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Penalties when companies do not declare taxes in Vietnam

Filing a tax declaration dossier is mandatory and any companies and enterprises must comply and fully implement it when operating. However, many companies do not file tax declarations. So what fine will be imposed on this company? In this article below, Viet An Law Firm offers an article below on penalties when companies do not declare taxes in Vietnam.

declare taxes

Legal basis

  • Law on Tax Administration 2019;
  • Decree 125/2020/ND-CP stipulates penalties for administrative violations of taxes and invoices.

What is the tax declaration?

The tax declaration is the act of organizations and enterprises presenting to tax authorities databases and dossiers related to their tax obligations. The requirement for the tax declaration is to submit all documents and evidence specified in the tax declaration dossier and the taxpayer needs to declare fully and truthfully the contents according to the form prescribed by the Ministry of Finance. The accuracy and truthfulness of all information is the responsibility of the taxpayer.

The time limit for submitting the tax declaration

  • The deadline for submitting a monthly tax declaration dossier is the 20th (twentieth) day of the month following the month which arises from the tax obligation.
  • The deadline for submitting a quarterly tax declaration dossier is the 30th (thirtieth) day of the quarter following the quarter which arises from the tax obligation.
  • The deadline for submitting an annual tax declaration dossier is the 30th (thirtieth) day of the first month of the calendar year.
  • The deadline for submitting a tax declaration dossier for each time that arise from the tax obligation is the 10th (tenth) day from the date the tax obligation arises.
  • The deadline for submitting annual tax finalization dossiers is the 90th (ninetieth) day from the end of the calendar year or the fiscal year.
  • The deadline for submitting tax finalization dossiers in cases where an enterprise divides, splits, consolidates, merges, converts ownership, dissolves, or terminates operations is the 45th (forty-fifth) day from the date of the decision on the enterprise’s division, separation, consolidation, merger, ownership conversion, dissolution, or termination of operations.

Penalties when companies do not declare taxes in Vietnam

In case of non-declaration due to late submission

Under Article 13 of Decree No. 125/2020/ND-CP, the penalty for the late submission of the tax dossier is as follows:

Number of days of the late submission Penalty level
Submitting the tax declaration dossier from 01 day to 05 days past the deadline and there are mitigating circumstances. Caution
Submitting the tax declaration dossier to the tax authority from 01 day to 30 days past the prescribed deadline. 2.000.000 VND – 5.000.000 VND
Submitting the tax declaration dossier from 31 to 60 days past the prescribed deadline. 5.000.000 VND – 8.000.000 VND
Submitting the tax declaration dossier from 61 to 90 days past the prescribed deadline.

Submitting the tax declaration dossier from 91 days or more past the prescribed deadline but not raising any payable tax. Do not submit the tax declaration dossier but no tax payable arises.

Do not submit appendices according to regulations on tax administration for enterprises with associated transactions enclosed with enterprise income tax finalization dossiers.

8.000.000 VND – 15.000.000 VND
Submitting the tax declaration dossier more than 90 days past the deadline after the deadline for submitting the tax declaration dossier, arises from the payable tax and the taxpayer has paid the full amount of tax and late payment interest to the State Budget. 15.000.000 VND – 25.000.000 VND

Accordingly, the minimum fine is a warning for tax declarations that are overdue from 01 day to 05 days and there is a mitigation circumstance and the maximum fine is 15,000,000 VND – 25,000,000 VND when submitting the declaration dossier is more than 90 days from the due date of the tax declaration.

In case of not declaring due to tax evasion

Article 143 of the Law on Tax Administration 2019 stipulates not submitting the tax declaration dossier; Submitting the tax declaration dossier after 90 days from the due date of submitting the tax declaration dossier or the due date of preliminary tax declaration dossier submission according to the provisions of this Law that is one of the acts considered as the tax evasion.

According to Point b, Clause 11, Article 143 of the Law on Tax Administration 2019 which stipulates tax evasion, the company will not be sanctioned for tax evasion but will be sanctioned according to the provisions of Clause 1, Article 141 of this Law for case:

  • Submitting the tax declaration dossier after 90 days arises the payment tax amount and the taxpayer has paid the full tax amount and the late payment interest to the State Budget before the tax authority announces the tax inspection decision or before the tax authority sets a record of the act which submitting the late tax declaration dossier.

Thus, if an enterprise has a sufficient amount of tax and late payment interest to the State Budget before the tax authority announces the tax inspection decision or before the tax authority sets a record of the act which submitting the late tax declaration dossier, this enterprise will not be penalized for the tax evasion, but will only be penalized for violations of the deadline for the tax declaration dossier submission.

Under Article 17 of Decree No. 125/2020/ND-CP regulating penalties for tax evasion, companies commit tax evasion that will be fined as follows:

  • A one-time fine calculated on the amount of evaded tax, the amount of tax evasion for companies that violate for the first time or for the second time with two or more mitigating circumstances.
  • Fine 1.5 times calculated on the amount of evaded tax for the company in the following cases: the next violation, with aggravating circumstances, or the second violation, with a mitigating circumstance.
  • Fine 2 times calculated on the amount of tax evaded for the company in the following cases: the second violation without mitigating circumstances or the third violation with a mitigating circumstance.
  • Fine 2.5 times the amount of tax evaded for the company in the following cases: the second violation with an aggravating circumstance or the third violation without mitigation circumstances.
  • Fine 3 times calculated on the amount of tax evaded for the company in the following cases: The second violation with two or more aggravating circumstances or the third violation with aggravating circumstances or violation from the fourth time onward.

In addition to the above administrative actions, the company was also forced to apply remedial measures to pay the full amount of tax evasion and fraud into the State Budget.

In addition, depending on the amount of tax evasion, the company may be subject to criminal sanctions. There are cases where the amount of tax evasion does not reach the level of criminal prosecution but it is subject to administrative sanctions about the tax evasion as prescribed above that will still be subject to criminal prosecution.

Remedies

The company fully eliminates the amount of late tax into the State Budget for actions that delay tax declaration dossiers leading to late tax payments specified in Clauses 1, 2, 3, 4, and 5, Article 13 of Decree No. 125/2020/ND-CP.

In addition, for the act of not submitting the tax declaration dossier but not generating the paid tax and not submitting appendices according to regulations on tax administration for enterprises with associated transactions attached to the corporate income tax finalization dossier, the company must submit the tax declaration dossier and appendices attached to the tax declaration dossier.

In cases where the tax evasion act as prescribed in Clauses 1, 2, 3, 4, 5, Article 17 of Decree No. 125/2020/ND-CP has exceeded the penalty time, the company will not be fined for the act of tax evasion but must pay the full amount of tax evasion and late payment interest calculated on the amount of tax evasion into the State Budget within the time limit specified in Clause 6, Article 8 of this Decree. At the same time, it is necessary to re-adjust the number of revenue and the input value added tax to be deducted on the tax dossier (if any).

Clients who need to consult on tax declaration services and tax accounting services, please contact Viet An Law Firm – Tax Agent for the best support.

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