Collection of judgments on enterprises committing tax evasion

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I. Regulations on tax evasion in Vietnam

1. Administrative sanctions for tax evasion:

In case individuals and businesses commit acts of tax evasion but not to the extent of being prosecuted for penal liability, they shall be administratively sanctioned according to the provisions of Article 17 of Decree 125/2020/ND-CP. Specifically, the sanctions are as follows:

- The fine which equals the amount of evaded tax shall be imposed on the taxpayer committing any of the violations of tax evasion under at least a mitigating circumstance

- The fine which is 1.5 times as much as the amount of evaded tax shall be imposed on any taxpayer committing one of the violations of tax evasion under neither aggravating nor mitigating circumstances.

- The fine which is 2 times as much as the amount of evaded tax shall be imposed on any taxpayer committing one of the violations of tax evasion under an aggravating circumstance.

- The fine which is 2.5 times as much as the amount of evaded tax shall be imposed on any taxpayer committing one of the violations of tax evasion under two aggravating circumstances.

- The fine which is 3 times as much as the amount of evaded tax shall be imposed on any taxpayer committing one of the violations of tax evasion under at least three aggravating circumstances.

In addition, individuals and businesses that evade tax are also subject to the following remedies:

- Compelling the full payment of evaded taxes into the state budget.

- If the sanctioning time limits for the acts of tax evasion expire, taxpayers that are not sanctioned must fully pay the amounts of evaded tax, deferred tax calculated based on the amounts of evaded tax into the state budget according to the time limits.

- Compelling the re-adjustment of losses, the amounts of input VAT deductions specified in tax dossiers (if any)...

2. Penalties for tax evasion in Vietnam

According to Article 200 of the Criminal Code 2015, amended 2017 stipulate that Any person who commits any of the following acts of tax evasion with an amount below will be examined for penal liability for the crime of tax evasion.

Article 200. Tax evasion

Any person who commits any of the following acts of tax evasion with an amount of evaded tax from VND 100,000,000 to under VND 300,000,000 or under VND 100,000,000 while having incurred an administrative penalty for tax evasion or having an unspent conviction for any of the offences specified in Article 188, 189, 190, 191, 192, 193, 194, 195, 196, 202, 250, 251, 253, 254, 304, 305, 306, 309 and 311 hereof shall be liable to a fine of from VND 100,000,000 to VND 500,000,000 or face a penalty of 03 - 12 months' imprisonment:

a) Failure to submit the application for tax registration; failure to submit the tax declaration; submitting a tax declaration after 90 days from the deadline for submitting the tax declaration or after the extended deadline for submitting the tax declaration as prescribed by law;

b) Failure to record revenues related to the determination of tax payables in accounting books;

c) Failure to issue invoices after selling goods/services or write lower values on invoices than actual values of goods/services sold;

d) Use illegal invoices or vouchers to record purchased goods and raw materials that results in reduction of tax payable or increase exempt, reduced, deductible or refundable tax;

dd) Use of other illegal documents to falsify the amount of tax payable or increase exempt, reduced, deductible or refundable tax;

e) Making incorrect declaration of exported or imported goods without making an additional declaration after customs clearance are granted, except in the circumstances specified in Article 188 and Article 189 hereof;

g) Failure to declare or to correctly declare taxes on exported or imported goods, except in the circumstances specified in Article 188 and Article 189 hereof;

h) Collaborating with the consignor to illegally import goods, except in the circumstances specified in Article 188 and Article 189 hereof;

i) Using tax-free goods, goods eligible for tax exemption or conditional tax exemption for improper purposes without notifying the change of purposes to the tax authority.

2. This offence committed in any of the following circumstances carries a fine of from VND 500,000,000 to VND 1,500,000,000 or a penalty of 01 - 03 years' imprisonment:

a) The offence is committed by an organized group;

b) The amount of tax evaded is from VND 300,000,000 to under VND 1,000,000,000;

c) The offence involves the abuse of the offender's position or power;

d) The offence has been committed more than once;

dd) Dangerous recidivism.

3. If the evaded tax is ≥ VND 1,000,000,000, the offender shall be liable to a fine of from VND 1,500,000,000 to VND 4,500,000,000 or face a penalty of 02 - 07 years' imprisonment.

4. The offender might also be liable to a fine of from VND 20,000,000 to VND 100,000,000 , be prohibited from holding certain positions or doing certain works for 01 - 05 years or have all or part of his/her property confiscated.

5. Punishments incurred by a corporate legal entity that commits any of the offences specified in this Article:

a) Any corporate legal entity that commits any of the acts of tax evasion specified in Clause 1 of this Article with an amount of from VND 200,000,000 to under VND 300,000,000 or from VND 100,000,000 to under VND 200,000,000 while having incurred an administrative penalty for tax evasion or having an unspent conviction for any of the offences specified in Article 188, 189, 190, 191, 192, 193, 194, 195 and 196 hereof shall be liable to a fine of from VND 300,000,000 to VND 1,000,000,000;

b) A corporate legal entity that commits this offence in any of the circumstances specified in Points a, b, d and dd Clause 2 of this Article shall be liable to fine of from VND 1,000,000,000 to VND 3,000,000,000;

c) A corporate legal entity that commits this offence in any of the circumstances specified in Clause 3 of this Article shall be liable to a fine of from VND 3,000,000,000 to VND 10,000,000,000 or has its operation suspended for 06 - 36 months;

d) A corporate legal entity that commits this offence in the circumstance specified in Article 79 hereof shall be permanently shut down;

dd) The violating corporate legal entity might also be liable to a fine of from VND 50,000,000 to VND 200,000,000, be banned from operating in certain fields or raising capital for 01 - 03 years.

II. Some judgments about tax evasion

1. Judgment 29/2021/HSST dated April 9, 2021 for tax evasion

- Level of trial: First instance.

- Judicial body: People's Court of Chau Thanh district, Tien Giang province.

Quote from the text: "
Private Enterprise Trading services VH in the process of trading gasoline and oil products from 2014 to the end of May 20, 2019; Nguyen Huu P purchased from the Company Limited (HD Company) a quantity of petroleum with a total input value of VND 33,480,727,000. This amount of gasoline and oil has been sold by Nguyen Huu P to consumers (no value-added invoices are issued). According to the notice of retail price of gasoline and oil of the Company, there is a basis to determine the total sales of gasoline and oil sold by VH Private Enterprise during the above period as 38,651,570,000 VND. Despite normal business operations, Nguyen Huu P did not submit tax returns as prescribed by law. After repeatedly requesting Nguyen Huu P to submit tax returns and applying many measures to enforce tax as prescribed, P did not comply; Chau Thanh District Tax Department (now CT-TP Regional Tax Department) has proposed to the Investigation Police Department of Chau Thanh District Police, Tien Giang Province, to criminally handle tax evasion by Nguyen Huu P.in accordance with the law."

2. Judgment on tax evasion No. 153/2021/HS-ST

- Level of trial: First instance.

- Judicial body: People's Court of Chuong My district, Hanoi city.

Quotes content: "
Dang Dinh C used Dang Van T's personal information to establish Ngoc K Trading and Investment Joint Stock Company, and C hired Ms. Nguyen Thi H as an Accountant. Every month, C pays Ms. H a salary of VND 3,500,000/month. By the end of June 2017, Ms. H quits. C continues to hire the company's accountant to work on a seasonal basis (When renting, only a verbal agreement, not a signed document, is required.)During the operation of the Company, by the beginning of 2017, C arises the intention to buy VAT invoices of "ghost" companies made by subjects T who do not conduct production and business activities but only illegally buy and sell VAT invoices, for C to deduct value added tax and reduce corporate income tax payable in 2017…"

3. Judgment 18/2021/HSST dated June 4, 2021 on tax evasion

- Level of trial: First instance.

- Judicial body: People's Court of Dak Mil district, Dak Nong province.

Quotes content: "In the course of business operations, TL Co., Ltd., led by Thach Kim M, failed to fulfill its tax obligations, resulting in tax debt to the State. On May 7, 2018, the Tax Sub-Department of DS District issued Decision No. 242/QD-CCT on the application of coercion by the measure of notifying invoices that are no longer valid (the period of enforcement is from May 9, 2018 to May 8, 2019), Notice No. 563/TB-CTT about the invoice is no longer valid for TL Co., Ltd. During the time of being coerced by not having a value-added invoice (VAT) to use in the sale of goods. On August 17, 2018 Thach Kim M signed a contract to order 10 copies of VAT invoices with the number of 500 numbers, from number 0000001 to number 0000500 with D Printing One Member Co., Ltd. On September 5, 2018, Tran Thi Nhu H, the Company's accountant sent the Notice of Issuance of 500 invoice numbers to the Tax Department of the Railway Region by electronic form but was automatically rejected by the system because the Company is in the process of being coerced by the measure of notifying invoices that are no longer valid for use…"

4. Judgment 88/2021/HS-ST dated May 26, 2021 for tax evasion

- Level of trial: First instance.

- Judicial body: People's Court of Phan Rang city - Thap Cham, Ninh Thuan province.

Quotes content: "During the business operation from July 2019 to December 2019, Dong T Company, run by Nguyen Nhu Minh T, bought cement and iron from Giang D Trading and Transport Co., Ltd., Ninh Thuan Construction Joint Stock Company, with input invoices; bought construction sand and stone from Toan T Ninh Thuan Co., Ltd., but had no input invoice. After purchasing, Dong T Company sold the above items to 05 individuals and organized and constructed some items for 02 businesses at the Duc Long Gia Lai solar power project but do not issue sales invoices in order to evade value added tax (VAT) and corporate income tax (CIT). The total revenue of goods trading, without issuing invoices, without prescribing and paying tax is VND 1,958,589,958… Through the investigation process, Nguyen Nhu Minh T admitted his tax evasion and used the tax evasion money for personal purposes."

5. Judgment on tax evasion No. 23/2021/HS-ST

- Level of trial: First instance.

- Judicial body: People's Court of Ba Be district, Bac Kan province.

Quotes content: "H Company Limited, the representative of the Company is Bui Ngoc T. hired Ms. Hoang Thi as accountant. In the course of business activities, Bui Ngoc T has signed and implemented contracts to supply materials and construction machines with the People's Committee of Commune A. However, the Company did not issue sales invoices for the works in 2014, 2015, and 2016. Bui Ngoc T's behavior was discovered by the Economic Division of the Investigation Police Department of Bac Kan Province.

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