What are the cases of tax liability imposition by tax authorities in Vietnam?

What are the cases of tax liability imposition by tax authorities in Vietnam?

According to Article 14 of Decree 126/2020/ND-CP, tax liability will be imposed by the tax authority if the taxpayer:

- Fails to apply for taxpayer registration in accordance with Article 33 of the Law on Tax Administration 2019.

- Fails to declare or truthfully and accurately declare tax in accordance with Article 42 of the Law on Tax Administration 2019.

- Fails to submit supplementary tax documents or adequate and accurate supplementary tax documents as the basis for determination of tax payable as requested by the tax authority.

- Fails to provide or truthfully and accurately provide information in accounting books as the basis for determination of tax obligations.

- Fails to present accounting books, invoices and documents necessary as the basis for tax calculation by the deadline or within the time limit for tax audit or tax inspection at the taxpayer’s premises.

- Fails to implement the decision on tax audit within 10 working days from the day on which the decision is signed, unless the inspection date is delayed as per regulations.

- Fails to implement the decision on tax inspection within 15 working days from the day on which the decision is signed, unless the inspection date is delayed as per regulations.

- Sells, buys, exchanges goods with unusual values; records unusual value of goods.

- Buys, exchanges goods, services using illegal invoices; illegally uses invoices for actual goods and services as discovered by an investigating or inspecting authority while revenues and expenses as the basis for tax calculation have been declared.

- Is suspected absconding or liquidating assets to avoid tax obligations.

11.- Conducts misleading or false transactions to reduce tax obligations.

- Fails to declare values of related-party transactions (if any) or fails to provide information about related-party transactions (if any) in accordance with tax administration regulations.

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

What is the basis for tax liability imposition in Vietnam?

According to Article 15 of Decree 126/2020/ND-CP, the basis for tax liability imposition is stipulated as follows:

(1) Imposition of separate elements of taxation:

- In one of the following cases, separate elements of taxation shall be imposed:

+ Through inspection of the tax declaration dossier, the tax authority suspects that the taxpayer does not fully or accurately declare certain elements of taxation and fails to supplement or fully and accurately supplement the declaration as requested by the tax authority.

+ Through inspection of accounting books, invoices and relevant documents of the taxpayer or relevant organizations or individuals, the tax authority is able to prove that the taxpayer does not accurately or truthfully record certain elements of taxation.

+ The taxpayer records false selling prices for goods and services and in order to reduce the taxable revenue; records false buying prices for goods serving business operation in order to increase the amount of VAT deductible or reduce tax payable.

+ The taxpayer has submitted the tax declaration dossier but is not able to determine the elements of taxation, or has determined the elements of taxation but not able to calculate tax payable themselves.

+ One of the cases specified in Clauses 10, 11, 12 Article 14 of Decree 126/2020/ND-CP.

- Basis for tax liability imposition

+ For taxpayers that are organizations:

The tax authority’s database and trade database; documents and effective inspection verdicts; verification results; minimum average tax payable of 03 local business establishments selling the same commodities or having the same business lines and scale. In case such business establishments are not available or are available but information about their commodities, business lines or scale is inadequate, information about business establishments in other areas may be used.

+ For individuals transferring real estate; receiving real estate as inheritance or gift

The taxable price will be imposed by the tax authority according to market price if the taxable price declared by the individual is lower than market price. The taxable price imposed by the tax authority must not be lower than the applicable price imposed by the People’s Committee of the province.

- The tax authority shall impose tax liability on the basis of separate elements in accordance with effective tax laws.

(2) Imposition of proportional tax on revenue:

- Organizations paying VAT using the subtraction method; individual businesses paying taxes using the declaration method shall have proportional tax on revenue imposed in the cases specified in Clauses 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 and 11 Article 14 of Decree 126/2020/ND-CP.

- Basis for proportional tax imposition

The tax authority’s database and trade database; documents and effective inspection verdicts; verification results; minimum revenue of 03 local business establishments selling the same commodities or having the same business lines and scale. In case such business establishments are not available or are available but information about their commodities, business lines or scale is inadequate, information about business establishments in other areas with the same natural and economic conditions may be used.

- The tax authority shall determine the amount of tax payable according to the imposed revenue in accordance with effective tax laws.

Who has the authority to impose tax liability in Vietnam?

According to Article 16 of Decree 126/2020/ND-CP, the following regulations apply:

Tax liability imposition authority, procedures and decision

1. Authority for tax liability imposition

the Director of the General Department of Taxation, Directors of Provincial Departments of Taxation and Directors of District-level Departments of Taxation have the authority to impose tax liability.

2. Procedures for tax liability imposition

a) When imposing tax liability, the tax authority shall send a written notice to the taxpayer and issue the tax liability imposition decision, which must specify the reasons and basis for imposition, the tax amount payable and payment deadline.

b) In case the tax authority imposes tax liability through tax audit or tax inspection, the reasons and basis for imposition, the tax amount payable and payment deadline shall be written in the tax audit or tax inspection record and tax decision issued by the tax authority.

c) In case tax liability is imposed due to the taxpayer’s violation, the tax authority shall impose administrative penalties and calculate late payment interest as prescribed by law.

3. Decision on tax liability imposition

a) When imposing tax liability, the tax authority shall issue a decision (Form No. 01/ADT in Appendix III hereof) and send it to the taxpayer within 03 working days from the day on which it is signed;

If the taxpayer has to pay tax under the tax authority’s notice, such a decision is not necessary.

b) The taxpayer shall pay tax as imposed by the tax authority. If the taxpayer does not concur with the tax liability imposed by the tax authority, the taxpayer still has to pay the tax and may request the tax authority to provide explanation or file a complaint or lawsuit against the tax authority’s decision.

Thus, the Director of the General Department of Taxation, Directors of Provincial Departments of Taxation and Directors of District-level Departments of Taxation have the authority to impose tax liability.