When shall tax liability of an enterprise in Vietnam be imposed?

What is tax imposition in Vietnam?

 Pursuant to Clause 1 Article 48 of the Circular 38/2015/TT-BTC stipulating tax imposition as follows:

Tax imposition

1. Tax imposition prescribed in this Circular means the customs authority’s exercising its right to determine the factors, basis for tax calculation, calculate tax, and request the taxpayer to pay the tax determined by the customs authority in the cases mentioned in Clause 2 of this Article.

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As regulations above, it can be understood that tax imposition is the act of the tax authority determining the amount of tax to be paid for the taxpayer instead of letting them voluntarily declare and pay taxes as prescribed.

The tax imposition must comply with the following principles:

- The estimated tax must be objective, fair, and comply with the provisions of the tax law.

- The tax authority shall determine the amount of tax to be paid or determine each factor related to the determination of the amount of tax to be paid.

When shall tax liability of an enterprise in Vietnam be imposed? - Source: Internet

When shall tax liability of an enterprise in Vietnam be imposed?

Currently, businesses are subject to tax imposition in two cases: when businesses violate tax laws according to Article 50 of the Law on Tax Administration in 2019 and imposition of tax on exports and imports according to Article 52 of the Law on Tax Administration in 2019, specifically:

(1) Tax liability imposition in case of tax offences (according to Article 50 of the Law on Tax Administration in 2019)

- fails to apply for taxpayer registration; fails to declare tax; fails to provide supplementary tax documents at the request of the tax authority; fails to declare fully and/or accurately the tax calculation bases;

- fails to record or fully and/or accurately record data on the accounting books;

- fails to present the accounting books, invoices and necessary documents relevant to the determination of tax payable within a certain time limit;

- fails to comply with the tax inspection or tax audit decision;

- buys, sells, trades goods and record values thereof against their market prices;

- buys or trades goods using illegal invoices; illegally uses invoices for real goods from which revenue has been declared for tax calculation as investigated by a competent authority;

- is suspected of absconding or selling assets to evade tax;

- makes false transactions to reduce tax liability; or

- fails to fulfill the responsibility to declare and valuate related-party transactions; fails to provide information about enterprises having related-party transactions according to tax administration laws.

(2) Imposition of tax on exports and imports (according to Article 50 of the Law on Tax Administration in 2019)

- The declarant declares tax according to illegal documents; fails to declare or accurately and fully declare information serving tax calculation;

- The declarant fails to provide, refuses to provide or delays providing accounting books, documents and data relevant to tax calculation;

- The declarant fails to prove, explain or fails to explain in the tax calculation as prescribed by law; fails to comply with the customs authority’s inspection decision;

- The declarant fails to record or fully and accurately record data on the accounting books to calculate tax;

- The customs authority has evidence to that the declared value is false;

- The transaction is falsely carried out in a manner that affects the amount of tax payable;

- The declarant fails to calculate the amount of tax payable themselves;

- Other cases of unconformable tax declaration discovered by customs authorities.

What is the basis for tax imposition in Vietnam?

 Pursuant to Clause 4 Article 48 of the Circular 38/2015/TT-BTC stipulating tax imposition as follows:

Tax imposition

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4. The basis for tax imposition is the quantities, dutiable values, origins of goods, rates of export duty, import duty, excise tax, VAT, environmental protection tax, safeguard duty, anti-dumping duty, countervailing duty on practical exports or imports; exchange rates, tax calculation method, other information and database prescribed in Clause 2 Article 30 of the Law on Tax administration, Article 35 of Decree No. 83/2013/ND-CP, and Section 5 Chapter II of this Circular.

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As regulations above, bases for tax imposition in Vietnam are:

- The quantities, dutiable values, origins of goods, rates of export duty, import duty, excise tax, VAT, environmental protection tax, safeguard duty, anti-dumping duty, countervailing duty on practical exports or imports

- Exchange rates

- Tax calculation method and other information and database as prescribed by law.

Best regards!