What is the fine for making a false declaration that causes any deficiency in taxes payable in Vietnam?

What acts does the false declaration that causes any deficiency in taxes payable in Vietnam include?

According to Clause 1, Article 142 of the Tax Administration Law 2019, the false declaration that causes any deficiency in taxes payable in Vietnam includes:

- The taxpayer incorrectly declares the basis for tax calculation or the deductible tax; the eligibility for tax remission or refund. However the transactions are fully recorded in legal accounting books, invoices and other documents;

- The figures in the taxpayer’s market value determination documents or the declaration of related-party transactions are found incorrect by tax inspectors or tax auditors in a manner that results in Understatement of tax payable or overstatement of tax eligible for remission or refund;

- The taxpayer uses illegal invoices/documents or illegally uses invoices that lead to decrease in tax payable or increase in tax eligible for remission or refund but the buyer of goods/services under the illegal invoices is able to prove that the seller is at fault.

What is the fine for making a false declaration that causes any deficiency in taxes payable in Vietnam? (Image from the Internet)

What is the fine for making a false declaration that causes any deficiency in taxes payable in Vietnam?

According to Article 16 of Decree 125/2020/ND-CP on penalties for making false declaration that causes any deficiency in taxes payable in Vietnam:

*  A fine which equals 20% of the underpaid tax amount or the higher-than-prescribed amount of tax exemption, reduction or refund shall be imposed for any of the following violations:

- Making false declaration of tax bases or deductible tax amounts or incorrectly determining cases of tax exemption, reduction or refund, resulting in any deficiency in tax amounts payable or any increase in amounts of tax exemption, reduction or refund though economic activities have already been fully recorded in legitimate accounting books, invoices and evidencing documents;

- Making false declaration causing any reduction in payable tax amounts or any increase in amounts of tax exemption, reduction or refund, which does not fall into the case specified at point a of this clause though the violating taxpayer has voluntarily made a supplementary declaration and fully paid unpaid back taxes or tax arrears to the state budget prior to the deadline for the tax authority’s tax inspection and examination at taxpayers' offices or premises;

- Making false declarations leading to any reduction in payable tax amounts or any increase in amounts of tax exemption, reduction or refund which have been determined by competent agencies’ tax inspection and examination or administrative violation records as an act of tax evasion if the violating taxpayer commits the first administrative violation regarding tax evasion, has made additional declarations and fully paid tax amounts owed to the state budget before the time of the competent agency’s issuance of the sanctioning decision, and the tax authority has made a written record stating that this act is an act of false declaration leading to any deficiency or underpayment of taxes payable;

- Making false declarations leading to any deficiency or underpayment of taxes payable or any increase in amounts of tax exemption reduction or refund in case of related-party transactions though the taxpayer has made market price determination dossiers, or has made and sent annexes to tax authorities as per regulations on tax administration applicable to enterprises with related-party transactions;

- Using illegal invoices or evidencing documents for keeping accounting records of values of purchased goods or services to reduce taxes payable or increase amounts of tax refund, reduction or refund but, after the tax authority’s discovering this act through their tax inspection and examination, the buyer succeeds in proving that this act is performed through the seller’s fault and fully keeping accounts of these values in accordance with regulations.

* Remedies:

- Compelling the full payment of underpaid or deficient taxes or higher-than-prescribed amounts of tax refund, exemption or reduction, or deferred taxes, into the state budget with respect to the acts prescribed in Clause 1, Article 16 of Decree 125/2020/ND-CP.

If the sanctioning time limit expires, the taxpayer that is not sanctioned under the provisions of Clause 1, Article 16 of Decree 125/2020/ND-CP must fully pay underpaid or deficient taxes or higher-than-prescribed amounts of tax refund, exemption or reduction, or deferred taxes, into the state budget within the time limits prescribed in Clause 6, Article 8 of Decree 125/2020/ND-CP;

- Compelling the re-adjustment of losses, the carried-forward amounts of input VAT deductions (if any) in case of commission of the acts prescribed in Clause 1, Article 16 of Decree 125/2020/ND-CP.

* In case where the taxpayer makes false declarations as provided in Points a, b, d of Clause 1, Article 16 of Decree 125/2020/ND-CP which do not lead to any deficiency or underpayment of taxes payable or any increase in amounts of tax exemption, reduction or refund, they shall not be sanctioned according to Article 16 of Decree 125/2020/ND-CP, but shall be sanctioned according to Clause 3, Article 12 of Decree 125/2020/ND-CP.

Which entities are subject to administrative penalties for tax-related violations in Vietnam?

According to the provisions in Clause 1, Article 3 of Decree 125/2020/ND-CP, the entities subject to administrative penalties for tax-related violations in Vietnam include:

- Individual taxpayers committing tax -related administrative violations.

In case where a taxpayer authorizes another entity or person to fulfill tax-related obligations subject to laws on taxes and tax administration under which a trusted party's obligations and duties to act on a taxpayer’s behalf are prescribed, and the trusted party commits any administrative violation prescribed herein, the trusted party (either person or entity) shall be sanctioned as per this Decree.

In case where, as provided by legislation on taxes and tax administration, an entity and person obliged to act on a taxpayer’s behalf to make tax registration, declaration or payment commits any violation prescribed in this Decree, that trusted entity or person shall be subject to the relevant tax-related administrative penalty stated herein.

- Entities and persons involved in tax-related administrative violations.