On 19 October 2020, the government issued Decree No. 125/2020/ND-CP (“Decree 125”), stipulating sanctions for administrative violations in tax and invoicing.
Decree 125 will take effect on 5 December 2020, and will implement the new Law on Tax Administration No. 38/2019/QH14. However, any tax and invoicing violation committed during the period from 1 July 2020, the effective date of the new Law on Tax Administration, to 4 December 2020, will continue to be governed by Decree No. 129/2013/ND-CP, Decree No. 109/2013/ND-CP and Decree No. 49/2016/ND-CP, respectively, on the basis of adopting general principles set forth under Chapter XV of the new Law on Tax Administration.
Below are some major points of Decree 125:
- Decree 125 imposes sanctions on authorized parties. Particularly, where a taxpayer authorizes another organization/ individual to fulfil tax obligations, the authorized party will be subject to sanctions for its administrative violations.
For each aggravating circumstance or mitigating circumstance, the average penalty level will respectively be increased or decreased by 10%, instead of 20% as previously stipulated. - Administrative violations that involve: (i) tax amount of VND 100 million or more; or (ii) value of goods or services of VND 500 million or more; or (iii) 10 invoices or more, are considered as large-scale administrative violation and accordingly classified as aggravating circumstance as provided under Article 10.1.1 of the Law on Handling of Administrative Violations.
- Among others, administrative penalties and/or late payment interest will not be imposed in the following cases (Article 9 of Decree 125):
- Taxpayers fail to conduct e-tax and e-invoice procedures due to technical problems in information technology systems as announced on the web portal of tax authorities ̶ No penalties
- Taxpayers who commit tax-related administrative violations due to compliance with competent authorities’ guidance and decisions related to the determination of taxpayers’ tax obligations (including guidance and decisions issued before the effective date of this Decree), except for cases where acts of administrative violations have not been detected during tax audits and are detected later ̶ No penalties and late payment interest
- Favorable provisions for taxpayers will apply to acts of tax/invoice administrative violations that occur before the effective date of this Decree but are detected or resolved after such date.
By Thanh Vinh Nguyen and Dao Thanh Hoa from Baker McKenzie
Related
Source: Vietnam Insider