INCREASING THE SEVERITY OF SANCTION FOR TAX ADMINISTRATIVE VIOLATIONS
On October 19, 2020, the Government issued Decree No. 125/2020 on sanctioning of administrative violations of tax and invoices. The Decree has adjusted to increase the sanction level for a number of tax-related administrative violations. The strict handling of tax-related administrative violations will contribute to preventing violations and raising taxpayers' awareness of observing the tax law. Decree 125 has 5 chapters and 47 articles. Basically, administrative violations of tax, sanctions and remedial measures are built on the basis of inheriting the still appropriate provisions in Decree No. 129/2013 / ND-CP , amending and supplementing a number of points to be consistent with the Law on Tax Administration 2019.
1. Aggravating penalties and extenuating circumstances
According to Decree 125/2020, the sanctioning level for some violations of tax procedures is adjusted to be higher than before. This Decree also details the wrongly declared tax, leading to the lack of tax, the specific fine level for the tax evasion as well as aggravating and mitigating circumstances.
Specifically, the Decree stipulates: administrative violations with the tax amount from 100 million VND or more or the value of goods from 500 million VND or more are determined as large-scale administrative violations of taxes and violations. Administration of 10 or more invoice numbers is defined as a large-scale administrative violation. The principle of determining the fine level when there is an aggravating or extenuating circumstance is calculated to increase or decrease 10% of the average fine level of the fine bracket.
For groups of violations of tax procedures, the minimum fine is 500,000 VND and the maximum is 25 million VND. In particular, the fine level will increase sharply for the group of violations of tax registration deadline and late submission of tax declaration dossiers. Specifically: the case of violation of tax registration deadline; time limit for notification of stopping business, continuing to do business ahead of schedule with a fine of from 1 million VND to 10 million VND. For violations of the time limit for notification of information changes in tax registration, the fine is from VND 500,000 to VND 7 million.
2. Penalties for false tax declaration and late tax return
For the group of acts of making false or incomplete declarations of information contained in tax dossiers that do not lead to any deficiency in taxes payable, the minimum and maximum level of fine is VND 500,000 and VND 12 million respectively.
The act of making false or incomplete declarations of information contained in tax dossiers shall be fined from VND 500,000 to VND 2.5 million. The act of false declarations which does not lead to lack of tax or tax evasion and does not result in a consequence shall receive a fine between VND 5 million and VND 8 million.
For the group of acts of late submitting tax dossiers, the minimum and maximum fine level is VND 2 million and VND 25 million respectively, which has increased sharply compared to the existing average fine level, specifically:
The act of submitting tax returns from 01 to 30 days after expiration of the prescribed time limits shall be fined at a low level (from 2 million VND to 5 million VND). The act of delaying return for more than 30 days shall be fined from VND 5 million to VND 15 million.
The act of filing tax returns more than 90 days after the prescribed deadline is defined as tax evasion but the taxpayer has fully supplemented tax returns and the late returns have been pain into the state budget before the time of the tax authority’s announcement of their decisions to conduct tax inspections or examinations or before making the record. In this case, the taxpayer shall be exempted from tax-evading penalties but still be fined between VND 15 million and VND 25 million following the level and nature of this act.
The Decree detailedly regulates the fine levels for tax evasion according to the criteria of aggravating and mitigating circumstances, which is in compliance with the principles of the 2012 Law on Handling of Administrative Violations. Writing particularly: a fine equal to the evaded tax for tax evasion with 1 or more mitigating circumstances; a fine of 1.5 times as much as the amount of evaded tax for tax evasion without mitigating or aggravating circumstances. For tax evasion with aggravating circumstances, the fine shall be 2 to 3 times.
3. Supplementing a number of acts of violation on e-invoices
The Decree regulating administrative penalties for tax or invoice-related violations inherits almost all acts of violation and the fine level for violations on invoices in Decree No.109 but still amends a number of contents, supplement regulations on violations of regulations on e-invoices with a fine provided for paper invoices, review and eliminate duplicate acts and rearrange similar acts into one single provision. Specifically, adjusting to reduce the fine for the violation of regulations on the loss, fire or damage of the invoice before the notice of issuance or the invoice purchase but the tax authorities have not set up from VND 5 million to VND 18 million, decreasing from VND 1 million to VND 8 million with a view to matching the nature of the violation.
The Decree has rearranged a number of articles and clauses such as: gathering the existing acts of giving and selling invoices scattered in many articles into one article on sanctioning the act of giving and selling invoices; the group of acts of losing, burning or corrupting invoices currently specified in many articles into one article on sanctioning the act of losing, burning or damaging invoices during the storage period; rearranging acts of violation of regulations on invoicing into 1 article; reviewing and rearranging acts in the direction of only sanctioning the act of providing self-printed invoice software that does not comply with principles or when printed out does not satisfy all provisions of the law on invoices.
Decree 125/2020 officially takes effect from December 5, 2020. The new regulations in Decree No. 125/2020/ND-CP are expected to increase the effectiveness and efficiency of tax administration preventing loss of tax revenue, reduce tax debts, and collect tax correctly, fully and timely into the state budget.
