Which entities have the power to impose penalties for tax administrative offences regarding tax evasion in Vietnam?

Which entities have the power to impose penalties for tax administrative offences regarding tax evasion in Vietnam?

According to Article 143 of the Law on Tax Administration 2019 which provides regulations on acts of tax evasion as follows:

Acts of Tax Evasion

1. Not submitting taxpayer registration files; not submitting tax declaration files; submitting tax declaration files more than 90 days after the deadline for submitting tax declaration files or the extended deadline for submitting tax declaration files as stipulated by this Law.

2. Not recording in accounting books receipts related to the determination of the tax amount payable.

3. Not issuing invoices when selling goods or services as required by law or stating an invoice value lower than the actual payment value for goods or services sold.

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And according to Article 139 of the Law on Tax Administration 2019 which regulates the authority to impose penalties for tax administrative offences in tax management as follows:

Authority to impose penalties for tax administrative offences in tax management

1. The authority to impose penalties for tax administrative offences for tax procedure violations is carried out in accordance with the law on handling administrative violations.

2. The head of the tax administration agency, the Director of the Anti-Smuggling Investigation Department under the General Department of Customs have the authority to issue decisions on administrative penalties for actions stipulated in Articles 142, 143, 144, and 145 of this Law.

3. The Government of Vietnam details these provisions.

Therefore, the head of the tax administration agency, and the Director of the Anti-Smuggling Investigation Department under the General Department of Customs are authorized to administer administrative penalties for tax evasion stipulated in Article 143 of the Law on Tax Administration 2019.

Which entities have the power to impose penalties for tax administrative offences regarding tax evasion in Vietnam? (Image from Internet)

What are adminstrative penalties for tax evasion in Vietnam?

According to Article 17 of Decree 125/2020/ND-CP, acts of tax evasion that do not constitute criminal offenses may be administratively sanctioned as follows:

- A fine equaling the amount of tax evaded for taxpayers with one or more mitigating factors when performing any of the following violations:

+ Failing to submit taxpayer registration files; failing to submit tax declaration files or submitting tax declaration files 90 days after the deadline, except as prescribed at points b, c clause 4 and clause 5 Article 13 of Decree 125/2020/ND-CP;

+ Not recording in accounting books receipts related to the determination of the tax amount payable, not declaring, or declaring incorrectly resulting in a lack of tax payable or an increase in refunded, exempted, or reduced taxes, except acts stipulated in Article 16 of Decree 125/2020/ND-CP;

+ Failing to issue invoices when selling goods or services, except when the taxpayer has declared the tax value for goods or services sold or provided during the corresponding tax period; issuing invoices with incorrect quantities or values of goods or services, leading to a lower tax declaration than actual and discovered after the tax declaration deadline;

+ Using illegal invoices; using illegal invoices for tax declarations that reduce the tax payable or increase the amount of tax refunded, exempted, or reduced;

+ Using illegal documentation; using illegal documentation; using documents that do not reflect the true nature of transactions or actual transaction values to incorrectly identify the payable tax amount, tax exempt or reduced amount, or refunded tax amount; creating documentation to cancel materials or goods inaccurately reducing the tax payable or increasing the refunded, exempted, or reduced taxes;

+ Using goods subject to non-tax, tax-exemption, or conditionally tax-exempt use for unauthorized purposes without declaring the conversion of usage purposes or declaring taxes to the tax authority;

+ Taxpayers engaging in business activities during the period of requested business suspension or temporary suspension without notifying the tax authority, except as stipulated at point b clause 4 Article 10 of Decree 125/2020/ND-CP.

- A fine equaling 1.5 times the amount of evaded tax for taxpayers committing any behaviors prescribed in clause 1 Article 17 of Decree 125/2020/ND-CP without any aggravating or mitigating circumstances.

- A fine equaling double the amount of evaded tax for taxpayers committing any behaviors prescribed in clause 1 Article 17 of Decree 125/2020/ND-CP who have one aggravating circumstance.

- A fine equaling 2.5 times the amount of evaded tax for taxpayers committing any behaviors prescribed in clause 1 Article 17 of Decree 125/2020/ND-CP having two aggravating circumstances.

- A fine equaling triple the amount of evaded tax for taxpayers committing any behaviors prescribed in clause 1 Article 17 of Decree 125/2020/ND-CP having three or more aggravating circumstances.

- Remedial measures:

+ Compulsory payment of full evaded taxes to the state budget for violations as prescribed in clauses 1, 2, 3, 4, 5 Article 17 of Decree 125/2020/ND-CP.

In cases where tax evasion as regulated in clauses 1, 2, 3, 4, 5 Article 17 of Decree 125/2020/ND-CP are beyond the time limits for administrative penalties, the taxpayer will not be penalized for tax evasion, but they must pay the full amount of evaded tax and late payment fees computed on the evaded tax amount to the state budget as per the deadlines stipulated in clause 6 Article 8 of Decree 125/2020/ND-CP.

+ Mandatory adjustment of the loss carryforward and deductible input VAT on tax records (if any) for behaviors prescribed in clauses 1, 2, 3, 4, 5 Article 17 of Decree 125/2020/ND-CP.

- Violations prescribed at points b, d, e clause 1 Article 17 of Decree 125/2020/ND-CP discovered post tax declaration deadline, but not reducing the tax payable or not yet refunded, not increasing the exempted, reduced tax amount, will be administratively sanctioned as per clause 3 Article 12 of Decree 125/2020/ND-CP.

Note: The aforementioned penalty levels apply to individuals, while the penalty levels for organizations are double that for individuals.

What is the time limits for imposion of penalties for tax evasion in Vietnam?

Regulations stipulated in point b clause 2 Article 8 of Decree 125/2020/ND-CP prescribe:

The time limits for administering penalties concerning tax, invoice violations; timeframe considered for being non-penalized; tax recovery timeframe

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2. The time limits for penalty on tax administrative violations

a) The penalty statute for violations of tax procedures is 2 years, from the date the violation is committed.

The date of committing an administrative violation in tax procedures is the day following the deadline to complete the tax procedure according to the law on tax management, except for the following cases:

For violations stipulated in clause 1, point a, b clause 2, clause 3, and point a clause 4 Article 10; clauses 1, 2, 3, 4 and point a clause 5 Article 11; clauses 1, 2, 3 and point a, b clause 4, clause 5 Article 13 of this Decree, the date of committing a violation to calculate the statute is the day the taxpayer completes taxpayer registration or notifies the tax authority or submits the tax declaration file.

For violations stipulated in point c clause 2, point b clause 4 Article 10; point b clause 5 Article 11; point c, d clause 4 Article 13 of this Decree, the date of committing a violation to calculate the statute is the day the authorized officer discovers the violation.

b) The time limits for penalizing tax evasion not reaching the level of criminal responsibility, acts of incorrect declarations leading to a deficiency in tax payable or increase in tax exemption, reduction, refund is 5 years from the date the violation is committed.

The date of committing acts leading to a deficiency in tax payable or increasing tax exemption, reduction, refund or tax evasion (except acts at point a clause 1 Article 17 of this Decree) is the day following the last date of the tax declaration filing period for the tax period when the taxpayer underreported taxes, evaded taxes or the day following the date the authorized agency issued the decision for tax refund, exemption, reduction.

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Thus, according to the above regulations, the time limits for administratively penalizing tax (tax procedure violations) and invoice violations is 2 years.

The time limits for penalizing tax evasion not reaching the level of criminal responsibility, acts of incorrect declarations leading to a deficiency in tax payable or increase in tax exemption, reduction, refund is 5 years.