New regulations on tax affecting business in Vietnam

The Government of Vietnam has recently issued two new tax regulations, including Decree No. 125/2020/ND-CP regulating the administrative sanctions on tax, and invoices and Decree No. 126/2020/ND-CP detailing some provisions of Law on Tax administration. How will these documents and their guiding documents from relevant authorities affect business in Vietnam? BLawyers Vietnam would like to highlight some remarkable points as follows:

new tax law could affect business in Vietnam

1. Commercial banks have obligation to provide taxpayer account information

In Decree No. 126/2020/ND-CP, the Government requires commercial banks to be responsible for providing taxpayer account information.

Specifically, information needs to provide at the request of the head of tax authorities, such as transactions via account, account balance, and transactions data. The purpose is inspecting, examining, determining payable tax obligations and implementing measures to enforce administrative decisions on tax administration according to tax law.

Tax authorities are responsible for keeping information confidential. They also take full responsibility for the information security in accordance with the law.

Notably, commercial banks must provide tax authorities with information about each taxpayer’s payment account every month. Such information includes name of account holder, account number according to tax code issued by the tax authority, opening and closing date of account.

This decree shall take effect from 05 December 2020.

2. Misdeclaration or evasion of tax in 3 consecutive tax periods are particularly serious problem

The General Tax Department issued an Official Letter No. 4818/TCT-PC dated 12 November 2020 regarding some new points in administrative sanctions on tax, invoices and the implementation of Decree No. 125/2020/ND-CP, which comes into force from 05 December 2020. The General Tax Department has summarized provisions of Decree No. 125/2020/ND-CP considered as new ones. Accordingly:

  • Only affiliates units or business locations of enterprises will be sanctioned for tax and invoice violations if they directly declare and pay taxes.
  • 02 following acts are considered particularly serious problems if they occur in 03 consecutive tax periods:
    • A misdeclaration resulting in underpayment of tax or increasing tax refund;
    • Tax evasion.
  • Each aggravation or extenuating circumstance will be counted towards the 10% increase or decrease of the fine, of which previous amount is 20%.
  • A violation with a tax amount from VND100,000,000 or value of goods from VND500,000,000 is a large-scale violation.
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