Will there be penalties imposed for supplementing a tax return before a tax audit in Vietnam?

Will there be penalties imposed for supplementing a tax return before a tax audit in Vietnam?

Based on Clause 3, Article 9 of Decree 125/2020/ND-CP, regulations are as follows:

Exceptions to tax or invoice-related administrative penalties

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3. No administrative penalty for tax-related violations shall be imposed on cases where an incorrect declaration has been made, the taxpayer has amended the tax return, and voluntarily paid the full amount of tax due before the tax authority announces the decision to conduct a tax inspection or audit at the taxpayer's premises, or before the tax authority discovers the issue without a tax inspection, audit, or before another competent authority discovers it.

4. No penalty for tax procedure violations shall be enforced for individuals directly finalizing personal income tax who are late in submitting tax finalization dossiers that have resulted in refundable tax; business households or individual businesses that have had their tax determined according to Article 51 of the Tax Administration Law.

5. No penalty for late submission of tax returns shall be imposed within the period when the taxpayer has been granted an extension to submit their tax return.

If there is a tax declaration error and the taxpayer has amended the tax return and voluntarily paid the full tax due, this shall occur before the tax authority announces the decision to conduct a tax inspection or audit at the taxpayer's premises, before the tax authority’s detection without inspection, or before another competent authority discovers it, then there will be no penalty imposed.

Will there be penalties for supplementing a tax return before a tax audit in Vietnam? (Image from the Internet)

What is the time limit for submitting tax returns after expiration of the prescribed time limits to be exempt from a fine?

According to Article 13 of Decree 125/2020/ND-CP, regulations for penalizing late submission of tax returns are as follows:

Penalties for late submission of tax returns

1. A warning is imposed for submitting a tax return late by 01 to 05 days with extenuating circumstances.

2. A fine ranging from VND 2,000,000 to VND 5,000,000 is imposed for submitting a tax return late by 01 to 30 days, except cases specified in Clause 1 of this Article.

3. A fine ranging from VND 5,000,000 to VND 8,000,000 is imposed for submitting a tax return late by 31 to 60 days.

4. A fine ranging from VND 8,000,000 to VND 15,000,000 is imposed for any of the following acts:

a) Submitting a tax return late by 61 to 90 days;

b) Submitting a tax return late by 91 days or more without incurring payable tax;

c) Failing to submit a tax return without incurring payable tax;

d) Failing to submit appendices as required by tax administration regulations for businesses with associated transactions along with the corporate income tax finalization return.

5. A fine ranging from VND 15,000,000 to VND 25,000,000 is imposed for submitting a tax return over 90 days late from the expiry date of the tax return submission, incurring payable tax, and the taxpayer has already paid the full tax and late payment fee to the state budget before the tax authority announces the decision to conduct a tax inspection or audit, or before the tax authority records the act of late submission of tax returns as prescribed in Clause 11, Article 143 of the Tax Administration Law.

In cases where the fine under this clause exceeds the payable tax on the tax return, the maximum fine for this case is equal to the payable tax amount on the tax return but not lower than the average level of the fine frame specified in Clause 4 of this Article.

6. Measures for remedying consequences:

a) Mandate the full payment of late payment interest to the state budget for violations specified in Clauses 1, 2, 3, 4, and 5 of this Article if the taxpayer's late submission of the tax return leads to late payment of taxes;

b) Require the submission of tax returns, appendices along with tax returns for violations specified at Points c, d, Clause 4 of this Article.

In the case of submitting a tax return late by 01 to 05 days and with extenuating circumstances, there will be no fine imposed; the person will be warned.

Vietnam: Shall tax returns be supplemented when the submitted returns are erroneous or inadequate?

Based on Clause 1, Article 47 of the 2019 Tax Administration Law regarding the amendment of tax returns by the taxpayer, the regulation is as follows:

Amendment of tax returns

1. Taxpayers who discover errors or omissions in tax returns submitted to tax authorities are allowed to amend their tax returns within 10 years from the deadline for submitting the return of the relevant tax period containing errors or omissions, but before the tax authority or competent authority announces the decision to conduct an audit, inspection.

2. Even if the tax authority or competent authority has announced the decision to conduct a tax audit or inspection at the taxpayer's premises, the taxpayer is still allowed to amend tax returns; the tax authority imposes administrative penalties for tax management violations for acts specified in Articles 142 and 143 of this Law.

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Taxpayers who discover errors in tax returns submitted to tax authorities are allowed to correct their tax returns.

To be specific, taxpayers who discover errors in tax returns submitted to tax authorities are allowed to correct their tax returns within 10 years from the deadline for submission of the tax return of the period containing errors or omissions, but before the tax authority or competent authority announces the audit or inspection decision.

If the tax authority or competent authority has announced the decision to conduct a tax audit or inspection at the taxpayer's premises, taxpayers are still allowed to amend tax returns; the tax authority will impose administrative penalties for tax management violations for acts specified in Articles 142 and 143 of the 2019 Tax Administration Law.

After the tax authority or competent authority issues conclusions or tax handling decisions post-audit or inspection at the taxpayer's premises, amendments to tax returns are regulated as follows:

- Taxpayers are allowed to amend tax returns in cases where it increases the tax payable, reduces the deductible tax, or reduces exempted, reduced, or refundable tax and will be subject to administrative penalties for tax management violations for acts specified in Articles 142 and 143 of the 2019 Tax Administration Law.

- If taxpayers discover errors or omissions in tax returns resulting in a reduction in the tax payable or an increase in deductible tax, or an increase in exempted, reduced, or refundable tax, they must follow the procedures for tax dispute resolution.