Which authority has the power to impose tax liability in Vietnam?

Which authority has the power to impose tax liability in Vietnam?

According to Clause 1, Article 16 of Decree 126/2020/ND-CP, the authorities with the power to impose tax liability include:

- General Director of the General Department of Taxation;

- Director of the Department of Taxation;

- Chief of the Tax Sub-Department with the power to impose tax liability.

Which authority has the power to impose tax liability in Vietnam? (Image from the Internet)

What are cases of tax liability imposition in Vietnam?

According to Article 14 of Decree 126/2020/ND-CP, taxpayers are subject to tax liability imposition by the taxation authority in the following cases:

(1). No taxpayer registration as stipulated in Article 33 of the Law on Tax Administration 2019.

(2). Failure to declare taxes or inaccurate, incomplete, and untruthful tax declarations as per Article 42 of the Law on Tax Administration 2019.

(3). Failure to submit supplementary tax dossier upon request from the tax authority or supplemented the tax dossier but did not provide complete, truthful, and accurate grounds for tax calculation to impose tax liability payable.

(4). Failure to reflect or accurately reflect financial data in the accounting books to determine tax obligations.

(5). Failure to present accounting books, invoices, documents, and necessary related materials for determining the elements to calculate tax; determining the tax payable within the prescribed time limit or upon the expiration of the tax inspection, audit period at the taxpayer's office.

(6). Failure to comply with the tax inspection decision within 10 working days from the date of signing the decision, except for cases where the inspection time is postponed following regulations.

(7). Failure to comply with the tax audit decision within 15 days from the date of signing the decision, except for cases where the audit time is postponed following regulations.

(8). Buying, selling, exchanging, and accounting the value of goods and services not according to the normal transaction value in the market.

(9). Purchasing, exchanging goods, and services using illegal invoices, illegal invoice use where the goods and services are genuine based on the determination by investigating, auditing, inspection authorities, and have been declared revenue, expense for tax calculation.

(10). Indicating signs of fleeing or dispersing assets to avoid tax obligations.

(11). Engaging in transactions inconsistent with the economic substance, incorrect actual transactions with the purpose of reducing the taxpayer's tax obligation.

(12). Non-compliance with regulations on the obligation to declare, determine transfer pricing or not providing information as per regulations on tax management for enterprises with related party transactions.

What are the bases for tax liability imposition in Vietnam?

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

(1). The taxpayer is subject to the determination of factors related to tax payable

- Organizations, individuals are subject to the determination of factors related to tax payable when falling into one of the following cases:

+ Through tax declaration dossier inspection, the tax authority has grounded reasons to believe that the taxpayer declared incomplete or inaccurate factors for determining tax payable, demanding the taxpayer to supplement the declaration but the taxpayer either did not supplement or did not supplement accurately, truthfully as per the tax authority's request.

+ Through inspection of accounting books, invoices, documents related to determining tax payable or through inspection, comparison, verification, accounting books, invoices, documents of related organizations, individuals, tax authority has grounds proving the taxpayer's accounting is inaccurate, untruthful on factors related to determining tax payable.

+ Accounting sale prices of goods, services incorrectly to actual payment prices, reducing taxable revenue or accounting purchase prices of goods, raw materials serving production, business not according to actual payment prices consistent with the market, increasing deductible VAT, reducing tax obligations.

+ Taxpayer submits tax declaration dossier but cannot determine the factors forming the tax calculation base or despite determining factors cannot self-calculate tax payable.

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

- Bases for tax liability imposition

+ For taxpayers being organizations

Based on the tax authority’s database and commercial database; effective inspection, audit documents and results; verification results; minimum average tax payable of 03 local business establishments with the same items, industries, scales; where local business establishments are unavailable or insufficient, necessary information about items, industries, scales refers to that from business establishments in other localities.

+ For individuals transferring, inheriting, receiving real estate as gifts

The tax authority determines the taxable value when it finds individuals declaring, paying taxes at taxable values lower than the market transactional values. The tax-determined price by the tax authority must comply with the average market transactional values but not under the prices stipulated by the People’s Committee of provinces, cities at the time of tax liability imposition.

- Based on each defined factor, the tax authority determines the tax payable following the current tax law.

(2). The taxpayer is subject to tax liability imposition payable by percentage on revenue according to the law, as follows:

- Organizations paying VAT by the direct method, individual business declaring tax paying tax payable by percentage on revenue when falling into one of the cases defined in Clauses 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, and 11, Article 14 of Decree 126/2020/ND-CP.

- Bases for tax liability imposition

Based on the tax authority’s database and commercial database; effective inspection, audit documents and results; verification results; minimum revenue of 03 local business establishments with the same items, industries, scales; if local business establishments are unavailable or insufficient information about items, industries, scales, then the information refers to business establishments in other localities under similar natural and economic development conditions to calculate tax revenue determination.

- Based on the defined revenue, the tax authority determines the tax payable following the current tax law.