What are the cases where separate elements relevant to determination of tax payable shall be imposed in Vietnam?

What are the tax liability imposition rules in Vietnam??

According to Article 49 of the Tax Administration Law 2019, tax liability imposition rules are:

- Tax shall be imposed on the basis of tax administration rules, tax calculation methods and bases specified by tax laws and customs laws.

- Tax authorities shall impose tax payable, separate elements or tax calculation bases.

What are the cases where separate elements relevant to determination of tax payable shall be imposed in Vietnam? (Image from the Internet)

What are the cases where separate elements relevant to determination of tax payable shall be imposed in Vietnam?

According to Clause 3, Article 50 of the Tax Administration Law 2019, separate elements relevant to determination of tax payable shall be imposed in the following cases:

- Through inspection of the tax declaration dossier, the tax authority has reasonable grounds to believe that the taxpayer did not fully or accurately declare the elements serving as the basis for tax calculation and fails to provide supplementary documents as requested by the tax authority;

- Through inspection of the accounting books and invoices relevant to tax calculation, the tax authority is able to prove that the taxpayer failed to accurately or truthfully record the tax calculation elements;

- Selling prices of goods/services were in accurately recorded in order to reduce the taxable revenue; buying prices of raw materials, goods and services were inaccurately recorded in order to increase expense or deductible VAT and thus reduce the amount of tax payable;

- The taxpayer failed to determine the elements or fails to calculate the tax payable after the elements are determined. separate elements or tax calculation bases.

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 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.