What is the tax liability imposition procedure in Vietnam?

What is the tax liability imposition procedure in Vietnam?

Based on Clause 2 Article 16 of Decree 126/2020/ND-CP, the tax liability imposition procedure is as follows:

- When imposing tax, the tax authority notifies the taxpayer in writing about the tax liability imposition and issues a tax liability imposition decision. The tax liability imposition decision must specify the reason for tax liability imposition, the basis for tax liability imposition, the imposed tax amount, and the deadline for tax payment.

- In cases where the tax authority impose tax through tax inspection or audit, the reason for tax liability imposition, the basis for tax liability imposition, the imposed tax amount, and the deadline for tax payment must be recorded in the tax inspection or audit report and the tax handling decision of the tax authority.

- In cases where the taxpayer is imposed according to the regulations, the tax authority will impose administrative sanctions and calculate late payment interest as prescribed by law.

What is the tax liability imposition procedure in Vietnam? (Image from the Internet)

When is the taxpayer imposed tax in case of tax offences in Vietnam?

Based on Clause 1 Article 50 of the Law on Tax Administration 2019, the taxpayer is imposed tax in one of the following tax offences:

- No taxpayer registration, failure to file tax declarations, failure to submit supplementary tax documents as requested by the tax authority, or incomplete, inaccurate, or untruthful tax declarations;

- Failure to reflect or accurately, truthfully, and fully reflect data in accounting books to determine tax obligations;

- Failure to present accounting books, invoices, documents, and necessary materials related to tax determination within the prescribed period;

- Non-compliance with tax inspection or audit decisions as prescribed;

- Buying, selling, or recording the value of goods and services not according to market transaction values;

- Purchasing, exchanging goods using illegal invoices or unlawful use of invoices where the goods are genuine as determined by the competent authority and have been declared in taxable revenue;

- Showing signs of absconding or dispersing assets to avoid fulfilling tax obligations;

- Conducting transactions not in accordance with economic substance or actual circumstances to reduce the taxpayer’s tax obligation;

- Failure to comply with regulations on the obligation to declare and determine transfer pricing or failure to provide information according to tax management regulations for enterprises with intercompany transactions.

When is tax imposed for exports and imports in Vietnam?

Based on Clause 1 Article 52 of the Law on Tax Administration 2019, the customs authority impose tax for exports and imports in the following cases:

- The taxpayer relies on illegal documents to declare and calculate tax; fails to declare tax or inaccurately or incompletely declares related content for tax determination;

- Beyond the prescribed period without providing, refusing, or delaying, prolonging the provision of accounting books, documents, vouchers, data, data related to the accurate determination of tax payable;

- The taxpayer fails to prove or explain or beyond the prescribed period fails to explain contents related to tax determination according to the law; non-compliance with customs authority’s inspection and audit decisions;

- The taxpayer fails to reflect or accurately, truthfully, and fully reflect data in accounting books for tax determination;

- The customs authority has sufficient evidence to determine that the declared value does not match the actual transaction value;

- Transactions are conducted not in accordance with economic substance or actual circumstances affecting the tax amount payable;

- The taxpayer fails to calculate the payable tax amount;

- Other cases where the customs authority or another authority discovers incorrect declaration and calculation of tax according to the law.

What are the bases for tax liability imposition in Vietnam?

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

* Taxpayers are imposed on individual elements related to the determination of payable tax amount

- Organizations and individuals are imposed on individual elements related to the determination of payable tax amount when falling into one of the following cases:

+ Through the review of tax declaration documents, the tax authority has grounds to believe that the taxpayer has not fully or accurately declared the factors serving as the basis for determining the payable tax amount. The authority has requested the taxpayer to declare supplementary information, but the taxpayer has not complied or has declared supplementary information inaccurately or untruthfully according to the tax authority’s requirements.

+ Through the review of accounting books, invoices, and relevant documents related to the determination of the taxpayer’s payable tax amount, or through verification of accounting books, invoices, and relevant documents of related organizations and individuals, the tax authority has grounds to prove that the taxpayer has inaccurately or untruthfully accounted for elements related to the determination of the payable tax amount.

+ Recording sales of goods and services not according to the actual payment price, reducing taxable revenue, or recording the purchase price of goods and raw materials serving production and business not according to the actual payment price suitable to the market, increasing costs, and increasing deductible value-added tax, thereby reducing tax obligations.

+ The taxpayer submits tax declaration documents but does not determine the factors serving as the basis for determining the tax calculation base or determines the factors but cannot self-calculate the payable tax amount.

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

- Bases for tax liability imposition

+ For taxpayers who are organizations

The basis includes tax management agency data and commercial data; valid inspection and audit documents; verification results; the minimum average payable tax amount of three businesses with similar items, industries, and scale in the locality. If such information is not available or insufficient in the locality, data from businesses in other localities may be used.

+ For individuals transferring or inheriting real estate, or receiving real estate as a gift

The tax authority determines the taxable price if the individual declares and pays tax with a value lower than the common market transaction price. The imposed taxable price must be consistent with the market transaction price but not lower than the price prescribed by the provincial or city People's Committee at the time of imposement.

+ Based on each imposed factor, the tax authority determines the payable tax amount according to the current tax laws.

* Taxpayers are imposed for the payable tax amount based on a percentage of revenue as prescribed by law, as follows:

- Organizations paying value-added tax by the direct method, and individual businesses paying tax by the declaration method, are imposed for the payable tax amount based on a percentage of revenue 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.

- Bases for tax liability imposition

The basis includes tax management agency data and commercial data; valid inspection and audit documents; verification results; the minimum revenue of three businesses with similar items, industries, and scale in the locality. If this information is unavailable in the locality, data from businesses in other localities with similar natural and economic development conditions are used for revenue imposement.

- Based on the imposed revenue, the tax authority determines the payable tax amount according to current tax laws.