Penalties for Accountants and Human Resources for Delayed Execution of Monthly Tasks in Vietnam

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1. Report on Labor Variations in Vietnam

According to the current regulations at Clause 2 Article 16 of Circular 28/2015/TT-BLDTBXH, by the 3rd of each month, enterprises must notify the Employment Service Center where they are headquartered about the labor variation at the unit, if any (calculated according to the Gregorian calendar of the month preceding the notification time).

According to the provisions at Article 25 of Decree 95/2013/ND-CP, enterprises failing to submit or late submission of the labor usage report will be warned or fined from 500,000 VND to 1,000,000 VND.

However, this regulation has been abolished at Clause 2 Article 2 of Decree 88/2015/ND-CP (amending and supplementing some articles of Decree 95/2013/ND-CP). Specifically:

"2. Abolish Point b Clause 2 Article 11, Article 25 of Decree No. 95/2013/ND-CP dated August 22, 2013, of the Government of Vietnam stipulating administrative sanctions in the field of labor, social insurance, and sending Vietnamese workers abroad under contracts."

Thus, from November 25, 2015, there will be no basis for imposing administrative sanctions on the act of not submitting or late submission of the labor usage report of enterprises.

However, Decree 88/2015/ND-CP also provides penalties for enterprises not opening Labor Management Books as required to be kept at the enterprise for monitoring and checking at Article 4a, supplementing after Article 4 of Decree 95/2013/ND-CP as follows:

"2. Fines from 1,000,000 VND to 3,000,000 VND for employers committing one of the following acts:

a) Collecting money from workers participating in labor recruitment;

b) Not establishing a labor management book; establishing a labor management book late, not ensuring the basic contents as prescribed by law; not recording, fully entering information about workers into the labor management book when the labor contract takes effect; not updating information when there is any change in the labor management book..."

Based on the above regulations, enterprises must notify the Employment Service Center where they are headquartered about labor variation at the unit by the 3rd of each month (if any), but if they submit the report late, they will not be fined. Simultaneously, enterprises must open a Labor Management Book to monitor labor situations and update information when there is any change into the book, failing or late opening, or incomplete contents can result in fines up to 3 million VND.

2. Late Submission of Invoice Usage Reports in Vietnam

According to the current regulations at Article 27 of Circular 39/2014/TT-BTC, Clause 4 Article 5 of Circular 119/2014/TT-BTC, and Section 10 of Official Dispatch 1839/TCT-CS, on a monthly basis, enterprises are responsible for submitting the Invoice Usage Report to the directly managing tax authority (even if no invoices are used during the period) by the 20th of the following month at the latest.

In the case of late submission of the Invoice Usage Report, according to Clause 2 Article 13 of Circular 10/2014/TT-BTC and Clause 7 Article 1 of Circular 176/2016/TT-BTC, the specific penalties are as follows:

- Warning if the report is submitted from the 1st to the 10th day after the deadline.

- Fine from 2,000,000 VND to 4,000,000 VND if the report is submitted after 10 days from the deadline.

- Fine from 4,000,000 VND to 8,000,000 VND if the report is submitted after 20 days from the deadline.

"2. For violations concerning submitting notifications or reports to tax authorities, except for invoice issuance notifications:

a) Warning for submitting notifications, reports to tax authorities, except for invoice issuance notifications, from the 1st to the 10th day after the deadline.

b) Fine from 2,000,000 VND to 4,000,000 VND, except for invoice issuance notifications, for submitting notifications, reports late after 10 days from the deadline.

3. Fine from 4,000,000 VND to 8,000,000 VND for failing to submit notifications or reports to tax authorities. Non-submission of notifications, reports to tax authorities, except for invoice issuance notifications, is considered after 20 days from the deadline."

3. Delayed Submission of Tax Declarations such as VAT, PIT, Annual Reports in Vietnam

According to Clause 3 Article 10 of Circular 156/2013/TT-BTC, in a month, if an enterprise has personal income tax deductions, it must submit the PIT tax declaration file to the directly managing tax authority, no later than the 20th of the following month. This regulation applies to enterprises declaring tax on a monthly basis; if no PIT deductions arise in the month, no need to submit the declaration for that month.

Simultaneously, according to Point a Clause 2 Article 11 and Point a Clause 3 Article 10 of Circular 156/2013/TT-BTC, enterprises with total sales revenue of the previous year exceeding 50 billion VND must submit the VAT declaration on a monthly basis, no later than the 20th of the following month.

In the case of late submission of PIT and VAT tax declarations compared to the prescribed deadline, the specific penalties are as follows:

- Warning for submitting tax declaration files 1-5 days late with extenuating circumstances.

- Fine of 700,000 VND, if extenuating circumstances fine no less than 400,000 VND or aggravating circumstances fine no more than 1,000,000 VND for submitting tax declaration files 1-10 days late.

- Fine of 1,400,000 VND, if extenuating circumstances fine no less than 800,000 VND or aggravating circumstances fine no more than 2,000,000 VND for submitting tax declaration files 10-20 days late.

- Fine of 2,100,000 VND, if extenuating circumstances fine no less than 1,200,000 VND or aggravating circumstances fine no more than 3,000,000 VND for submitting tax declaration files 20-30 days late.

- Fine of 2,800,000 VND, if extenuating circumstances fine no less than 1,600,000 VND or aggravating circumstances fine no more than 4,000,000 VND for submitting tax declaration files 30-40 days late.

- Fine of 3,500,000 VND, if extenuating circumstances fine no less than 2,000,000 VND or aggravating circumstances fine no more than 5,000,000 VND for one of the following acts: Submitting tax declaration files late by 40-90 days; Submitting tax declaration files late over 90 days but no tax liabilities arise; not submitting tax declaration files but no tax liabilities arise (unless otherwise stipulated by law not to submit tax declaration files); submitting quarterly provisional tax declarations late over 90 days from the deadline for filing tax declarations but not to the end of the year’s tax finalization filing deadline.

Note:

- The above deadlines for submitting tax declaration files include the extension period granted by the competent authority.

- These penalties do not apply when the taxpayer is within the extension period for submitting tax declaration files, tax payment extension period.

- Taxpayers who submit tax declaration files late and lead to late tax payment must pay late tax payment fees as stipulated in Article 106 of the Law on Tax Administration and its guiding documents.

- In case of late submission of tax declaration files beyond the deadline, and the tax authority has issued a decision to determine the tax amount payable, if the taxpayer submits valid tax declarations within 90 days from the due date and correctly determines the tax payable amount for the tax period, the tax authority shall penalize the late submission of tax declarations as stipulated above and calculate the late tax payment fees as regulated. The tax authority must issue a decision to annul the fixed tax determination.

This content is stipulated in Article 9 of Circular 166/2013/TT-BTC.

4. Late Payment of Social Insurance, Unemployment Insurance, Health Insurance in Vietnam

According to Clause 1 Article 7, Article 16, and Clause 1 Article 19 of Decision 595/QD-BHXH, monthly, no later than the last day of the month, enterprises must deduct compulsory Social Insurance, Health Insurance, Unemployment Insurance on the monthly salary fund of the employees participating in compulsory insurance; simultaneously deduct from the monthly salary of each employee the compulsory insurance payment as prescribed, and transfer in one lump sum into the specialized collection account of the social insurance agency at the bank or State Treasury.

In case the enterprise violates the regulations on the payment deadline of Social Insurance, Unemployment Insurance, Health Insurance, according to Decree 95/2013/ND-CP and Decree 176/2013/ND-CP, the specific penalties are as follows:

- Late Payment of Social Insurance, Unemployment Insurance: Fine from 12% to 15% of the total amount payable at the time the administrative violation record is made but not exceeding 75,000,000 VND for individual violations and no more than 150,000,000 VND for organizational violations.

Additionally, enterprises must take remedial measures such as paying the unpaid, late paid Social Insurance, Unemployment Insurance, and paying interest on the unpaid, late paid amounts according to the interest rate of the Social Insurance Fund’s investment activities of the year.

- Late Payment of Health Insurance: Fine from 300,000 VND to 35,000,000 VND depending on the violation level and must take remedial measures of paying the unpaid amount and interest on the unpaid, late paid amount into the health insurance fund’s collection account.

Moreover, according to Article 3 of Social Insurance Law 2014, Article 49 of Health Insurance Law 2008 amended and supplemented in 2014, enterprises that evade, delay, or appropriate social insurance, health insurance, unemployment insurance contributions from 30 days or more, besides paying the unpaid, delayed amounts and being handled according to law, must:

- Pay interest on the unpaid, delayed amounts at a rate of twice the average Social Insurance Fund’s investment return rate of the previous year for Social Insurance, Unemployment Insurance contributions;

- Pay interest on the unpaid, delayed amounts at twice the interbank rate for health insurance contributions;

- If non-compliance occurs, upon the request of competent persons, banks, other credit institutions, or State Treasury must deduct from the employer's deposit accounts to pay the unpaid, delayed amounts and interest into the Social Insurance agency’s account, Health Insurance fund;

- Fully reimburse the medical expenses to employees within the benefits coverage, health insurance entitlement that employees incurred during the period without a Health Insurance card.

5. Late Payment of Union Dues in Vietnam

According to Clause 2 Article 6 of Decree 191/2013/ND-CP, enterprises must pay Union Dues monthly at the same time as paying compulsory social insurance for employees, at a rate of 2% of the salary fund used for calculating Social Insurance for employees.

In case of violations regarding the payment of Union Dues, such as late payment, insufficient payment for all eligible employees, the fine ranges from 12% to under 15% of the total payables at the time the administrative violation record is made but no more than 75,000,000 VND.

Particularly, in cases where the enterprise fails to pay Union Dues for all eligible employees, fines will range from 18% to 20% of the total due at the time of making the administrative violation record but not exceeding 75,000,000 VND.

Additionally, within 30 days from the date of the penalty decision, enterprises must pay the overdue, insufficient Union Dues and the interest on the overdue, insufficient amounts to the union organization as per the highest non-term deposit interest rate announced by State-owned commercial banks at the penalty time for the violations.

Nguyen Trinh

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