Decree No. 125/2020/NĐ-CP: 03 important new points on administrative penalties for tax or invoice-related violations in Vietnam

Decree No. 125/2020/NĐ-CP

Decree No. 129/2013/NĐ-CP

1. Increasing fines for colluding with and shielding taxpayers evading taxes

According to Article 19:

- Fines ranging from VND 6,000,000 to VND 16,000,000 shall be imposed for colluding with and shielding taxpayers evading taxes, failing to execute decisions on enforcement of tax-related administrative actions, except the act of failing to withdrawing and remitting money from taxpayers’ accounts as provided in Article 18 herein.

- The amounts of fine are those imposed on entities. The amounts of fine imposed on persons shall be ½ of the fines imposed on entities.

=> Violating persons shall be fined up to VND 8,000,000, violating entities shall be fined up to VND 16,000,000

According to Clause 1 Article 13:

A fine of from 2,500,000 VND to 5,000,000 VND shall be incurred by any individual, or a fine of from 5,000,000 VND to 10,000,000 VND shall be incurred by any organization that collaborates, conceals the tax evasion of the taxpayer, fails to implement the decision on enforcement, (except for the failure to transfer money from the taxpayer’s account prescribed in Article 12 of this Decree). A criminal prosecution shall be initiated if signs of criminal offenses are found.

=> Violating persons shall be fined up to VND 5,000,000, violating entities shall be fined up to VND 10,000,000

Thus, fines for colluding with and shielding taxpayers evading taxes of Decree No. 125/2020/NĐ-CP have been increased 1.6 times compared to the fines of Decree No. 129/2013/NĐ-CP.

2. The fine which is 3 times as much as the amount of evaded tax shall be imposed from the first time committing tax evasion

According to Clause 5 Article 17:

The fine which is 3 times as much as the amount of evaded tax shall be imposed on any taxpayer committing one of the violations prescribed in clause 1 of this Article under at least three aggravating circumstances.

According to Clause 5 Article 11:

A fine of equal to 1.5 times the tax evaded shall be imposed if the taxpayer commits one of the violations in Clause 1 of this Article for the first time under an aggravating circumstance, or commits it for the second time under a mitigating circumstance.

Decree No. 125/2020/NĐ-CP does not stipulate how many times the violation is committed, thus, it can be understand that the fine which is 3 times as much as the amount of evaded tax shall be imposed from the first time committing tax evasion under at least three aggravating circumstances.

3. Penalties for violations against regulations on cancellation, destruction or elimination of invoices

Article 27 of the Decree No. 125/2020/NĐ-CP has specified penalties for violations against regulations on cancellation, destruction or elimination of invoices, specifically as follows:

1. Penalties in the form of cautions shall be imposed for the act of canceling or destroying invoices from 1 to 5 days after expiry of the regulated time limit under mitigating circumstances.

2. Fines ranging from VND 2,000,000 to VND 4,000,000 shall be imposed for canceling or destroying invoices from 1 to 10 working days after expiry of the regulated time limit, except the case prescribed in clause 1 of this Article.

3. Fines ranging from VND 4,000,000 to VND 8,000,000 shall be imposed for canceling or destroying invoices at least 11 working days after expiry of the regulated time limit.

According to Point b Clause 2 Article 29 of Circular No. 39/2014/TT-BTC, time limit for destroying invoices is as follows:

“Entities must destroy invoices that are no longer used. Invoices shall be destroyed within 30 days from the day on which a notification is sent to the tax authority. In case the tax authority has notified invoice expiration (except for the cases in which tax debt payment is enforced), invoices must be destroyed within 10 days from the day on which the tax authority notifies the expiration or lost invoices are found.”

No provision

Thus, Article 27 of the Decree No. 125/2020/NĐ-CP will help to limit the behavior of canceling and destroying invoices that are overdue. If the time limit for cancellation or destruction of invoices is violated, the fine shall be up to VND 8,000,000.