Imposition of separate elements of taxation in Vietnam

Specifically, according to the Decree No. 126/2020/NĐ-CP of Vietnam’s Government, taxpayers are imposed for separate elements of taxation. In one of the following cases, separate elements of taxation shall be imposed:

- Through inspection of the tax declaration dossier, the tax authority suspects that the taxpayer does not fully or accurately declare certain elements of taxation and fails to supplement or fully and accurately supplement the declaration as requested by the tax authority.

- Through inspection of accounting books, invoices and relevant documents of the taxpayer or relevant organizations or individuals, the tax authority is able to prove that the taxpayer does not accurately or truthfully record certain elements of taxation.

- The taxpayer records false selling prices for goods and services and in order to reduce the taxable revenue; records false buying prices for goods serving business operation in order to increase the amount of VAT deductible or reduce tax payable.

- The taxpayer has submitted the tax declaration dossier but is not able to determine the elements of taxation, or has determined the elements of taxation but not able to calculate tax payable themselves.

- One of the cases specified in Clauses 10, 11, 12 Article 14 of this Decree.

Concurrently, this Decree also stipulates basis for tax liability imposition for taxpayers that are organizations and for individuals transferring real estate; receiving real estate as inheritance or gift as follows:

- For taxpayers that are organizations: The tax authority’s database and trade database; documents and effective inspection verdicts; verification results; minimum average tax payable of 03 local business establishments selling the same commodities or having the same business lines and scale. In case such business establishments are not available or are available but information about their commodities, business lines or scale is inadequate, information about business establishments in other areas may be used.

- For individuals transferring real estate; receiving real estate as inheritance or gift: The taxable price will be imposed by the tax authority according to market price if the taxable price declared by the individual is lower than market price. The taxable price imposed by the tax authority must not be lower than the applicable price imposed by the People’s Committee of the province.

- The tax authority shall impose tax liability on the basis of separate elements in accordance with effective tax laws.

View more details at the Decree No. 126/2020/NĐ-CP of Vietnam’s Government, effective from December 05, 2020.

Ty Na

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