Recently, Prime Minister Nguyen Xuan Phuc signed a document issuing decree No. 125/2020/ND-CP regarding administrative penalties for tax and invoice violations. The decree will officially come into effect on December 5, 2020.
2 groups subject to administrative penalties for tax and invoice violations
According to Article 3 of Decree No. 125/2020/ND-CP, the subjects subject to administrative penalties for tax and invoice violations include:
1. Taxpayers committing administrative violations related to taxes and invoices.
In cases where organizations or individuals with tax registration obligations submit, declare, and pay taxes on behalf of taxpayers, and those organizations or individuals commit administrative violations, the organizations or individuals that submit, declare, and pay taxes on behalf will be subject to administrative penalties regarding taxes.
Note: In cases where taxpayers authorize other organizations or individuals to fulfill tax obligations as stipulated by tax laws, tax management authorities, if the authorized party commits administrative violations, the authorized organizations or individuals will be subject to penalties.
2. Organizations and individuals related to administrative violations related to taxes and invoices.
Specifically, for taxpayers who are organizations, the types of organizations subject to administrative penalties for tax and invoice violations include:
Enterprises established and operating under the Enterprise Law, Investment Law, Credit Institutions Law, Insurance Business Law, Securities Law, Petroleum Law, Commercial Law, and other legal documents; dependent units of enterprises, directly-operated business locations that declare, pay taxes, and use invoices. Public sector entities, both public and non-public. Cooperative organizations established and operating under the Cooperatives Law. Foreign organizations, businesses, branches, representative offices of foreign traders, foreign contractor project management offices in Vietnam conducting business or generating income in Vietnam. State agencies committing administrative violations regarding taxes and invoices, but those actions are not within their state management duties. Cooperatives and other organizations established according to legal regulations.
Penalty levels according to Decree 125/2020/ND-CP
1. Increase in penalties for collusion and concealing tax evasion by taxpayers
According to Article 19 of Decree 125/2020/ND-CP, the maximum penalty for collusion and concealing tax evasion is specified. Specifically, the maximum penalty for individuals is 8,000,000 VND; for organizations committing violations, the maximum penalty is 16,000,000 VND.
2. First-time tax evasion can be fined three times the amount of tax evaded
Article 17 stipulates that tax evasion can be fined three times the amount of tax evaded if the taxpayer commits one of the following actions with three or more aggravating circumstances:
Failure to submit tax registration documents; failure to submit tax declaration documents or late submission of tax declaration documents within 90 days from the deadline for tax declaration or extension of the deadline for tax declaration, except as provided in points b and c of Clause 4 and Clause 5 of this Article. Failure to record in accounting books related to determining the amount of tax due, incorrect tax declaration leading to underreported tax due or increased tax refund, exemption, reduction, except as provided in Article 16 of this Decree.
Failure to issue invoices when selling goods or providing services, except in cases where the taxpayer has declared taxes for the value of goods or services sold or supplied in the corresponding tax period; issuing invoices for goods sold or services provided incorrectly regarding quantity or value to declare lower taxes than actual, discovered after the tax declaration deadline.
Unauthorized use of invoices; unauthorized use of invoices to declare taxes to reduce the amount of tax payable or increase tax refunds, exemptions, reductions.
Unauthorized use of documents; unauthorized use of documents; use of documents or records that do not accurately reflect the nature of the transaction or the actual transaction value to incorrectly determine the amount of tax payable, tax exemption, reduction, tax refund; falsification of procedures, documentation for the cancellation of materials, goods not in accordance with reality to reduce the amount of tax payable or increase tax refunds, exemptions, reductions.
Taxpayers engaged in business activities during the period of temporary suspension or cessation of business activities without notifying the tax authority, except as provided in point b, Clause 4 of this Decree.
3. Losing invoices can be fined up to 10 million VND
According to Article 26 of Decree No. 125/2020/ND-CP, the act of losing, burning, or damaging invoices will be subject to the following levels of penalties:
A warning for one of the following actions: Losing, burning, or damaging issued invoices (except those transferred to customers) during use, tax declaration, submission, with mitigating circumstances; losing, burning, or damaging incorrectly issued invoices, deleted, and replaced by other invoices by the seller.
A fine of 3,000,000 – 5,000,000 VND for the following actions: Losing, burning, or damaging issued invoices (transferred to customers) during use, with the seller having declared and paid taxes, having records, documents, invoices proving the purchase and sale of goods, services.
A fine of 4,000,000 – 8,000,000 VND for one of the following actions: Losing, burning, or damaging invoices issued but not yet issued by the tax authority; losing, burning, or damaging issued invoices (transferred to customers) during use, with the seller having declared and paid taxes, having records, documents, invoices proving the purchase and sale of goods, services.
A fine of 5,000,000 – 10,000,000 VND for the act of losing, burning, or damaging invoices that have been declared, issued, and taxes paid during use or storage. Except for the case of a warning penalty as specified in Clauses 1, 2, 3 of Article 26 of Decree No. 125/2020/ND-CP.
Source: Supreme People’s Procuracy’s Electronic Portal.
