What are penalties for enterprises evading taxes in Vietnam? What are some judgments related to this offense?

Dear Sir, Lawnet would like to respond as follows:

1. What are penalties for enterprises evading taxes in Vietnam?

According to Clause 5, Article 200 of the Ciminal Code 2015 (amended in 2017), commercial legal entities committing tax evasion shall be penalized as follows:

- For one of the acts stipulated in Clause 1, Article 200 of the Ciminal Code 2015 (amended in 2017), evading taxes in amounts ranging from 200,000,000 VND to under 300,000,000 VND, or from 100,000,000 VND to under 200,000,000 VND but having already been administratively penalized for tax evasion or previously convicted for this crime or one of the crimes stipulated in Articles 188, 189, 190, 191, 192, 193, 194, 195, and 196 of the Ciminal Code 2015 (amended in 2017), without criminal record expungement while violating again, shall be fined from 300,000,000 VND to 1,000,000,000 VND;

- Committing the crime under one of the circumstances defined in Points a, b, d, and e of Clause 2, Article 200 of the Ciminal Code 2015 (amended in 2017), shall be fined from 1,000,000,000 VND to 3,000,000,000 VND;

- Committing the crime under the circumstance defined in Clause 3, Article 200 of the Ciminal Code 2015 (amended in 2017), shall be fined from 3,000,000,000 VND to 10,000,000,000 VND or temporarily suspended from operations for 6 months to 3 years;

- Committing the crime under the circumstance defined in Article 79 of the Ciminal Code 2015 (amended in 2017), shall be permanently suspended from operations;

- The commercial legal entity may also be fined from 50,000,000 VND to 200,000,000 VND, banned from certain business activities, operations in specific fields, or raising capital for 1 to 3 years.

Thus, according to Vietnamese criminal law, based on the nature and extent of the act, a company evading taxes will be prosecuted under different penalties: fines ranging from 300,000,000 VND to 3,000,000,000 VND.

Additionally, permanent suspension from operations may be enforced if it's a commercial legal entity causing harm or potentially causing substantial harm to many people's lives, environmental incidents, or adversely affecting security, order, or public safety with no potential for remedial actions.

2. What are some judgments related to tax evasion in Vietnam?

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

- Level of trial: First instance.

- Court: People's Court of Chuong My District, Hanoi City.

Excerpt: "Dang Dinh C used the personal information of Dang Van T to establish Ngoc K Investment and Trade JSC, C hired Ms. Nguyen Thi H as an accountant. Monthly, C paid Ms. H a salary of 3,500,000 VND/month, and up until June 2017, when Ms. H resigned, C continued to hire company accountants on an ad-hoc basis (with only verbal agreements, no written contracts). During the company's operations, early in 2017, C developed the idea of buying VAT invoices from ghost companies set up by T with no actual production or business activities solely for the illegal sale of VAT invoices. This allowed C to deduct VAT and reduce corporate income tax payable for 2017..."

Judgment No. 18/2021/HSST dated June 04, 2021, on tax evasion

- Level of trial: First instance.

- Court: People's Court of Dak Mil District, Dak Nong Province.

Excerpt: "During the business operations of TL Co., Ltd. under the directorship of Thach Kim M, the company failed to meet tax obligations, leading to tax debt to the state. On May 7, 2018, the District Tax Department issued Decision No. 242/QD-CCT on coercive measures by notifying that invoices would no longer be valid (the coercion period from May 9, 2018, to May 8, 2019), and Notification No. 563/TB-CTT regarding the invalidation of invoices for TL Co., Ltd. During the coercion period without valid VAT invoices for sales activities, on August 17, 2018, Thach Kim M signed a contract to self-print 10 VAT invoice books, totaling 500 copies numbered from 0000001 to 0000500, with D Printing Co., Ltd. On September 5, 2018, Tran Thi Nhu H, TL Co., Ltd.'s accountant, electronically notified the District Tax Department about issuing the 500 VAT invoices but was automatically rejected due to the coercion period..."

Judgment on tax evasion No. 21/2022/HS-ST

- Level of trial: First instance.

- Court: People's Court of Ninh Binh Province.

Excerpt: The case involves Company K 70, with Mr. Hoang Khanh H as Director and Mr. Tran Van T as Accountant.

Company K purchased 8,240.370 tons of acacia wood from individual households without invoices or documents, later selling 4,630.21 tons of wood chips to Company N at a value of 11,337,497,270 VND.

Mr. H and Mr. T used 9 falsified VAT invoices, valued at 4,440,000,289 VND, to claim tax deductions, reducing payable VAT by 444,000,029 VND.

The court fined Mr. H 500 million VND and Mr. T 300 million VND for the crime of "Tax Evasion."

Best regards!

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