What is the time limit for execution of tax or invoice-related administrative penalty charge decisions in Vietnam?

What is the time limit for execution of tax or invoice-related administrative penalty charge decisions in Vietnam?

Pursuant to Article 40 of Decree 125/2020/ND-CP, the following provisions apply:

Statute of Execution for Administrative Penalty Decisions on Tax and Invoice Violations

1. The statute of execution for administrative penalty decisions on tax and invoice violations is one year from the date of issuing the penalty decision. If the tax authority has not yet delivered or sent the penalty decision to the violating organization or individual as stipulated in Article 39 of this Decree within the statute of execution, the penalty decision will not be executed.

If the penalty decision includes measures to remedy the consequences, these measures will still be applied.

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Therefore, the statute of execution for administrative penalty decisions on tax and invoice violations is one year from the date of issuing the penalty decision.

If the above statute of execution expires and the tax authority has not delivered or sent the administrative penalty decision to the violating organization or individual, the penalty decision will not be executed.

What is the time limit for execution of tax or invoice-related administrative penalty charge decisions in Vietnam? (Image from Internet)

When is a tax-related administrative penalty charge decision not issued in Vietnam?

According to Article 38 of Decree 125/2020/ND-CP on situations where a tax-related administrative penalty charge decision is not issued, include:

- No tax-related administrative penalty charge decision is issued in the following cases:

+ Cases as stipulated in Article 9 of Decree 125/2020/ND-CP involve situations where administrative penalties for tax violations are not applied:

++ No administrative penalty is applied in situations where administrative violations are not penalized according to the law on handling administrative violations.

Taxpayers who are late in fulfilling electronic tax procedures due to technical malfunctions of the information technology system as notified on the tax authority’s electronic portal fall under cases caused by force majeure events as stipulated in Clause 4, Article 11 of the 2012 Law on Handling Administrative Violations.

++ No administrative penalty is applied for tax violations and no late payment interest for taxes is charged to taxpayers who violate tax administration due to compliance with guiding documents or decisions by tax authorities or competent state agencies related to determining tax obligations (including guiding documents or decisions issued before December 5, 2020), except during audit or inspection at the taxpayer’s premises where no error in declaration or tax obligation determination is found, but later administrative tax violations are discovered.

++ No penalty is applied for tax violations in cases of incorrect declarations where the taxpayer has amended the tax declaration records and voluntarily paid the due tax amount fully before the tax authority announces the decision to check or audit tax at the taxpayer’s premises, or before the tax authority discovers such without audit or inspection, or before other competent agencies find such errors.

++ No penalty is applied for violations of tax procedures for individuals directly finalizing personal income tax late that incur tax refunds; business households, individual businesses have been subjected to tax determination as per Article 51 of the 2019 Law on Tax Administration.

++ No penalty is applied for deadline violations in submitting tax declaration records during periods when taxpayers are granted extensions to file.

+ Unable to identify the administrative violation subject for tax;

+ The statute of limitations for administrative penalties for tax-related violations as stipulated in Article 8 of Decree 125/2020/ND-CP or the deadline for issuing penalty decisions as per the law on handling administrative violations has expired;

+ Individuals who violate administrative regulations on tax have died, are missing; organizations have been dissolved or went bankrupt during the timeframe for issuing penalty decisions, except for cases noted in point c, Clause 4, Article 41 of Decree 125/2020/ND-CP.

The basis for determining individuals' death, missing status; organizations' dissolution or bankruptcy status is as per Clause 2, Article 41 of Decree 125/2020/ND-CP;

+ Transfer of case files with criminal indicators for prosecution purposes.

- In cases where no administrative penalty decision is issued as per points a, b, c, d, Clause 1, Article 38 of Decree 125/2020/ND-CP, the competent authority must apply remedial actions (if any).

The decision to apply remedial measures must clearly state the reasons for not issuing the administrative penalty decision; measures applied, responsibilities and completion deadlines.

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

According to Article 3 of Decree 125/2020/ND-CP, the subjects to administrative penalties for tax-related violations include:

[1] Taxpayers with acts of administrative violations on tax, invoices.

In cases where taxpayers authorize other organizations or individuals to perform tax obligations, and the tax law and tax administration law mandate the proxy to fulfill certain obligations on behalf of the taxpayer, if the proxy commits administrative violations stipulated in this Decree, the proxy shall be penalized in accordance with this Decree.

Per the tax law and tax administration law, entities or individuals responsible for taxpayer registration, declaration, or payment on behalf of taxpayers who commit administrative violations as per this Decree, shall be subject to administrative penalties for taxes as per this Decree.

[2] Organizations and individuals related to administrative violations on tax, invoices.

* Taxpayers being organizations subject to administrative penalties for tax-related violations, invoices include:

- Enterprises established and operating under the Law on Enterprises, Law on Investment, Law on Credit Institutions, Law on Insurance Business, Law on Securities, Law on Petroleum, Law on Commerce, and other legal documents; dependent units of enterprises, business locations directly declaring, paying taxes, and using invoices;

- Public and non-public administrative units;

- Organizations established and operating under the Law on Cooperatives;

- Foreign organizations, enterprises, branches, representative offices of foreign traders, executive offices of foreign contractors in Vietnam engaging in business or having income arising in Vietnam;

- State agencies committing administrative violations on tax, invoices, where such acts are outside state management duties assigned;

- Partnerships and other organizations established per the legal provisions.