What are the penalties for making false declaration of information contained in tax dossiers in Vietnam?

What are the penalties for making false declaration of information contained in tax dossiers in Vietnam?

In cases of making false declaration of information contained in tax dossiers, penalties will vary depending on the specific situation, as detailed below:

Case 01:

Making incorrect declarations without leading to a shortfall in payable tax obligations or not increasing the amount of tax exemptions, reductions, or refunds will incur penalties according to Article 12 of Decree 125/2020/ND-CP as follows:

(1) A fine ranging from VND 500,000 to VND 1.5 million for acts of incorrect declarations or failure to fully declare required indicators in tax records, not related to tax determination obligations, excluding acts specified in (2).

(2) A fine ranging from VND 1.5 million to VND 2.5 million for acts of incorrect declarations or failure to fully declare required indicators on tax declarations and accompanying appendices, not related to determining tax obligations.

(3) A fine of VND 5 million for any of the following acts:

(i) Incorrectly declaring or failing to fully declare indicators related to tax obligation determination in tax documentation;

(ii) Acts specified in Clause 3, Article 16, Clause 7, Article 17 of Decree 125/2020/ND-CP.

Furthermore, individuals violating the above regulations are required to undertake corrective measures, including:

- Mandatory re-declaration and submission of additional documents for the acts specified in (1), (2), and (i) in section (3).

- Mandatory adjustment of losses and input VAT amounts deductible and carried forward (if any) for the acts specified in (3).

Note: The above penalties are applied to organizations; for individual violators, the penalties are half the amount imposed on organizations.

Case 02:

Making incorrect personal income tax declaration, leading to a shortfall in payable tax or an increase in the tax amount exempt, reduced, or refunded, is specifically punished according to Article 16 of Decree 125/2020/ND-CP, as follows:

For cases of incorrect personal income tax declarations leading to a shortfall in the payable tax amount or an inflated amount of exempt, reduced, or refunded tax, a penalty of 20% of the understated tax amount or the tax amount exempted, reduced, or refunded exceeding regulations is imposed for any of the following acts:

(1) Incorrectly declaring tax bases or deductible tax amounts, or wrongly determining cases eligible for exemptions, reductions, or refunds, leading to a shortfall in the payable tax amount or an inflated exempt, reduced, or refunded tax amount, provided that such transactions have been fully recorded in the accounting system, invoices, and legal documents.

(2) Incorrectly declaring to reduce the amount of tax payable or increase the eligible refunded tax, exempted, reduced amount not covered under (1) but voluntarily supplemented and fully paid the shortfall into the state budget before the end of the tax inspection, audit, or examination period at the tax office.

(3) Incorrectly declaring to reduce the amount of payable tax or increase the refunded tax amount, the previously exempted, reduced tax not falling under (1) but voluntarily supplemented and fully paid the shortfall into the state budget before a decision on penalties is made by a competent authority, and the tax authority has documented this act as an incorrect declaration leading to tax shortfall.

(4) Incorrectly declaring leading to a shortfall in the amount payable or increase in the exempt, reduced, refunded tax amount related to associated transactions, but the taxpayer has filed market price determination documentation or has submitted the appendices to the tax authority as required.

(5) The use of unauthorized invoices or documents to account product or service purchase values, leading to a reduction in payable tax or an increase in the refunded, exempted, reduced tax amount; however, when the tax authority performs an audit, the buyer proves that the unauthorized document fault lies with the seller and the buyer has fully accounted per regulations.

Moreover, violators are required to implement corrective measures such as:

- Paying the entire shortfall tax, refunded, exceeded exempt or reduced tax amount, and interest on late payment to the state budget for the transgression.

In cases beyond the punishment limits, taxpayers are not penalized but must pay the full shortfall tax, excess exempt, reduced, refunded tax amount, and interest on late payment to the state budget following the deadline prescribed in Clause 6, Article 8 of Decree 125/2020/ND-CP.

- Adjusting the losses, input VAT deductible amounts to carry forward to subsequent periods for the acts specified above.

Note: Taxpayers making incorrect declarations as specified in (I), (2), and (4) without leading to a tax shortfall or increase in exempt, reduced, or refunded taxes are not penalized under this Article but are penalized under Clause 3, Article 12 of Decree 125/2020/ND-CP.

What are the penalties for making false declaration of information contained in tax dossiers in Vietnam? (Image from the Internet)

How long is the time limits for imposition of making false declaration of information contained in tax dossierss?

According to point b, clause 2, Article 8 of Decree 125/2020/ND-CP regarding administrative sanctions on tax violations:

Time limits for imposition of administratively penalizing tax violations, not being penalized, tax arrears recovery period

...

2. Time limits for imposition of administratively penalizing tax violations

...

b) The time limits for imposition of penalizing acts of tax evasion not amounting to criminal liability, acts of incorrect declarations leading to a shortfall in payable taxes or an increase in exempt, reduced, refunded taxes is 05 years from the date the violation occurs.

The date of incorrect declaration leading to a shortfall in payable taxes or an increase in exempt, reduced, or refunded taxes or tax evasion (excluding the acts at point a, clause 1, Article 17 of this Decree) is the day following the deadline for submitting the tax declaration of the tax period in which the taxpayer made the inaccurate declaration or the next day when the competent authority issues a decision on tax refunds, exemptions, or reductions.

...

Hence, the time limits for imposition of acts of incorrect declaration leading to a shortfall in payable taxes or an increase in exempt, reduced, or refunded taxes is 05 years from the date the violation occurs.

In the case of incorrect declarations leading to a shortfall or increase in exempt, reduced, or refunded taxes, or tax evasion acts (excluding acts at point a, clause 1, Article 17 of Decree 125/2020/ND-CP), the date is the day following the final deadline for submitting the tax declaration of the taxable period for which incorrect declaration or tax evasion occurred, or the next day when the competent authority issues a decision on refund, exemption, or reduction.

How many risk levels are there in tax dossier classification in Vietnam?

According to clause 9, Article 3 of Law on Tax Administration 2019, it is specified as follows:

Definitions

In this Law, the following terms are defined as follows:

...

9. A tax dossier includes taxpayer registration, tax declaration, tax refund, tax exemption, tax reduction, exemption of late payment fines, non-calculation of late payment fines, deferment of tax payment, payment of tax debt in installments, tax non-collection; customs files; tax debt deferral; cancellation of tax debt, late payment fines, and penalties.

...

The tax dossier is understood as the following types:

- Taxpayer registration files, tax declaration, refunds, exemptions, reductions, late payment exemption, non-calculation of late payment fines, deferred payment, gradual payment of tax debts, non-collection of taxes;

- Customs files;

- Tax debt deferral files;

- Tax debt, late payment, and penalty cancellation files.

According to clause 1, Article 71 of Circular 80/2021/TT-BTC, it is prescribed as follows:

tax dossier inspection at the tax authority's headquarters

1. Classification of tax dossiers:

tax dossiers are classified into 03 risk levels: Low risk, medium risk, high risk.

2. The tax authority proposes a plan to inspect tax dossiers at the tax authority's headquarters or handle as prescribed in clauses 3 and 4 of this Article for high-risk files.

...

tax dossiers are classified into 03 risk levels as follows:

- Low risk.

- Medium risk.

- High risk.