Exceptions to tax or invoice-related administrative penalties in Vietnam

Regarding this matter, LawNet would like to answer as follows:

1. Exceptions to tax or invoice-related administrative penalties in Vietnam

According to Article 9 of Decree 125/2020/ND-CP, exceptions to tax or invoice-related administrative penalties include:

(1) Exceptions to administrative penalties prescribed in laws on handling of administrative violations shall be treated as the exceptions to tax or invoice-related administrative penalties.

Taxpayers’ delay in carrying out electronic tax or invoice-related procedures due to technical problems of information technology systems that are informed on tax authorities’ web portals shall constitute the act of violation caused by force majeure events under the provisions of clause 4 of Article 11 in the Law on Handling of Administrative Violations 2012.

(2) Taxpayers’ commission of tax-related administrative violations due to the execution of instructional documents, decisions to respond to such violations of competent tax authorities or state regulatory agencies related to the tasks of determining taxpayer’s tax obligations (including those issued before the effective date of Decree 125/2020/ND-CP) shall be treated as exceptions to administrative penalties for tax-related violations or fines for late payment of taxes, except if taxpayers’ tax-related administrative violations are discovered after receipt of conclusions of tax inspections and examinations carried out at the taxpayer’s offices that none of the taxpayer’s defects arising from the declaration and calculation of taxes payable or tax exemptions, reductions or refunds have been discovered yet.

(3) If, after making the false declaration, the taxpayer has supplemented tax returns and, of their own accord, has paid taxes before the time of the tax authority’s announcement of their decisions to conduct tax inspections or examinations at the taxpayer’s offices, or before the time of the tax authority’s discovery thereof without needing to carry out these inspections or examinations, or before the time of other competent authorities’ discovery thereof, the act of false declaration committed in this situation shall be exempted from any tax-related administrative penalties.

(4) None of administrative penalties for tax-related violations shall be imposed upon persons directly carrying out personal income tax finalization procedures if they delay filing personal income tax finalization applications to claim their tax refunds; upon sole proprietorship households and sole proprietors subject to taxation or fixing of the constant tax rates as provided in Article 51 of the Law on Tax Administration 2019.

(5) During the extension of the time limit for tax return submission, taxpayers shall be exempted from any administrative penalties for violations related to the time limit for submission of tax returns.

Thus, there are 05 exceptions to tax or invoice-related administrative penalties, including: delay in carrying out electronic tax or invoice-related procedures due to technical problems of electronic portal of the tax authority; tax-related administrative violations due to the execution of instructional documents, decisions to respond to such violations of competent tax authorities; taxpayer have supplemented tax returns and, of their own accord to rectify any errors; taxpayers have paid taxes before the time of tax authority’s announcement of their decisions to conduct tax inspections or examinations; taxpayers must submit their tax returns within the specified deadline, including any previously granted extensions.

2. What are sanctioning principles for administrative violations of taxes and invoices in Vietnam?

According to the provisions of Article 5 of Decree 125/2020/ND-CP supplemented by Decree 102/2021/ND-CP, sanctioning principles for administrative violations of taxes and invoices in Vietnam are:

- Imposing administrative penalties for tax or invoice-related violations must conform to laws on tax administration and handling of administrative violations.

- Entities and persons shall be subject to administrative penalties for tax or invoice-related violations only if they commit tax or invoice-related violations under the provisions of this Decree.

- If an entity or person commits multiple administrative violations, a penalty for each violation shall be imposed, except in the following cases:

+ If a taxpayer makes incorrect declarations in one or more required data fields contained in tax files for the same tax type at a time, the act of making such incorrect declarations falling into the case of imposition of penalties for violations arising from the implementation of tax procedures shall only be subject to the penalty for the act of making incorrect declarations in tax files of which the amount is highest amongst other penalties for those acts committed as provided herein, and shall be treated as the violation committed repeatedly under the aggravating circumstances;

+ If a taxpayer makes incorrect declarations in one or more required data fields contained in tax files for the same tax type at a time, the act of making such incorrect declarations falling into the case of imposition of penalties for violations arising from the implementation of tax procedures shall only be subject to the penalty for the act of making incorrect declarations in tax files of which the amount is highest amongst other penalties for those acts of the same class committed as provided herein, and shall be treated as the violation committed repeatedly under aggravating circumstances.

In case where there is any late tax return classified as an act of tax evasion, out of all late tax returns, this violation shall be separately sanctioned in the same manner as acts of tax evasion;

+ If, at the same time, a taxpayer delays submitting a number of invoice-related notices and reports of the same kind, the violating taxpayer shall be fined for their act of deferred submission of invoice-related notices or reports at the amount which is highest amongst other fines for those acts of the same class committed as provided in Decree 125/2020/ND-CP, and shall be treated as the repeated violation committed under aggravating circumstances;

+ Any violation arising from use of illegal invoices or illegal use of invoices which is classified into those violations subject to penalties prescribed in Article 16 and 17 of Decree 125/2020/ND-CP shall not be fined under Article 28 of Decree 125/2020/ND-CP.

- In case where an administrative procedure includes a number of documents of which more than one violation is prescribed herein, the violating entity or person shall be fined for each of the violations that they have committed.

+ For a tax or invoice-related administrative violation, if an entity commits such violation, they must be fined two times as much as the amount of penalty imposed on persons, except the amounts of penalty for the acts prescribed in Article 16, 17 and 18 of Decree 125/2020/ND-CP.

Thus, the sanctioning principles for administrative violations of taxes and invoices in Vietnam will apply depending on the nature and extent of the violation. At the same time, implement a strict control mechanism to avoid overlapping sanctions in certain cases.

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