When is tax liability imposed in case of tax offences in Vietnam?

When is tax liability imposed in case of tax offences in Vietnam?

Based on the provisions of Clause 1, Article 50 of the Law on Tax Administration 2019 regarding cases of tax liability imposition in case of tax offences as follows:

Tax liability imposition in case of tax offences

1. Taxpayers are subject to tax liability imposition when they fall into one of the following cases of tax law violations:

a) Failure to register taxpayers, failure to declare taxes, failure to submit additional tax documents as requested by the tax authority, or incomplete, dishonest, and inaccurate tax declarations regarding tax calculation grounds;

b) Failure to reflect or inadequate, dishonest, and inaccurate reflection of data in the accounting books to determine tax obligations;

c) Failure to present accounting books, invoices, documents, and the necessary related materials for determining the amount of tax payable within the stipulated time frame;

d) Failure to comply with decisions on tax inspection or tax audit as prescribed;

e) Purchase, sale, exchange, and accounting of the value of goods and services not according to normal transaction values on the market;

f) Purchase or exchange of goods using illegal invoices, or illegal use of invoices where the goods are real as determined by a competent authority and the revenue has been declared for tax calculation;

g) Signs of escaping or dispersing assets to avoid fulfilling tax obligations;

h) Conducting transactions not consistent with the economic essence, not true to the actual occurrence, aiming to reduce the taxpayer's tax obligations;

i) Non-compliance with regulations on the obligation to declare and determine the price of related transactions or failing to provide information as required by tax laws for enterprises with related transactions.

2. The basis for tax liability imposition includes:

a) Database of the tax administration agency and commercial databases;

b) Comparing tax amounts payable by businesses of the same type, sector, profession, and scale in the locality; if there is no information on the items, sector, profession, and scale of the business in the locality, compare with other localities;

c) Documents and results of valid inspections and audits;

d) Tax collection rates on revenue for each field, sector, profession according to tax law provisions.

3. Taxpayers are subject to the imposition of individual factors related to determining the tax amount payable when falling into one of the following cases:

a) Through checking the tax declaration documents, the tax authority has grounds to believe that the taxpayer has not fully or accurately declared the factors constituting the basis for determining the tax payable, has requested the taxpayer to supplement declarations but the taxpayer has not supplemented as requested by the tax authority;

b) Through checking the accounting books, invoices, documents related to determining the tax amount payable, the tax authority has grounds to prove that the taxpayer has inaccurately and dishonestly accounted for the elements related to determining the tax amount payable;

c) Accounting the selling price of goods and services not consistent with the actual payment price, reducing taxable revenue, or accounting the purchase price of goods, raw materials for production and business inconsistent with the actual payment price suitable to the market, increasing costs, increasing deductible VAT, reducing the tax obligation payable;

d) The taxpayer submits tax declaration documents but cannot determine the factors constituting the basis for determining the tax calculation ground or can determine the factors constituting the basis for determining the tax calculation ground but cannot self-calculate the tax amount payable.

4. Taxpayers are subject to the imposition of tax amounts payable based on the rate on revenue according to the law for instances where the tax authority, through inspection or audit, finds that the accounting books, invoices, documents are incomplete, illegal, or contain incorrect declarations and calculations of tax in reality, and the revenue scale does not exceed the highest criteria of micro-enterprises according to the law on support for small and medium-sized enterprises and not subject to tax liability imposition as prescribed in Clause 3 of this Article.

5. The Government of Vietnam stipulates in detail this Article.

Thus, according to the above regulations, there are 9 cases where tax liability is imposed in case of tax offences specifically:

[1] Failure to register taxpayers, failure to declare taxes, failure to submit additional tax documents as requested by the tax authority, or incomplete, dishonest, and inaccurate tax declarations regarding tax calculation grounds;

[2] Failure to reflect or inadequate, dishonest, and inaccurate reflection of data in the accounting books to determine tax obligations;

[3] Failure to present accounting books, invoices, documents, and the necessary related materials for determining the amount of tax payable within the stipulated time frame;

[4] Failure to comply with decisions on tax inspection or tax audit as prescribed;

[5] Purchase, sale, exchange, and accounting of the value of goods and services not according to normal transaction values on the market;

[6] Purchase or exchange of goods using illegal invoices, or illegal use of invoices where the goods are real as determined by a competent authority and the revenue has been declared for tax calculation;

[7] Signs of escaping or dispersing assets to avoid fulfilling tax obligations;

[8] Conducting transactions not consistent with the economic essence, not true to the actual occurrence, aiming to reduce the taxpayer's tax obligations;

[9] Non-compliance with regulations on the obligation to declare and determine the price of related transactions or failing to provide information as required by tax laws for enterprises with related transactions.

What are the bases for tax liability imposition in case of tax offences in Vietnam?

Based on the provisions of Clause 2, Article 50 of the Law on Tax Administration 2019, the bases for tax liability imposition in case of tax offences include:

- The database of the tax administration agency and commercial databases;

- Comparing tax amounts payable by businesses of the same type, sector, profession, and scale in the locality; if there is no information on the items, sector, profession, and scale of the business in the locality, compare with other localities;

- Documents and results of valid inspections and audits;

- Tax collection rates on revenue for each field, sector, profession according to tax law provisions.

When is tax liability imposed in case of tax offences in Vietnam? (Image from the Internet)

What are the procedures and authority for tax liability imposition in Vietnam?

Based on the provisions of Article 16 of Decree 126/2020/ND-CP regarding procedures and authority for tax liability imposition:

* Regarding the authority for tax liability imposition:

The Director General of the General Department of Taxation; Directors of Tax Departments; Heads of Tax Sub-Departments have the authority to impose taxes.

* Procedures for tax liability imposition:

- When a tax liability is imposed, the tax authority shall notify the taxpayer in writing about the tax liability imposition and issue a tax liability imposition decision.

The tax liability imposition decision must clearly state the reasons for tax liability imposition, the basis for tax liability imposition, the imposed tax amounts, and the deadline for paying the tax.

- In cases where the tax authority carries out tax liability imposition through tax inspection or tax audit, the reasons for tax liability imposition, the basis for tax liability imposition, the imposed tax amounts, and the deadline for paying the tax must be stated in the tax inspection or audit record and the tax authority's tax handling decision.

- In cases where the taxpayer is subject to tax liability imposition as prescribed, the tax authority shall impose an administrative penalty and calculate the late payment interest according to legal provisions.

* tax liability imposition decision:

- When imposing a tax, the tax authority must issue a tax liability imposition decision according to Form No. 01/ADT in Appendix III issued together with Decree 126/2020/ND-CP (Download), and send it to the taxpayer within 3 working days from the date of signing the tax liability imposition decision;

In cases where the taxpayer is subject to tax payment as notified by the tax authority, the tax authority does not need to issue a tax liability imposition decision according to this clause.

- The taxpayer must pay the imposed tax amount according to the tax authority's tax handling decision.

In cases where the taxpayer disagrees with the tax amount imposed by the tax authority, the taxpayer still has to pay the tax amount and has the right to request the tax authority to explain or file complaints and lawsuits regarding the tax liability imposition.