How to Avoid Penalties for Violations in Tax and Invoicing in Vietnam

Posted 24.03. 2021 by Cekindo

Decree 125/2020/ND-CP dated 19/10/2020 is the newly issued Vietnam Tax Law, which has been effective since December 5, 2020. The new law states several penalties and the resulting fines for the violation of tax and invoice regulations.

Thus, ensuring tax and invoicing compliance is highly important when doing business in Vietnam. Below we will highlight significant penalties, administrative fines, late payment fines in this new decree and what can be done to ensure compliance.

Penalties and Fines For Invoice-related Violations

Fines shall be imposed on entities committing invoice-related violations with maximum amount VND 100,000,000 (US$ 4,310).

Fines ranging from VND 500,000 (US$22) to VND 1,500,000 (US$65) shall be imposed for failing to invoice promotional, advertising or sample goods or services; goods and services used as gifts, donations, presents, swaps or employee’s payment-in-kind wages.

Fines ranging from VND 10,000,000 (US$431) to VND 20,000,000 (US$862) shall be imposed for any act of failing to issue invoices upon sale of goods or provision of services to buyers as required by laws, except the acts prescribed in above.

Penalties for the act of using invoices illegally or using illegal invoices: Fines ranging from VND 20,000,000 (US$862) to VND 50,000,000 (US$2,155) shall be imposed for the act of using illegal invoices or using invoices illegally.

No submission of invoicing report periodic reports to tax authorities:

  • Fines ranging from 1 – 3 mil VND for the late lodgement invoice report within 1 – 10 days;
  • Fines ranging from 2 – 4 mil VND for the late lodgement invoice report within 11 – 20 days;
  • Fines ranging from 4 – 8 mil VND for the late lodgement invoice report within 21 – 90 days;
  • Get the penalty from 5 – 15 mil VND for the late lodgement invoice report over 91 days or failing to submit invoice reports to tax authorities as legally required;

Penalties and Fines for Vietnam Tax-relates Violation:

Tax returns lodgement schedule:

  • Taxpayers must lodge their tax returns and process payment tax payable according to below schedule:
    For ad-hoc case: Tax declaration and tax payment within 10 days from the date incurs transaction and tax final declaration within 45 days from the termination date of the contract.
  • For monthly tax returns: No later than the 20th of following month.
  • For quarterly tax returns: No later than the last day of the first month of the following quarter.
  • For annual tax returns:
    * Business license fee: Within 30 first days of the following year (Calendar year)
    * PIT finalisation: Due day is the last day of the first quarter of the following Calendar year.
    * CIT finalisation: Due day is the last day of the first quarter of the following financial year.

The penalty for the late tax returns lodgement:

  • Get the penalty from 2 – 5 mil VND for the late lodgement within 1 – 30 days;
  • Get the penalty from 5 – 8 mil VND for the late lodgement within 31 – 60 days;
  • Get the penalty from 8 – 15 mil VND for the late lodgement within 61 – 90 days;
  • Get the penalty from 15 – 25 mil VND for the late lodgement over 90 days;

The late payment fine: Late payment fine of tax paybale is 0,03% per day on the overdue amount from the over due date.

However, there will be no penalties for tax-paying businesses if the fault is on tax authorities due to their IT system’s technical errors.

The Fines applicable to commercial banks relating to the tax withholding obligations of commercial banks
Under Article 18, Decree 125 – Commercial banks in Vietnam are subject to fines for their obligation to witholding, deduct tax payable from taxpayer’s account and pay into the state budget’s accounts upon tax authority’s request.

In case commercial banks default on liabilities to withhold, deduct and get money from taxpayer’s accounts to pay into the state budget’s accounts upon tax authority’s request then the commercial banks wil get fines equaling the amounts of tax, the deferred amounts of tax or the fines not paid into the state budget (minus minimum balances of demand accounts subject to regulations of commercial banks providing fiduciary payment services for taxpayers).

* For this point: The guideline is still unclear, and banks do not really know how to implement this. However, Vietnam’s Ministry of Finance will develop an official circular to guide banks on adopting this new regulation.

How Cekindo can assist

Tax compliance is a complicated matter for the business communities in Vietnam. Therefore, complying with Vietnam tax law requires utmost attention.

As the expert on tax compliance in Vietnam, Cekindo can help business owners and enterprises do everything regarding Vietnam’s tax. Our knowledge and expertise in the related fields are from dealing with practical scenarios day today.

Don’t worry about the challenges you face regarding Vietnam tax law, as our consultants will extend their support, guidance, and execution with the desired outcome based on the authorities’ provisions.

Cekindo will help you in addressing any tax non-compliance. Learning the weaknesses of your tax structure enables you to establish a better compliance system.

Ask our team for consultation and support to avoid any unnecessary tax mistakes. Fill in the form below.