INCREASING FINES AND ADDITIONAL REGULATIONS ON ADMINISTRATIVE VIOLATIONS RELATED TO TAXES AND INVOICES

On October 19th, 2020, the Government issued Decree 125/2020/ND-CP regulating penalties for administrative violations pertaining to taxations and invoices. Some remarkable contents are: the increase in certain tax-related administrative violations and the harmonization of all regulations related to sanctioning administrative violations of taxes and invoices with the Law on Tax Administration No. 38/2019.

1. Noteworthy contents

The new Decree coherently specifies administrative violations of taxes and invoices, penalties and remedies for each specific act in Chapter II and Chapter III.

A large-scale administrative violation of taxes and invoices are defined as follows:

“An administrative violation with the tax amount (the tax deficient, the tax evaded or the tax exempt, reduced or refunded higher) from 100,000,000 VND or the value of goods, services from 500,000,000 VND is defined as a large-scale tax administrative violation. An administrative violation of 10 or more invoice numbers is defined as a large-scale administrative violation of invoices.”

Aggravating and mitigating factors in taxation and invoices are defined according to the Law on Handling of Administrative Violations. Principles of determining fines when there are aggravating and mitigating circumstances are as follow:

“Each mitigating circumstance is entitled to a 10% reduction of the average fine level of the fine bracket, but must not be reduced to the minimum level of the fine bracket; each aggravating circumstance is entitled to a 10% increase of the average fine rate of the fine bracket but must not exceed the maximum level of the fine bracket.”

The Decree is not applicable in the following cases:

“This Decree does not apply to administrative violations of fees and charges; administrative violations of tariffs collected by the customs and violated regulations on tax registration procedures, violations of regulations on notification of business suspension, notification on the continued business operation ahead of schedule with business registration agencies, cooperative registration agencies of organizations and individuals that carry out tax registration together with enterprise registration, cooperative registration, business registration."

2. Increasing penalties level for tax violations

The sanction level has increased remarkably compared to the previous regulations in Decree 129/2013/ND-CP. Specifically:

• For administrative violations of time limit for taxpayer registration; notification of suspension of operation/business; notification of continuing to operate/do business before the notified time, the maximum fine can be up to 10,000,000 VND
• For administrative violations of time limit for notification of changes to taxpayer registration information, the fine level is from 500,000 VND to 7,000,000 VND
• The act of declaring tax inaccurately, dishonestly and inadequately in the tax dossier which does not lead to a lack of tax liabilities payment or an increase in tax exemption or reduction can be penalized from 500,000 VND to 8,000,000 VND.
• Failure to meet the deadline for submission of tax declaration dossiers, the fine level is from 2,000,000 VND to 25,000,000 VND, depending on the number of days of late filing.
• The taxpayer who fails to submit the tax declaration dossier within 90 days after tax is incurred but has fully paid the tax, late payment interest before the tax authority announces the tax audit or tax inspection decision, or before the tax authority issues the record on late submission of the tax declaration dossier will not be fined for tax evasion. However, the taxpayer is still subject to a penalty between 15,000,000 VND and 25,000,000 VND.
• For violations against regulations on provision of tax-related information, the fine level can be up to 5,000,000 VND
• Failure to comply with the administrative decision on tax inspection, tax audit, tax enforcement is fined from 2,000,000 VND to 10,000,000 VND
• The taxpayer who commits tax evasion can be fine 3 times the amount of tax evasion if there are 3 aggravating circumstances or more.

3. Supplement certain provisions on administratives violations in respect of invoices

Regarding this field, the provisions of this Decree inherit nearly the content of Decree 109/2013/ND-CP. However, the new Decree provides more specific penalties for the act of losing, burning invoices. Moreover, there are more provisions including violations against e-invoices, penalty levels and remedies as well. These violations can be mentioned as: using illegal e-invoices without acceptance or without authentication code, making e-invoices from cash registers without connection; transferring electronic data to tax authority; not destroying voices according to the provisions of law; violating the regulation on transferring data of e-invoices. 

Moreover, in order to be compatible with Decree 123/2020/ND- CP, Article 44, Clause 2 states that: 

“Taxpayers apply to e-invoices in accordance with the Law on Tax Administration No 38/2019/QH14 dated June 13, 2019 and legal documents guiding this Law before July 1, 2022 if violating regulations on e-invoices will be fined according to the provisions of this Decree.”

Decree 125/2020/ND-CP takes effect from the 5nd of December, 2020.

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