6 common types of tax penalties in Vietnam

In the fight against tax fraud, identifying tax evasion is an extremely important and necessary issue. Only then can effective solutions be proposed and improve management capacity. management of the Tax industry, especially in the context of Vietnam’s increasingly deep integration into the world economy. Identifying some acts of vietnam tax penalty in practice, the article proposes some directions, thereby contributing to effective prevention and combat of tax evasion.

1.What is the tax rate? Tax rate classification

Tax is a mandatory payment that organizations or individuals must pay to the state when certain conditions are met. Most countries have a tax system to pay for national, common or agreed needs and government functions. Some tax a flat percentage of an individual’s annual income, but most taxes are based on the amount of annual income. Most countries levy personal income taxes as well as corporate income taxes. Countries or subunits also often impose wealth taxes, inheritance taxes, estate taxes, gift taxes, sales taxes, payroll taxes, or tariffs.

Tax rate is the basis for the tax rate payable per unit to determine the value of the tax rate payable for a type of taxable object. The tax rate is expressed as a percentage, depending on each type of subject and conditions. Relatedly, the applicable tax rates and service tax penalty will be different.


Regulations on penalties for tax evasion in Vietnam

>>>Find out more: Service tax audit income tax Vietnam

2. Common types of tax penalties in Vietnam

2.1 Establishing a “ghost” enterprise:

A “ghost” enterprise is an enterprise established according to the provisions of the Enterprise Law but does not actually produce or do business, only for the purpose of being eligible to issue invoices. , thereby selling the invoices to other subjects or intermediaries creating short sales invoices and creating fake documents to request tax refunds. The level of damage caused by these floating invoices is very difficult to control, completely depending on the amount of input costs that need to be legalized by the invoice buying and selling enterprise.

2.2 Creating bogus transactions:

Unreal transactions mean that in reality, the enterprise did not create these transactions but created its own documents and bought external documents to legalize them. Therefore, this can be called a false recording. False recording is shown through fake documents and statements with fake signatures, fake labor contracts, purchase invoices from other businesses… With this behavior, businesses can not only reduce their corporate income tax. (CIT) but also reduce value added tax (VAT) through false deduction of input VAT.

2.3 Recording an increase in the price of purchased goods and services:

Enterprises that produce goods for domestic consumption and domestic consumption find it difficult to compete and arbitrarily increase prices compared to the general level, so enterprises often find every possible way. ways to increase input costs of the production process. Adjusting the numbers on equipment, supplies, raw materials, material consumption norms per unit of product, and allocated costs are the methods and “loopholes” that help businesses circumvent the law and raise prices the easiest. Increasing costs not only helps businesses reduce the amount of corporate income tax payable, but also helps businesses reduce VAT payable by increasing deductible input VAT.

2.4 Recording the selling price lower than the actual price:

This is the act of recording the selling price on the invoice and declaring taxable revenue lower than the price actually paid by the customer. This behavior is common in businesses operating hotels and restaurants, private transportation, petroleum, construction materials, selling cars and motorbikes, interior decoration goods…

2.5 Illegal accounting and tax declaration:

The main goal of illegal accounting is to hide tax revenue, increase CIT costs and increase input VAT. The types of accounting errors are very diverse. When detected by an inspection, accountants can use the excuse of mistaken accounting to avoid being fined for tax evasion. Accountants can account for revenue deductions through improper forms of discounts and rebates…

What Are the Benefits of Filing Your Income Tax Return Regularly?

2.6 Accounting books do not fully reflect:

Taxpayers often use two accounting book systems simultaneously: an internal accounting book system that fully reflects economic transactions and an accounting book system that only reflects one part of economic transactions.

Tax accounting operations should occur regularly and periodically to ensure the tax payment rights and obligations of businesses to the State. Tax accounting has an important meaning, trading information is calculated. Tax calculations are stored and synthesized as a basis for determining the taxes that enterprises and economic organizations conducting business activities must pay to the state. Any question in tax burden in vietnam, please contact us.

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