Prior to December 5, 2020, regulations on administrative penalties for tax and invoice violations were applied in two separate documents. From December 5, 2020, Decree 125/2020/ND-CP came into effect, merging the regulations on administrative penalties for tax and invoice violations.
The latest guidelines on administrative penalties for tax and invoice violations are presented below.
1. What are administrative violations related to taxes and invoices?
What constitutes an administrative tax violation?
Tax administrative violations are culpable acts committed by organizations or individuals that violate regulations of tax management law, tax law, and other revenue laws, which are not crimes and, according to the law, must be subject to administrative penalties.
What constitutes an administrative violation related to invoices?
Administrative violations related to invoices are culpable acts committed by organizations or individuals that violate the legal regulations on invoices, which are not criminal offenses and, according to the law, must be subject to administrative penalties.
2. Statute of limitations for administrative penalties related to taxes and invoices.
General regulations on the statute of limitations for administrative violations.
The statute of limitations for imposing administrative penalties related to invoices is one year.
The statute of limitations for imposing penalties for violations of tax procedures is 02 years, counting from the date the violation occurred.
violation.
Special cases
The statute of limitations for penalties for tax evasion and false declarations resulting in underpayment of tax or overpayment of tax exemptions, reductions, or refunds is 05 years from the date the violation was committed.
If an organization or individual deliberately evades or obstructs the enforcement of penalties, the statute of limitations for imposing administrative penalties will be recalculated from the time the act of evasion or obstruction ceases.
The above are general regulations for common offenses and the determination of the date of the violation is straightforward; for cases with complex circumstances, please refer to the details in the decree.
The period during which administrative penalties for tax and invoice violations are considered not to have been imposed.
Organizations and individuals who have been penalized for administrative violations related to taxes and invoices will be considered as not having been penalized for that violation if, within 06 months from the date of completing the execution of a warning penalty decision, or 01 year from the date of completing the execution of other administrative penalty decisions, or from the date the statute of limitations for enforcing the penalty decision expires, they do not re-offend.
The date of completion of the warning penalty decision is the date the administrative penalty decision is delivered to the penalized organization or individual.
3. Cases where administrative penalties for tax and invoice violations are not imposed.
1. No administrative penalties for tax and invoice violations shall be imposed in cases where no administrative penalties are applicable according to the law on handling administrative violations.
Taxpayers who are late in completing tax procedures and issuing invoices electronically due to technical problems with the information technology system, as announced on the tax authority's electronic portal, are considered to have committed violations due to force majeure events as stipulated in Clause 4, Article 11 of the Law on Handling Administrative Violations.
2. No administrative penalties or late payment interest will be charged to taxpayers who commit administrative tax violations, provided that the actions are in accordance with guidance documents and decisions issued by tax authorities or other competent state agencies regarding the determination of the taxpayer's tax obligations (including guidance documents and decisions issued before the effective date of this Decree), except in cases where tax audits at the taxpayer's premises do not detect errors in the taxpayer's declaration and determination of the amount of tax payable or the amount of tax exempted, reduced, or refunded, but the taxpayer's administrative tax violation is subsequently discovered.
3. No administrative penalties for tax violations shall be imposed in cases of incorrect declarations where the taxpayer has submitted supplementary tax returns and voluntarily paid the full amount of tax due before the tax authority announces a tax audit or inspection at the taxpayer's premises, or before the tax authority discovers the violation without conducting an audit or inspection at the taxpayer's premises, or before another competent authority discovers the violation.
4. No penalties will be imposed for violations of tax procedures for individuals directly settling personal income tax who are late in submitting their personal income tax return but have a tax refund due; or for household businesses and individual businesses whose taxes have been assessed according to the provisions of Article 51 of the Law on Tax Administration.
5. No penalties will be imposed for violations of the tax return filing deadline during the period when the taxpayer is granted an extension for filing the tax return.
4. What should businesses pay attention to in order to avoid administrative penalties for tax and invoice violations?
1. Review administrative violations related to taxes and invoices as stipulated in the Decree to develop a management system that helps avoid the occurrence of penalty-related errors.
2. Avoid aggravating circumstances and serious violations.
3. Avoid any actions related to tax evasion.
4. Regularly complete a quarterly tax checklist to avoid violations.
FAQ - Frequently Asked Questions: Administrative violations related to taxes and invoices
"Invoices from businesses that have abandoned their business location" is a common term, but it's not the correct one. The correct terms are "Invoices from businesses that have abandoned their business location" or "Illegal invoices."
To determine how to handle cases of fraudulent invoices, it is necessary to identify the point in time when the tax authorities or other competent agencies (investigating agencies) determined that the invoice was illegal.
1. If the authorities have not yet determined that the invoice is illegal, the following applies:
– If a business has not yet declared VAT deductions, the Tax Authority will notify the business in writing to temporarily suspend VAT deduction declarations for invoices showing signs of legal violations, pending the official results from the competent authority. The business is only allowed to declare input VAT deductions for invoices that do not show signs of legal violations.
– If a business has already declared VAT deductions, the tax authority will notify the business in writing to declare an adjustment to reduce the deducted VAT amount. If the business asserts that the purchase and sale of goods and the input VAT invoices used for deductions are in accordance with regulations, the business must commit to being responsible before the law, and the tax authority must conduct an inspection at the business to conclude and handle violations according to regulations. During the inspection, verification and comparison with the business involved in the purchase and sale must be carried out regarding the following aspects:
- Inspect and verify the goods:
- Sales contract (if any);
- Methods of goods delivery and receipt;
- Location for receiving and delivering goods;
- means of transporting goods;
- freight costs;
- Owner of goods and origin of goods (before the time of delivery)
- Payment verification check:
- Transaction bank;
- The person deposits money into the account to conduct the transaction;
- number of transactions performed;
- Payment method; payment documents.
- Verification checks for exported goods:
- The customs declaration form must have confirmation of actual export by the Customs authority.
- bank payment documents;
- Bill of lading (if applicable).
Through inspection and verification, if the buying and selling of goods is confirmed to be genuine and in accordance with the law, the enterprise will be granted VAT deduction and refund; at the same time, the enterprise will be required to commit that if any violations are later discovered in the documents it submits to the Tax authorities, the enterprise will be held legally responsible.
If signs of tax law violations or criminal activity are detected, a file will be prepared and transferred to the competent authority for investigation and prosecution of criminal responsibility.
– If the suspension of tax deductions results in an increase in the amount of VAT payable, the Tax Authority is responsible for compiling and monitoring these cases, not requiring payment or calculating late payment penalties until an official conclusion is reached by the competent authority.
2. If the authorities have determined that the invoice is illegal, the following procedures apply:
+ In cases where the seller provides an illegal invoice: Tax deductions will not be granted, and administrative penalties will be imposed for the illegal use of invoices.
+ Cases involving the buying and selling of invoices: Handle according to legal regulations.
See further instructions regarding fraudulent invoices. Official document 11797/BTC-TCT issued by the Ministry of Finance
There are 3 cases that need to be determined:
+ In the case of purchasing goods from entities paying flat-rate taxes, such as individual business households, it is necessary to fully comply with regulations regarding accounting documents, accounting entries, and exclusions on the annual corporate income tax return. Businesses will not be penalized for invoice-related issues in this case.
+ In cases where agricultural, forestry, aquatic products, soil, rocks, sand, gravel, scrap materials, etc., are purchased without invoices but are required to be listed in a detailed inventory list according to legal regulations, such a list must be prepared. If a legally valid list is not prepared, the business is not allowed to include these goods as part of its purchase costs.
+ In cases where goods are purchased without an invoice: These expenses cannot be included; if included, they will be disallowed during tax settlement and will result in administrative penalties for tax violations.
Article 10. Penalties for violations regarding tax registration deadlines; notification of temporary suspension of business operations; and notification of resumption of business operations before the deadline.
1. A warning penalty will be issued for violations related to tax registration; notification of temporary suspension of business operations; and notification of resumption of business operations before the prescribed deadline, ranging from 01 to 10 days, provided there are mitigating circumstances.
2. A fine of between VND 1.000.000 and VND 2.000.000 for one of the following acts:
a) Tax registration; notification of resumption of business before the previously announced deadline, exceeding the prescribed deadline by 1 to 30 days, except as stipulated in Clause 01 of this Article;
b) Notifying the temporary suspension of business operations beyond the prescribed time limit, except in cases specified in Clause 1 of this Article;
c) Failure to notify authorities of the temporary suspension of business operations.
3. A fine of VND 3.000.000 to VND 6.000.000 will be imposed for the following violations: registering for tax; notifying the resumption of business before the previously announced deadline, exceeding the prescribed deadline by 31 to 90 days.
4. A fine of between VND 6.000.000 and VND 10.000.000 for one of the following acts:
a) Tax registration; notification of resumption of business operations before the previously announced deadline, exceeding the prescribed deadline by 91 days or more;
b) Failure to notify the authorities of the resumption of business operations before the announced deadline, but without incurring any tax liability.
1. A warning penalty will be issued for any of the following acts:
a) Notification of changes to tax registration information submitted more than 01 to 30 days after the prescribed deadline, but which does not alter the tax registration certificate or tax identification number, and there are mitigating circumstances;
b) Notifying changes to tax registration information beyond the prescribed deadline by 01 to 10 days, resulting in changes to the tax registration certificate or tax identification number, but with mitigating circumstances.
2. A fine of VND 500.000 to VND 1.000.000 shall be imposed for the act of notifying changes to tax registration information beyond the prescribed deadline by 1 to 30 days, but without changing the tax registration certificate or tax identification number, except for cases subject to penalties under point a, clause 01 of this Article.
3. A fine of between VND 1.000.000 and VND 3.000.000 for one of the following acts:
a) Notification of changes to tax registration information submitted more than 31 to 90 days after the prescribed deadline, but without changing the tax registration certificate or tax identification number;
b) Notifying changes to tax registration information beyond the prescribed deadline, ranging from 1 to 30 days, resulting in changes to the tax registration certificate or tax identification number, except for cases specified in point b, clause 01 of this Article.
4. A fine of between VND 3.000.000 and VND 5.000.000 for one of the following acts:
a) Notification of changes to tax registration information submitted more than 91 days after the prescribed deadline but without changing the tax registration certificate or tax identification number;
b) Notifying changes to tax registration information beyond the prescribed deadline of 31 to 90 days, resulting in changes to the tax registration certificate or tax identification number notification.
5. A fine of between VND 5.000.000 and VND 7.000.000 for one of the following acts:
a) Notification of changes to tax registration information submitted more than 91 days after the prescribed deadline, resulting in changes to the tax registration certificate or tax identification number notification;
b) Failure to notify the tax registration authorities of changes to the information in the tax registration file.
6. The provisions of this Article do not apply to the following cases:
a) Individuals who are not engaged in business activities and have been issued a personal income tax identification number are slow to update their identity card information when they are issued a citizen identification card;
b) The income-paying agency is slow to notify changes in identity card information when the individual taxpayer is an authorized individual who has been issued a citizen identity card for personal income tax settlement;
c) Notification of changes to the taxpayer's address on the tax registration file after the prescribed deadline due to changes in administrative boundaries according to a Resolution of the Standing Committee of the National Assembly or a Resolution of the National Assembly.
7. Remedial measures: Mandatory submission of documents to amend tax registration information for the actions specified in point b, clause 5 of this Article.
Article 12. Penalties for false or incomplete declarations in tax documents that do not result in a shortfall in tax payable or an increase in tax exemptions, reductions, or refunds.
1. A fine of VND 500.000 to VND 1.500.000 shall be imposed for the act of incorrectly or incompletely declaring information in tax documents that is not related to determining tax liability, except for the acts specified in Clause 2 of this Article.
2. A fine of VND 1.500.000 to VND 2.500.000 shall be imposed for the act of incorrectly or incompletely declaring information on tax returns and accompanying appendices that are not related to determining tax obligations.
3. A fine of between VND 5.000.000 and VND 8.000.000 for one of the following acts:
a) Incorrect or incomplete declaration of information related to determining tax obligations in tax returns;
b) The acts stipulated in Clause 3 of Article 16; Clause 7 of Article 17 of this Decree.
4. Remedies:
a) Requiring the re-declaration and submission of additional documents in the tax file for the acts specified in clauses 1, 2 and point a of clause 3 of this Article;
b) Mandating the adjustment of losses and deductible input value-added tax carried forward to the next period (if any) for the acts specified in Clause 3 of this Article.
1. A warning penalty will be issued for submitting tax returns more than 01 to 05 days after the deadline, provided there are mitigating circumstances.
2. A fine of VND 2.000.000 to VND 5.000.000 shall be imposed for submitting tax declaration documents more than 1 day but less than 30 days after the deadline, except for cases specified in Clause 01 of this Article.
3. A fine of VND 5.000.000 to VND 8.000.000 will be imposed for submitting tax declaration documents more than 31 to 60 days after the prescribed deadline.
4. A fine of between VND 8.000.000 and VND 15.000.000 for one of the following acts:
a) Filing tax returns more than 61 to 90 days after the prescribed deadline;
b) Filing tax returns more than 91 days after the prescribed deadline but without incurring any tax liability;
c) Failure to file a tax return but no tax liability arises;
d) Failure to submit the required appendices on tax management for enterprises with related-party transactions along with the corporate income tax return.
5. A fine of VND 15.000.000 to VND 25.000.000 shall be imposed for the act of submitting tax declaration documents more than 90 days after the deadline for submitting tax declaration documents, where there is tax payable and the taxpayer has paid the full amount of tax and late payment penalties to the state budget before the tax authority announces a tax audit or inspection decision, or before the tax authority draws up a record of the act of late submission of tax declaration documents as prescribed in Clause 11, Article 143 of the Law on Tax Administration.
If the penalty amount, if applied under this clause, is greater than the tax amount due as stated in the tax return, the maximum penalty in this case shall be equal to the tax amount due as stated in the tax return, but not less than the average of the penalty range stipulated in Clause 4 of this Article.
6. Remedies:
a) The taxpayer shall be required to pay the full amount of late payment penalties to the state budget for violations of the provisions in Clauses 1, 2, 3, 4, and 5 of this Article in cases where the taxpayer's late submission of tax declarations leads to late payment of taxes;
b) Mandatory submission of tax returns and accompanying appendices for the acts specified in points c and d of Clause 4 of this Article.
1. A fine of between VND 2.000.000 and VND 3.000.000 for one of the following acts:
a) Providing information, documents, and legal records related to tax registration as notified by the tax authority more than 05 working days after the prescribed deadline;
b) Providing information, documents, and accounting records related to determining tax obligations as notified by the tax authority more than 05 working days after the prescribed deadline.
2. A fine of between VND 3.000.000 and VND 5.000.000 for one of the following acts:
a) Failure to provide, or providing incomplete or inaccurate information, documents, receipts, invoices, and accounting records related to determining tax obligations; providing incomplete or inaccurate account numbers, deposit account balances, and payment account balances to competent authorities when requested;
b) Failure to provide, or providing incomplete or incorrect information and data related to tax obligations that must be registered according to regulations, but which does not reduce the tax obligation to the state budget;
c) Failure to provide, or providing incomplete or inaccurate information and documents related to deposit accounts, payment accounts at credit institutions, the State Treasury, and related third-party liabilities when requested by the tax authorities.
3. Remedial measures: Requiring the provision of information regarding the acts specified in Clause 2 of this Article.
Article 15. Penalties for violations of regulations on compliance with tax inspection and audit decisions, and enforcement of administrative tax decisions.
1. A fine of between VND 2.000.000 and VND 5.000.000 for one of the following acts:
a) Not accepting tax inspection or audit decisions, or decisions on enforcement of administrative tax decisions when delivered or sent by the tax authority in accordance with the law;
b) Failure to comply with tax inspection or audit decisions for more than 03 working days from the date of compliance with the decision of the competent authority;
c) Providing records, documents, invoices, vouchers, and accounting books related to tax obligations more than 06 working hours after receiving the request from the competent authority during an inspection or audit at the taxpayer's premises;
d) Providing incomplete or inaccurate information, documents, and accounting records related to determining tax obligations as requested by competent authorities during tax audits and inspections at the taxpayer's premises;
(d) Failure to sign the tax inspection or audit report within 05 working days from the date of preparation or public announcement of the report.
2. A fine of between VND 5.000.000 and VND 10.000.000 for one of the following acts:
a) Failure to provide data, documents, and accounting records related to determining tax obligations when requested by competent authorities during tax audits or inspections at the taxpayer's premises;
b) Failure to implement or improper implementation of decisions to seal records, documents, cash reserves, warehouses, goods, materials, raw materials, machinery, equipment, and factory buildings;
c) Willfully removing or altering seals legally established by competent authorities.
3. Remedial measures: Requiring the provision of information, documents, and accounting records related to determining tax obligations for the acts specified in point d, clause 1 and point a, clause 2 of this Article.
Article 16. Penalties for false declarations leading to underpayment of tax or overpayment of tax exempted, reduced, or refunded.
1. A penalty of 20% of the amount of underdeclared tax or the amount of tax exempted, reduced, or refunded in excess of the regulations will be imposed for any of the following acts:
a) Incorrectly declaring the basis for tax calculation or the amount of tax deductible, or incorrectly determining cases eligible for tax exemption, reduction, or refund, resulting in a shortfall in the amount of tax payable or an increase in the amount of tax exempted, reduced, or refunded, but the economic transactions have been fully reflected in the accounting system, invoices, and legal documents;
b) Incorrect declarations resulting in a reduction of the tax payable or an increase in the tax refund, exemption, or reduction not falling under the cases specified in point a of this clause, but where the taxpayer has voluntarily submitted supplementary declarations and paid the full amount of the tax deficit to the state budget before the tax authority concludes its tax audit or inspection at the taxpayer's premises;
c) Making false declarations that reduce the amount of tax payable or increase the amount of tax refunded, exempted, or reduced, which have been recorded in tax inspection reports or administrative violation reports by competent authorities as tax evasion, but the taxpayer, committing the first-time administrative violation of tax evasion, has made supplementary declarations and paid the full amount of tax to the state budget before the competent authority issues a penalty decision, and the tax authority has recorded the false declaration as an act of tax evasion resulting in underpayment;
d) Making false declarations resulting in a shortfall in tax payable or an increase in tax exemptions, reductions, or refunds for related-party transactions, but the taxpayer has prepared documentation to determine market prices or has prepared and submitted appendices to the tax authorities as required by tax management regulations for enterprises with related-party transactions;
d) Using illegal invoices or documents to account for the value of purchased goods and services, thereby reducing the amount of tax payable or increasing the amount of tax refunded, exempted, or reduced, but when discovered by the tax authorities during an inspection, the buyer can prove that the violation of using illegal invoices or documents was the fault of the seller and the buyer has fully accounted for the transaction according to regulations.
2. Remedies:
a) To compel the payment of the full amount of outstanding tax, the amount of tax refunded, exempted, or reduced in excess of regulations, and late payment penalties into the state budget for the acts specified in Clause 1 of this Article.
If the statute of limitations for penalties has expired, the taxpayer will not be penalized according to the provisions of Clause 1 of this Article, but the taxpayer must pay the full amount of tax owed, the amount of tax refunded, exempted, or reduced in excess of the regulations, and late payment penalties to the state budget within the deadline specified in Clause 6 of Article 8 of this Decree;
b) Mandating the adjustment of losses and deductible input value-added tax carried forward to the next period (if any) for the acts specified in Clause 1 of this Article.
3. In cases where taxpayers make false declarations as stipulated in points a, b, and d of Clause 1 of this Article, but this does not result in a shortfall in tax payable, an increase in tax exemptions or reductions, or a delay in tax refunds, they shall not be penalized according to the provisions of this Article, but shall be penalized according to Clause 3 of Article 12 of this Decree.
Article 17. Penalties for tax evasion
1. A one-time fine equal to the amount of tax evaded will be imposed on taxpayers with one or more mitigating circumstances when committing one of the following violations:
a) Failure to submit tax registration documents; failure to submit tax returns or submitting tax returns more than 90 days after the deadline for submitting tax returns or after the extended deadline for submitting tax returns, except for cases specified in points b and c of Clause 4 and Clause 5 of Article 13 of this Decree;
b) Failure to record in the accounting books any revenue related to determining the amount of tax payable, failure to declare, or incorrect declaration resulting in a shortfall in the amount of tax payable or an increase in the amount of tax refunded, exempted, or reduced, except for acts specified in Article 16 of this Decree;
c) Failure to issue invoices when selling goods or services, except in cases where the taxpayer has declared tax on the value of goods or services sold or provided in the corresponding tax period; issuing invoices for the sale of goods or services with incorrect quantities or values to declare lower taxes than the actual amount, and being discovered after the deadline for submitting tax returns;
d) Using illegal invoices; illegally using invoices to declare taxes in order to reduce the amount of tax payable or increase the amount of tax refunded, exempted, or reduced;
d) Using illegal documents; using documents illegally; using documents or records that do not accurately reflect the nature or actual value of the transaction to incorrectly determine the amount of tax payable, the amount of tax exempted, reduced, or refunded; creating procedures and records for the destruction of materials and goods that do not reflect reality, thereby reducing the amount of tax payable or increasing the amount of tax refunded, exempted, or reduced;
e) Using goods that are exempt from tax, tax-exempt, or eligible for tax relief for purposes other than those specified, without declaring the change in purpose of use or filing a tax return with the tax authorities;
g) Taxpayers who continue business operations during the period of requesting business suspension or temporary suspension but fail to notify the tax authorities, except in cases stipulated in point b, clause 4, Article 10 of this Decree.
2. A fine of 1,5 times the amount of tax evaded shall be imposed on taxpayers who commit one of the acts specified in Clause 1 of this Article without aggravating or mitigating circumstances.
3. A fine of twice the amount of tax evaded shall be imposed on taxpayers who commit one of the acts specified in Clause 1 of this Article with an aggravating circumstance.
4. A fine of 2,5 times the amount of tax evaded shall be imposed on taxpayers who commit one of the acts specified in Clause 1 of this Article with two aggravating circumstances.
5. A fine of three times the amount of tax evaded shall be imposed on taxpayers who commit one of the acts specified in Clause 1 of this Article with three or more aggravating circumstances.
6. Remedies:
a) Compulsory payment of the full amount of evaded taxes into the state budget for violations of the provisions in Clauses 1, 2, 3, 4, and 5 of this Article.
In cases where the statute of limitations for penalties for tax evasion as stipulated in Clauses 1, 2, 3, 4, and 5 of this Article has expired, the taxpayer will not be penalized for tax evasion, but must pay the full amount of evaded tax and late payment interest calculated on the evaded tax amount into the state budget within the time limit stipulated in Clause 6, Article 8 of this Decree.
b) Mandating the adjustment of losses and deductible input value-added tax amounts on tax records (if any) for the acts specified in clauses 1, 2, 3, 4, and 5 of this Article.
7. Violations of the provisions in points b, d, and e of Clause 1 of this Article, discovered after the deadline for submitting tax returns but which do not reduce the amount of tax payable or have not yet been refunded, and do not increase the amount of tax exempted or reduced, shall be subject to administrative penalties as prescribed in Clause 3 of Article 12 of this Decree.
Look up the penalties for administrative violations related to taxes and invoices.
Decree 125/2020/ND-CP stipulates administrative penalties for violations related to taxes and invoices.
This Decree stipulates the acts, penalties, and remedial measures for administrative violations related to taxes and invoices, effective from December 5, 2020.
The level of penalty applied depends on the time of application and the nature of the violation.