CIRCULAR No CIRCULAR No. 128/1998/TT-BTC AMENDING AND SUPPLEMENTING CIRCULAR No. 45-TC/TCT OF AUGUST 1 st , 1996 GUIDING THE IMPLEMENTATION OF GOVERNMENT DECREE No. 22/CP OF APRIL 17, 1996 ON HANDLING ADMINISTRATIVE VIOLATIONS IN THE FIELD OF TAX In implementation of the Government Decree No. 22/CP of April 17, 1996 on sanctions against administrative violations in the field of tax, the Ministry of Finance hereby provides the specific guidance as follows: I. GENERAL PROVISIONS 1. Acts of administrative violation in the field of tax are those committed by organizations or individuals in violation of the provisions of tax laws, tax ordinances, the stipulations on drawing up of vouchers for purchase and sale of goods, opening and entering account books, the stipulations on collected charges, fees and the current stipulations on other State budget revenues, which are, however, not so serious enough for being examined for penal liability, but must be subject to administrative sanctions. 2. Subject to sanctions against administrative violations in the field of tax shall be: 2.1. All Vietnamese organizations and individuals that commit acts of administrative violations in the field of tax; 2.2. Foreign organizations and individuals that commit acts of administrative violation in the field of tax. Where international treaties which Vietnam has signed or acceded to provide otherwise, the signed treaties shall apply. 3. The tax collecting agencies stipulated in Decree No. 22/CP of April 17, 1996 shall comprise tax agencies and customs offices (for export, and/or import tax, special consumption tax and value added tax levied on import). 4. Principles and forms of sanctions against administrative violations in the field of tax. 4.1. Principles of sanctioning administrative violations in the field of tax shall comply with Article 3 of the Ordinance on Handling Administrative Violations of July 06, 1995. 4.2. Principal forms of sanction: - Warning; - Pecuniary fine. Where organizations or individuals are found having committed more than one act of administrative violations in the field of tax in one discovery and inspection, and detection, penalty shall be meted out for each act of violation, then the fines shall be totaled. Apart from application of either of the two principal forms of sanction, such forms of additional sanction as confiscation of exhibits and means used for administrative violations may apply, depending on the nature and seriousness of the violations by committed organizations and individuals in the field of tax. 5. Attenuating circumstances when sanctioning administrative violations in the field of tax: Organizations and individuals committing administrative violations that have prevented and reduced the harms done by their violations or voluntarily mended or made compensation for damage. 6. Aggravating circumstances when sanctioning administrative violations in the field of tax: 6.1. Recidivism or violation for more than one occasion; 6.2. Taking advantage of one�s post or power, natural disasters, epidemic diseases or enemy-sabotage to commit violations; 6.3. Violations while serving penalty decisions; 6.4. Showing acts of evasion or concealing violations. 7. Cases where administrative violations shall not be sanctioned: 7.1. Expiration of statute of limitations for sanctioning administrative violations: - The discovered acts of administrative violation in taxation have passed the statute of limitations for sanctions stipulated in Article 12 of Decree No. 22/CP of April 17, 1996 (counting two years with retrospective effect from the date of discovery of acts of violation). For acts of false declaration and evasion of taxes, the statute of limitations for sanctions shall be determined in according to the stipulations in tax laws and tax ordinances; - Past the time limit of three months from the date of issue of decisions for suspension of investigation or of cases regarding individuals committing acts of administrative violation in taxation, against whom legal actions had been taken or a decision had been issued to bring the cases to trial according to criminal proceedings procedures but the bodies that carry out legal proceedings have decided to suspend investigation or the cases. Within the statute of limitations for sanctions, if organizations and/or individuals commit new breaches or deliberately evade or hamper the sanction, the afore-mentioned statute of limitations shall not apply and all detected administrative violations in the field of tax shall be sanctioned. 7.2 Tax-related administrative violations which, according to law, show signs of offences and the dossiers of which have been forwarded by tax agencies to competent authorities for settlement. 7.3. For minors who commit acts of administrative violation in taxation, Article 6 of the Ordinance on Handling Administrative Violations of July 6, 1995 shall apply. 7.4. Persons committing acts of administrative violation in taxation while being affected by mental disease or other diseases that cause incognizance or loss of capacity to control their acts. II. ACTS OF VIOLATION AND LEVELS OF SANCTION Based on the stipulations in Articles 1, 2, 3, 4 and 5 of Chapter I, Government Decree No. 22/CP of April 17, 1996, the specific forms and levels of sanctions against acts of administrative violations in taxation shall be as follows: 1. Acts of violating the procedures for business registration, registration for tax payment, declaration for making account books and keeping of vouches and invoices relating to calculation, collection and payment of tax: 1.1. Warning for the first breach and a fine of from 20,000 VND to 200,000 VND for the second breach. Where aggravating circumstances are involved, a fine of up to 1,000,000 VND shall be imposed on one of the following acts: a) Violations of the stipulations on business registration, registration for tax payment or making declarations to tax offices upon the expiry of the time limits prescribed in the current documents guiding the implementation of tax laws, ordinances on taxes, charges, fees and other State budget revenues. b) Failure to make full declarations of items stipulated in the declarations for tax payment or in book-keeping documents provided to tax agencies. 1.2. A pecuniary fine of from 40,000 VND to 200,000 VND for the first breach. For the second breach, pecuniary fine of from 600,000 VND to 1,000,000 VND with regard to one of the following acts: - Failure to comply fully with the regime on the management and use of sale invoices according to the State stipulations; - Failure to make full inscription of details in accordance with each invoice, receipt and printed tax forms when delivering goods or providing services to clients. 1.3. A pecuniary fine of from 100,000 VND to 1,000,000 VND for the first violation and from 2,000,000 to 4,000,000 VND for the second violation; if one aggravating circumstance is involved, a fine of 6,000,000 VND may be imposed and if two aggravating circumstances are involved, a fine of up to 10,000,000 VND may be imposed on one of the following acts: a) Failing to produce accounting books, vouchers and related documents at the request of the tax authorities; b) Failing to submit tax declarations and book-keeping reports to tax collecting agencies within the time limit prescribed in the current documents that guide the implementation of tax legislation and law documents on State budget revenues; c) Failing to observe or having not fully observed the accounting regulations as prescribed in the Ordinance on Accounting and Statistics. d) Transport of goods without accompanied tax dossiers prescribed for each business subject (i.e. goods purchasing books, vouchers and other legal papers). 1.4. A pecuniary fine of from 1,000,000 VND to 10,000,000 VND for the first violation, and of up to 13,000,000 VND for second violation; if aggravating circumstances are involved, a fine of up to 20,000,000 VND may be imposed on one of the following acts: - Deliberately not to submit tax declarations, book-keeping reports and other papers to tax collecting agencies in accordance with the provisions of law. The circumstance in which an act is considered deliberate in this connection shall be as follows: When the time limit for submission of the above-said documents expires, the tax-collecting agencies shall send the first notice requesting the submission of these documents. After ten days from the date of sending the first notice, if the concerned establishments fail to submit the documents, the second notice shall be forwarded and if such documents are still not submitted, the tax-collecting agencies shall apply the sanctioning levels provided for in this point. - Selling goods without invoices handed to customers as stipulated by the State; - Organizations and individuals buying and using invoices and receipts of various types neither issued nor permitted to use by the Ministry of Finance; - Losing or letting other persons make use of one�s invoices to carry out illegal business activities or to evade tax. 1.5. A pecuniary fine of from 2,000,000 VND to 10,000,000 VND for the first violation and of up to 15,000,000 VND for the second violation; if one aggravating circumstance is involved, a fine of up to 20,000,000 VND may be imposed on one of the following acts: - Destruction of vouchers, books or book-keeping reports related to tax calculation and tax collection when the prescribed time limit for maintenance and keeping has not expired; - To make vouchers, books or book-keeping reports related to tax calculation and tax collection decrepit to the extent that they cannot be restored (i.e. impossible to read or make photocopy). 2. Acts of false declaration and evasion of tax Organizations or individuals that commit acts of false declaration and evasion of taxes stipulated in the current tax laws and the Ordinance on Natural Resources Tax (amended), besides having to fully pay the taxes that have been falsely declared or evaded, shall be liable to pecuniary fines according to the number of times of committing these acts as stipulated by each tax law and by the Ordinance on Natural Resources Tax (amended). Organizations or individuals that commit acts of false declaration and evasion of other taxes, besides having to fully pay the afore-said taxes that have been false declared or evaded shall be liable to pecuniary fines according to the number of times of making false declaration and evasion of taxes according to the levels mentioned below, the maximum fine level, however, shall not exceed 100,000,000 VND: 2.1. A pecuniary fine equal to the taxes evaded and where aggravating circumstances are involved (except for cases where acts of tax evasion have been dealt with but the violation is repeated), a pecuniary fine equal twice the amount of evaded tax shall be levied on one of the following acts: a) Making wrong declarations of tax calculation basis prescribed for each kind of tax; b) Drawing up account books, invoices and vouchers not true to the real situations that arise; c) Leaving out of books accounting data or making accounting not in conformity with the stipulated accounts which result in determining tax calculation basis not true to the real situations; d) Asking for temporary cessation of business for purpose of tax reduction or exemption but in fact still going on. Where organizations and individuals committing acts of violation stipulated in this Point 2.1, if discovered prior to the time the committing subjects have to make final settlement of taxes or make full payment of taxes in accordance with law, the levels of fine set forth in this Point 2.1 shall not apply and the levels stipulated in Clause 2, Article 2 of Decree No. 22/CP of April 17, 1996 shall be applied instead. 2.2. A pecuniary fine equating twice the evaded tax amount and where aggravating circumstances are involved (except for cases where acts of tax evasion have been dealt with but violation is repeated), a pecuniary fine that triples the evaded tax amount shall be levied on one of the following acts: a) Goods transported without sufficient dossiers evidencing that tax has been paid for them or they have been controlled by tax agencies according to the stipulations for each business subject. The acts of violation referred to in this point shall be considered acts of false declaration and tax evasion only if the tax agencies still have doubts after the inspection and allow the violators a time limit for travelling to collect sufficient valid dossiers evidencing that tax has been paid for the goods (for those purchased, sold or exchanged) or the goods have been controlled by tax-collecting agencies (for goods transported from one warehouse to another within the same unit) but the violators still fail to produce all the valid dossiers. Where within the time limit set by tax agency, the violators have produced all valid dossiers, the tax offices competent to sanction may only issue sanctioning decision according to the stipulations in Point b, Item 2, Article 2 of Decree No. 22/CP of April 17, 1996. Where goods owners fail to abide by tax agency�s handling decisions or past the time limit by one day for fresh food and five days for other goods after the issuance of the handling decisions, the goods owners still fail to come up and pay tax or fines in order to take back their goods, the tax agency shall refer the matter to financial body of the same level from district level upwards to set up a council to sell the temporarily-held goods by auction for enforcement of penalties; b) Doing business without making declaration and registration with tax offices; c) Forging sale invoices, vouchers for receipt of money, tax receipts, copies of permits to transport goods and other documents relating to tax calculation. 2.3. For organizations and individuals engaged in production or/and export-import business activities, if violating regulations in Points 2.1, 2.2, Section II hereof shall, depending on violation, be subject to a pecuniary fine equal from 2 to five times to the evaded tax amount as stipulated by law. 2.4. Where the evaded tax amount is large or the tax evasion is repeated though it has been administratively sanctioned, the tax-collecting agency shall refer the dossiers to People�s Procuracies of the same level for examining penal liability according to law. 3. Acts of violating the regime of collection and payment of taxes and fines: 3.1. A pecuniary fine of from 100,000 VND to 500,000 VND for the first violation and from 500,000 VND to 800,000 VND for the second violation; if one aggravating circumstance is involved, a fine of up to 3,000,000 VND may be imposed and if two aggravating circumstances are found, a fine of up to 5,000,000 VND may be levied on one of the following acts: - Refusing to receive tax-collecting notice, tax-collecting orders or decisions sanctioning the tax-related administrative violations, in cases where these notices are directly handed by tax agencies. When tax-collecting officials personally hand the tax payment notices, tax-collecting orders or tax-related sanctioning decisions to tax payers or the violating organizations and/or individuals, that refuse to take them, the tax agencies shall send for a witness and make a record on the administrative violation with reasons therefor clearly stated, to serve as the ground for sanctioning. 3.2. A pecuniary fine of from 200,000 VND to 500,000 VND for the first violation and from 500,000 VND to 1,000,000 VND for the second violation; if one aggravating circumstance is involved, a fine of up to 5,000,000 VND may be imposed and if two aggravating circumstances are found, a fine of up to 10,000,000 VND may be levied on one of the following acts: - Delay in tax or fine payment specified in tax-notice or in the tax offices� decisions to handle tax-related violations. Tax officials, organizations or officials entrusted to collect taxes, bank officials or officials from other credit organizations who, due to lack of responsibility, make tardy tax payment into the Treasuries shall also be subject to fines for tardy payment in accordance with this stipulation; When enterprises pay taxes via their accounts at banks or other credit institutions and such accounts have a credit balance enough for tax payment, if such banks or credit institutions are late in deducting the money from the enterprises� accounts for tax payment into treasury accounts, such banks or credit institutions shall be fined for late payment according to this provision. - Procrastination in tax or fine payment: Shall be considered procrastination in tax or fine payment cases of late payment of taxes and fines which are more than 30 days overdue against the time limit stipulated in tax payment notices and sanctioning decisions. 3.3. Those organizations and individuals that breach the stipulations set out in Point 3.2, Section II hereof shall, besides being imposed with penalties pursuant to the stipulations in Point 3.2, Section II above, still be subject to a fine equal to 0.1% of the late payment amount. 4. Acts of breaching goods inspecting and goods sealing systems. 4.1. A pecuniary fine of from 100,000 VND to 400,000 VND for the first violation and from 500,000 VND to 1,000,000 VND for the second violation; if one aggravating circumstance is involved, a fine of up to 3,000,000 VND may be imposed and if two aggravating circumstances are found, a fine of up to 5,000,000 VND may be levied on the following act: Not letting tax offices to inspect goods en route of transport or to inspect goods and goods and raw material warehouses in production and business places. 4.2. A pecuniary fine of from 200,000 VND to 500,000 VND for the first violation and from 600,000 VND to 1,200,000 VND for the second violation; if one aggravating circumstance is involved, a fine of up to 10,000,000 VND may be imposed on the act of breaking sealing, at one�s own will, of goods warehouses, raw material warehouses, machinery and workshops within the tax offices� sealing duration. III. COMPETENCE AND PROCEDURES FOR SANCTIONING TAX-RELATED ADMINISTRATIVE VIOLATIONS. 1. Competence to sanction tax-related administrative violations 1.1. Tax officials on duty shall have the right to serve warning and/or impose pecuniary fine of up to 100,000 VND on acts of tax-related administrative violation in their control areas. Heads of tax stations and heads of tax teams shall have the right to award warning and pecuniary fine of up to 200,000 VND for acts of tax-related administrative violation in their control areas. 1.2. Heads of Tax Sub-Department shall have the following rights: - To impose warning penalties and pecuniary fines of up to 2,000,000 VND for acts of tax-related administrative violation provided in Articles 2, 4 and 5 of Government Decree No. 22/CP of April 17, 1996 on sanctioning tax-related administrative violations; - To impose pecuniary fines equal to the evaded tax amount, for acts of false declaration and tax evasion. - To confiscate exhibits and means used for the tax-related administrative violations, which is valued up to 10,000,000 VND. 1.3. Heads of Tax Departments shall have the following rights: - To impose warning and pecuniary fine of up to 20,000,000 VND for acts of tax-related administrative violation provided in Articles 2, 4 and 5 of Government Decree No. 22/CP of April 17, 1996 on sanctioning tax-related administrative violations; - To impose pecuniary fines equal five times to the evaded tax amount, for acts of false declaration and tax evasion in strict conformity with the stipulations of each current tax law and tax ordinance; - To confiscate exhibits and means used for tax-related administrative violations. Tax-collecting agencies of all levels shall be the ones competent to sanction all acts of tax-related administrative violations within the scope of their power. Where the cases ar

Circular 128/1998/TT-BTC