The wrong declaration of taxes in Vietnam has many serious consequences for society, whether unintentionally or intentionally. This behavior is a violation of the law and will be sanctioned according to the provisions of Vietnam’s tax law and relevant documents. However, in case the person declares false tax unintentionally and has taken measures to remedy it, the sentence will be lighter than the act of tax evasion.
According to the provisions of Clause 1, Article 16 of Decree 125/2020/ND-CP on penalties for administrative violations of invoice tax (“Decree 125”), the act of making false declarations leads to a lack of tax payable or an increase in the amount of tax payable, tax exempted, reduced or refunded in Vietnam will be fined 20% of the understated tax amount or the exempted, reduced or refunded tax amounts are higher than prescribed.
Cases of being penalized for wrong tax declarations leading to reduced tax payments in Vietnam
– Wrong tax declaration bases or tax amounts to be deducted or wrongly identify cases eligible for tax exemption, reduction or refund, leading to a lack of payable tax amount or an increase in exempted, reduced or refunded tax amounts (Incorrect with the information that has been fully reflected on the system of legal accounting books, invoices, and documents);
– Wrong tax declaration reduces the payable tax amount or increases the refunded tax amount, the exempted or reduced tax amount does not fall into the case specified at point a of this clause but the taxpayer has voluntarily made additional declarations and paid in full the missing tax amount into the state budget before the tax authority ends the tax inspection and examination time limit at the taxpayer’s office;
– Making false declarations reduces the payable tax amount or increases the refunded tax amount, the exempted or reduced tax amount has been determined by a competent authority to make a tax inspection or examination record, or an administrative violation act of tax evasion but the taxpayer commits an administrative violation for the first time in terms of tax evasion, has additionally declared and paid the full tax amount into the state budget before the time the competent authority issues the sanctioning decision and the tax authority makes a record to determine that the act of making false declarations leads to a lack of tax;
– Wrong tax declaration leading to a lack of payable tax amount or an increase in the amount of tax exempted, reduced or refunded for related transactions, but the taxpayer has made a dossier to determine the market price or has prepared and sent the tax authorities the following information: an appendix according to regulations on tax administration applicable to enterprises having associated transactions;
– Using illegal invoices and vouchers to record the value of purchased goods and services, which reduces the payable tax amount or increases the refundable tax amount, the exempted or reduced tax amount, but when the tax agency inspects and examines, the buyer can prove that the violation is caused by using illegal invoices and documents belonging to the seller and the buyer has made full accounting records according to regulations.
Remedies for wrong declaration of tax leading to reduced tax payment in Vietnam
Clause 2, Article 16 of Decree 125 stipulates remedial measures in case taxpayers perform the above acts:
– Forcible payment of insufficient tax amounts, refunded, exempted or reduced tax amounts higher than prescribed and late payment interest in the state budget.
If the statute of limitations for sanctioning has passed, the taxpayer will not be sanctioned according to the above provisions, but the taxpayer still has to pay the full amount of the insufficient tax, the tax refunded, exempted, or reduced more than the prescribed amount and the late payment interest into the state budget within the time limit specified in Clause 6, Article 8 of Decree 125;
– Forcible adjustment of losses, deductible input value-added tax amounts (if any) for the above acts.