Legal Advice: What constitutes criminal tax evasion in Vietnam?
BP Holdings Tax Management- Tax obligations often significantly burden businesses operating in Vietnam. To maximize profit, companies often seek out ways to avoid mandatory tax payments. Vietnamese law enforcement is beginning to vigorously monitor and prosecute acts of tax evasion or tax fraud.
Acts of Tax Evasion or Tax Fraud
The following acts are considered tax evasion:
1. Failure to file for tax registration; failure to file a tax declaration; filing a tax declaration more than 90 days after the filing deadline or the filing extension deadline;
2. Failure to properly record any revenue included in the taxable income calculation;
3. Failure to issue invoices upon selling goods or services, or recording lower values than the actually paid values of goods or services;
4. Using unlawful invoices or vouchers for accounting costs of goods or input materials in operations that give rise to tax liability, with the intend to reduce payable tax amount; increase the exempted or reduced tax amount or increase the creditable or refundable tax amount;
5. Using other unlawful vouchers or documents to incorrectly calculate payable tax amount or refundable tax amount;
6. Failure to file additional declarations where previous declarations are inconsistent with the actual exported or imported goods within sixty days after the customs declaration is registered;
7. Intentionally failing to declare or making incorrect declarations of customs duties;
8. Colluding with goods consignors to evade duties on imported goods;
9. Using duty-free goods for improper purposes without declaring duty.
Once detected by the Vietnam Government, the enterprise evading tax will face tax arrears and become disqualified for tax incentives.
If a corporation committing acts of tax evasion shows any criminal signs, that corporation and its legal representative are subject to the following punishments:
1. Offenders shall be imposed a fine of between 1 and 5 times the evaded tax amount or be subject to non-custodial reform for up to 2 years if:
• evading tax amounts of between 100 million and under 300 million VND or ;
• evading tax amounts of under 100 million VND but have been administratively sanctioned for acts of tax evasion or;
• having been sentenced for this crime or;
• having been sentenced for one of the crimes specified in Articles 153 through 160, 164, 193 through 196, 230, 232, 233, 236 and 238 of the Criminal Code, have not yet had such criminal record cleared but commit recidivism.
2. Offenders shall be subject to a fine of between 1 and 5 times the evaded tax amount or subject to a prison term of between 6 months and 3 years if:
• evading tax in the amount of between 300 million VND and under 600 million VND or;
• committing recidivism.
3. Offenders shall be sentenced to between 2 and 7 years if:
• evading a tax amount of 600 million VND or higher, or
• evading a tax amount of between 300 million VND and less than 600 million dong and concurrently conduct one of the following acts: offering bribes; resisting or inflicting injury on persons in the performance of their official duties; destroying property of tax administration agencies, tax administration civil servants and other state agencies with responsibilities in tax administration execution provided that such act does not constitute a crime. In case where such act constitutes a crime, apart from tax evasion, the offender is also prosecuted for criminal liabilities on corresponding crime.
4. Aside from the above mentioned punishments, offenders may also be imposed a fine of between 1 and 3 times the evaded tax amount.