What is the time limit for imposion of administrative penalties on tax evasion in Vietnam?

What is tax evasion?

Pursuant to Article 143 of the Law on Tax Administration 2019, acts of tax evasion include:

- Failing to submit taxpayer registration documents; failing to submit tax declaration documents; submitting tax declaration documents more than 90 days after the deadline for submission, or after the extended deadline as regulated by the Law on Tax Administration 2019.

- Not recording in accounting books the revenues related to determining the amount of tax payable.

- Failing to issue invoices when selling goods or services as required by law or recording lower values on sales invoices than the actual payment value of the goods or services sold.

- Using illegal invoices, using invoices illegally to account for raw materials and goods in tax-related activities to reduce the amount of tax payable or increase the tax amount exempted, reduced, or refunded.

- Using documents that do not reflect the true nature of transactions or the actual transaction value to incorrectly determine the tax amount payable, the tax amount exempted, reduced, refunded, or not payable.

- Incorrectly declaring or failing to declare customs for exported or imported goods without amending tax declaration documents post-clearance.

- Intentionally not declaring or falsely declaring tax concerning exported or imported goods.

- Colluding with senders to import goods for the purpose of tax evasion.

- Using tax-exempt, non-taxable, or tax-considered goods for non-designated purposes without declaring the change in use with the tax authority.

- Taxpayers conducting business during periods of suspension or temporary cessation without notifying the tax authority.

What is the time limit for imposion of administrative penalties concerning tax evasion in Vietnam?

According to point b, clause 2, Article 8 of Decree 125/2020/ND-CP on the time limit for administrative penalties on tax violations:

Time limit for administrative penalties on tax, invoices; period considered not yet penalized; period for tax recall

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2. Time limit for administrative penalties on tax violations

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b) The time limit for imposion of penalties for acts of tax evasion that do not reach the level of criminal liability, incorrect declaration leading to insufficient tax payment or increased tax exemption, reduction, refund is 5 years from the date of violation.

The date of violation for incorrect declaration leading to insufficient tax payment, increased tax exemption, reduction, refund, or tax evasion (except for acts at point a, clause 1, Article 17 of this Decree) is the day following the deadline for the tax period’s tax declaration documents in which the taxpayer understated tax, evaded tax, or the day following the decision by a competent authority to refund, exempt, or reduce tax.

For the acts of not submitting taxpayer registration documents, failing to submit tax declaration documents at point a, clause 1, Article 17 of this Decree, the date of violation is when an authorized person detects the violation. For submitting tax declaration documents after 90 days as specified at point a, clause 1, Article 17 of this Decree, the date of violation is the day the taxpayer submits the tax declaration documents.

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Thus, the time limit for imposion of administrative penalties on tax violations not reaching criminal liability, incorrect declaration leading to insufficient tax payment, or increased tax exemption, reduction, refund, is 5 years from the date of violation.

What is the time limit for imposion of administrative penalties on tax evasion in Vietnam? (Image from the Internet)

What are the penalties for administrative violations related to tax evasion in Vietnam?

Pursuant to Article 17 of Decree 125/2020/ND-CP, penalties for tax evasion are prescribed as follows:

(1) A fine equal to 1 time the tax evaded amount for taxpayers with at least one mitigating circumstance when committing one of the following violations:

- Failing to submit taxpayer registration documents; failing to submit tax declaration documents, or submitting tax declaration documents more than 90 days after the deadline or extended deadline, except as specified at point b, c clause 4 and clause 5, Article 13 Decree 125/2020/ND-CP;

- Not recording in accounting books the revenues related to tax determination, failing to declare or incorrectly declaring that leads to insufficient tax payable or increased tax refund, exemption, reduction, except for violations specified in Article 16 Decree 125/2020/ND-CP;

- Failing to issue invoices when selling goods or services, except when the taxpayer has declared taxes for the value of goods or services sold in the corresponding tax period; issuing sales invoices incorrectly in quantity, value discovered after the deadline for filing tax returns;

- Using illegal invoices; using invoices illegally to declare taxes thereby reducing the tax payable or increasing the tax refunded, exempted, reduced;

- Using illegal documents; using documents improperly; using documents that do not reflect real transaction nature or value to determine incorrect tax payable, tax exempted, reduced, refunded; preparing and filing unrealistic material dissolution or commodity liquidation documentation to decrease payable tax or increase refunded, exempted, reduced tax;

- Using tax-exempt, non-taxable, or tax-considered goods for non-designated purposes without declaring the change in use or tax to the tax office;

- Taxpayers engaging in business during approved suspension or cessation without notification to the tax authority, except as stipulated at point b, clause 4, Article 10 Decree 125/2020/ND-CP.

(2) A fine equal to 1.5 times the evaded tax amount for taxpayers committing any acts specified in (1) without aggravating or mitigating circumstances.

(3) A fine equal to 2 times the evaded tax amount for taxpayers committing any acts specified in (1) with one aggravating circumstance.

(4) A fine equal to 2.5 times the evaded tax amount for taxpayers committing any acts specified in (1) with two aggravating circumstances.

(5) A fine equal to 3 times the evaded tax amount for taxpayers committing any acts specified in (1) with three or more aggravating circumstances.

(6) Remedial measures:

- Requiring the payment of the full evaded tax amount to the state budget for violations specified in (1), (2), (3), (4) and (5).

If the tax evasion act specified in (1), (2), (3), (4), and (5) has surpassed the statute of limitations, the taxpayer will not be penalized for tax evasion but must pay the full evaded tax amount, late payment interest on the evaded tax amount to the state budget by the deadline specified in clause 6, Article 8 Decree 125/2020/ND-CP.

- Requiring adjustment of losses, input value-added tax to be deducted on tax documents (if any) for violations specified in (1), (2), (3), (4), and (5).

(7) Violations specified at point b, d, e, clause 1, Article 17 Decree 125/2020/ND-CP detected after the filing deadline but not reducing the tax payable or not yet refunded tax, not increasing the exempted or reduced tax, are fined administratively as specified in clause 3, Article 12 Decree 125/2020/ND-CP.

Note: The tax evasion penalty level above applies to individual taxpayers as per clause 4, Article 7 Decree 125/2020/ND-CP

Additionally, pursuant to clause 5, Article 5 Decree 125/2020/ND-CP, it is stipulated as follows:

Principles for handling administrative tax and invoice violations

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5. For the same tax and invoice administrative violation, the fine level for organizations is twice that for individuals, except for fines related to violations in Articles 16, 17, and 18 of this Decree.

Thus, for tax evasion acts, the administrative fine for individuals and organizations with the same violation is equivalent.