What are the current bases for tax liability imposition in Vietnam?

What are the current bases for tax liability imposition in Vietnam?

According to Article 15 of Decree 126/2020/ND-CP, the bases for tax liability imposition are specified as follows:

(1) Taxpayers are imposed with respect to separate elements related to the determination of the tax payable

- Organizations or individuals are imposed with respect to separate elements related to the determination of the tax payable when one of the following cases occurs:

+ Upon examination of the tax declaration dossier, the tax authority has a basis to believe that the taxpayer has not fully or accurately declared the elements that form the basis for imposing the tax payable, has requested the taxpayer to supplement the declaration, but the taxpayer has not supplemented or has supplemented incorrectly, not truthfully as required by the tax authority.

+ Upon examination of the accounting books, invoices, and documents related to the determination of the tax payable of taxpayers or upon examination, comparison, verification, the accounting books, invoices, and documents of related organizations or individuals, the tax authority has a basis to prove that the taxpayer has not accurately, not truthfully recorded the elements related to the determination of the tax payable.

+ Recording sale prices of goods and services not in accordance with actual payment prices, reducing taxable revenue, or recording purchase prices of goods, raw materials for production and business not in accordance with actual market payment prices, increasing costs, increasing deductible value-added tax, reducing payable tax obligations.

+ The taxpayer submits the tax declaration dossier but cannot impose the elements forming the basis for imposing the tax calculation or can impose the elements forming the basis for imposing the tax calculation but cannot self-calculate the tax payable.

+ Being 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 who are organizations

Based on the database of the tax management agency and commercial database; documents and results of effective inspections and audits; verification results; the minimum average tax payable by 03 business establishments of the same product, industry, or scale in the locality; in case there are no or insufficient information about the product, industry, or scale of the business establishment in the locality, the information from business establishments in other localities will be used to implement determination according to separate elements.

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

The tax authority imposes the taxable price in case it imposes that the individual declares and pays tax with a taxable price lower than the usual market transaction price. The taxable price imposed by the tax authority must comply with the usual market transaction price but not lower than the price stipulated by the People's Committee of the province or city at the time of imposing the taxable price.

- Based on each imposed element, the tax authority imposes the tax payable according to the current tax law provisions.

(2) Taxpayers are imposed with respect to the tax payable based on the turnover ratio as prescribed by law, as follows:

- Organizations paying value-added tax by the direct method, individuals doing business paying tax by the declaration method are imposed with respect to the tax payable according to the percentage on turnover when falling into one of the cases specified in Clauses 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, and 11 of Article 14 of Decree 126/2020/ND-CP.

- Basis for tax liability imposition

Based on the database of the tax management agency and commercial database; documents and results of effective inspections and audits; verification results; the minimum revenue of 03 business establishments of the same product, industry, or scale in the locality; in the absence of or with insufficient information on the product, industry, or scale of the business establishment in the locality, the information from business establishments in other localities with the same natural and economic development conditions will be used to implement the determination of taxable revenue.

- Based on the imposed revenue, the tax authority imposes the tax payable according to the current tax law provisions.

What are the current bases for tax liability imposition in Vietnam? (Image from the Internet)

When do taxpayers be imposed tax liability in case of tax offences in Vietnam?

According to Clause 1, Article 50 of Law on Tax Administration 2019, taxpayers are imposed to get tax liability imposition when falling into one of the following cases of tax law violations:

- Failing to register as taxpayer, failing to declare tax, failing to supplement the tax dossier as requested by the tax authority, or declaring tax not fully, truthfully, or accurately regarding the tax calculation basis;

- Not reflecting or not fully, truthfully, accurately reflecting data in the accounting books to impose tax obligations;

- Not presenting accounting books, invoices, documents, and necessary related materials to impose the tax payable within the prescribed time limit;

- Not complying with tax inspection and tax audit decisions as prescribed;

- Buying, selling, exchanging goods, services, and recording their value not according to the usual transaction value on the market;

- Buying, exchanging goods by using illegal invoices, using illegal invoices but the goods are real as imposed by the competent authority and have been declared as taxable revenue;

- Having signs of fleeing or dispersing assets to evade tax obligations;

- Conducting transactions not in accordance with the economic essence, not according to the actual occurrence to reduce the taxpayer’s tax obligation;

- Failing to comply with regulations on the obligation of declaring, imposing prices for associated transactions or failing to provide information as prescribed for tax management concerning enterprises with associated transactions.

Vietnam: What are cases where separate elements relevant to determination of tax payable are imposed?

According to Clause 3, Article 50 of Law on Tax Administration 2019, taxpayers are imposed with respect to separate elements related to the determination of the tax payable when falling into one of the following cases:

- Upon examination of the tax declaration dossier, the tax authority has a basis to believe that the taxpayer has not fully or accurately declared the elements that form the basis for imposing the tax payable, has requested the taxpayer to supplement the declaration but the taxpayer has not supplemented as required by the tax authority;

- Upon examination of the accounting books, invoices, documents related to the determination of the tax payable, the tax authority has a basis to prove that the taxpayer has not accurately or truthfully recorded the elements related to the determination of the tax payable;

- Recording the sale prices of goods and services not in accordance with actual payment prices, reducing taxable revenue, or recording procurement costs of goods, raw materials for production and business not in accordance with actual market payment prices, increasing costs, increasing deductible value-added tax, and reducing payable tax obligations;

- The taxpayer submits the tax declaration dossier but cannot impose the elements forming the basis for imposing the tax calculation, or can impose the elements forming the basis for imposing the tax calculation but cannot self-calculate the tax payable.