subject to tax payment notifications from the tax authority, the tax authority does not need to issue a tax liability imposition decision as stipulated in this clause.

b) Taxpayers must pay the imposed tax according to the tax authority’s handling decision. If the taxpayer disagrees with the imposed tax amount, they must still pay the imposed tax and have the right to request an explanation from the tax authority or file a complaint or lawsuit concerning the tax liability imposition.

Thus, according to the above regulations, the authority to impose tax liability belongs to the General Director of the General Department of Taxation, Directors of Tax Departments, and Heads of Tax Sub-Departments.