Official Dispatch No. 3200/TCT-PCCS of September 14, 2005, on Guiding the sanctioning of tax-related administrative violations
THE FINANCE MINISTRY
GENERAL DEPARTMENT OF TAXATION
SOCIALIST REPUBLIC OF VIET NAM
Independence - Freedom – Happiness
Subject: Guiding the sanctioning of tax-related administrative violations
Hanoi, September 14, 2005
To: The provincial/municipal Tax Departments
Recently, the General Department of Taxation has received a number of reports on some problems in the implementation of the Finance Ministry’s Circular No.41/2004/TT-BTC of May 18, 2004 guiding the implementation of the Government’s Decree No.100/2004/ND-CP of February 25, 2004 providing the sanction of administrative violations in the field of taxation; the General Department of Taxation hereby expresses its opinions as follows:
1. The sanctioning of administrative violations involving both aggravating and extenuating circumstances:
Clause 2, Article 2 of Decree No.100/2004/ND-CP of February 25, 2004, provides: “The specific fine level against an administrative violation act shall be the average of the fine bracket prescribed for such act. In cases where extenuating circumstances are involved, the fine level shall be reduced but not to below the minimum level of the fine bracket. In cases where aggravating circumstances are involved, the fine level would be higher but must not be higher than the maximum level of the fine bracket.”
The Finance Ministry’s Circular No.41/2004/TT-BTC of May 18, 2004, Part B on violation acts, forms and levels of fines, including the sanctioning levels applicable to administrative violation in the field of taxation (excluding the sanctioning of tax evasion), provides that if two extenuating circumstances are involved, the fine level shall be the lowest level of the fine bracket and if two aggravating circumstances are involved, the fine level shall be the highest level of the fine bracket. So, if an administrative violation in the field of taxation involves both the extenuating circumstances and the aggravating circumstances, the fine level applicable to such violation shall be the result of clearing between the extenuating circumstances and the aggravating circumstances.
Example: An administrative violation in the field of taxation involves two aggravating circumstances and one extenuating circumstance, the fine level applicable to such violation shall be the fine level prescribed for a violation involving one aggravating circumstances and vice versa.
2. the procedures to sanction the late payment of tax and/or fines
- The sanctioning of administrative violations regarding acts of the late payment of tax, fines under the guidance at Point 1, Section II, Part B of the Finance Ministry’s Circular No.41/2004/TT-BTC of May 18, 2004 guiding the application of the Government’s Decree No.100/2004/ND-CP detailing the sanction shall be executed on monthly or daily basis when the violating organizations or individuals voluntarily obey to, and be issued in form of a Decision.
In cases where the level of fine applicable to late payment is calculated by tax authority after one month and higher than VND 100,000,000, the tax offices shall have to reconsider their management as in this case the late-paid tax amount is very large while they have failed to apply any sanctioning measures. So, in cases where the late paid tax amount is large or very large, the provincial/municipal Departments of Taxation must immediately take measures to urge and notify the fines on late payment in time ( once every 10 days if possible).
- the sanctioning competence is prescribed in Section I, Part C of the above-said Circular No.41/2004/TT-BTC. The application of coercive tax measures or the transfer of tax evasion cases with criminal traces to competent bodies for treatment shall fall under the competence of provincial/municipal Department directors or Sub-Department heads in line with relevant regulations as the case may be.
3. The measure of suspending the use of invoices:
Pursuant to Point 1, Section II, Part B of Circular No. 41/2004/TT-BTC, when it is necessary to suspend the use of invoices as prescribed under the provision at Item b, Clause 3, Article 5 of Decree No.100/2004/ND-CP, relevant tax offices must make decisions to suspend the use of invoices. After the decisions on suspension of the use of invoices take effect, the tax offices make records of invoice inventory and seal off the volumes of invoice sold to the enterprise but not yet used and hand them to the enterprise for preservation.
Where a violating person has grounds to prove that that person has completely undergone the sanctioning decisions (with vouchers of payment into the state treasuries...), the tax offices shall only make records on complete execution of sanctioning decisions and break the seals on the invoices, handing them to that person for use and need not to issue decisions to write off the decisions on suspension of the use of invoices.
4. Regarding the records of administrative violations: To comply with the form issued together with the Finance Ministry’s Circular No.41/2004/TT-BTC of May 18, 2004 guiding the implementation of the Government’s Decree No.100/2004/ND-CP of February 25, 2004 providing the sanctioning of administrative violations in the field of taxation. Particularly, for the cases of inspection and examination of tax payers, the inspection and examination records shall comply with the form of tax inspection and examination, issued together with Decision No.1439 TCT/QD/TTr of October 29, 1999 of the General Director of Taxation, which shall be used as basis for issuing decisions to sanction tax-related administrative violations.
5. Regarding the signing of records of handling of administrative violations: To comply with the provisions in Clause 2, Article 20, Decree No.134/2003/ND-CP of November 14, 2003 of the Government detailing the implementation of the Ordinance on Handling of Administrative Violations:
“2. In cases where the record-makers have no sanctioning competence, their heads shall be the persons who have the sanctioning competence and also have to sign the records; in case of necessity, they shall make verifications before signing the records.”
6. Handling administrative violations for acts of falsely declaring, evading tax:
Subjects committing acts of falsely declaring or evading tax shall, apart from the application of remedial measure being the full payment of evaded tax amounts, be fined with times over the evaded tax amounts according to provisions of tax law as guided in Section VI, Part B, Circular No.41/2004/TT-BTC of May 18, 2004 of the Finance Ministry.
7. The time determined as having completed an act of evading VAT to sanction administrative violation:
Point 3c, Section VI, Part A of the above-said Circular No.41/2004/TT-BTC guides the time determined as having completed an act of tax evasion to sanction act of tax evasion: “ For cases of tax reimbursement, exemption or reduction, it is the time when the tax offices’ decisions on tax reimbursement, reduction or exemption take implementation effect...”.
In cases where tax offices detect through examinations or inspections before reimbursement of value added tax that units make incorrect declaration to enjoy the tax reimbursement with amounts larger than the actual amounts, the falsely declared tax amounts shall not be deducted by the units or not be refunded. The VAT amounts in the dossiers of application for tax reimbursement after subtracting the falsely declared VAT amounts must be transferred by the business establishments to the subsequent tax payment declaration period for clearing against the payable VAT amounts. Sanctions shall not be imposed on tax evasion acts but on relevant administration violation acts.
8. The sanctioning of acts of violation in enroute- transportation of goods, raw materials or materials under the guidance at Point 2, Section III, Part B of the Finance Ministry’s Circular No.41/2004/TT-BTC of May 18, 2004 is clearly explained as follows: The goods transportation enroute must be accompanied with vouchers proving that for the goods lots tax has been already paid or the goods lots have been managed for tax collection. If within 24 hours counting from the time of examination and detection thereof, the subjects can supply the vouchers, the fine levels shall range between VND one and two million in compliance with the fine bracket; if they can only supply the vouchers after 24 hours, they shall be considered having failed to supply the vouchers and be sanctioned for tax evasion acts provided at Item h, Point 1, Section IV, Part B of Circular No.41/2004/TT-BTC.
9. Regarding the sanctioning of acts of late registering tax, declaring tax or submitting tax settlement:
Pursuant to the provisions in Section I, Part B of the Finance Ministry’s Circular No.41/2004/TT-BTC, the making of records on administrative violations for use as basis for sanctioning of administrative violations in the field of tax shall be at the time individuals, organizations fail to comply with the time limits for tax registration, tax declaration, submission of tax settlement according to provisions of legal documents on tax.
Particularly for cases of violation provided for at Point 3a, Point 6, Section I, Part B of Circular No.41/2004/TT-BTC, having not yet submitted the tax registration, tax declaration or tax settlement, the tax offices shall make records thereon and issue the sanctioning decisions. If after issuing the sanctioning decisions, the subjects still fail to make tax registration, to submit the tax declarations, tax settlement, the tax offices shall fix the temporarily paid tax amounts (Point 7, Section I, Part B of Circular No.41/2004/TT-BTC).
10. On the application of forms of administrative violation record:
- The administrative violation record form issued together with the Finance Ministry’s Circular No.41/2004/TT-BTC of May 18, 2004 shall apply to all acts of administrative violation in the field of taxation.
- For the sanctioning of administrative violations regarding acts of violation in printing, distribution, use and management of invoices, the forms prescribed in the appendix to list of a number of forms of record and decision used in sanctioning of administrative violations, issued together with the Government’s Decree No.134/2003/ND-CP of November 14, 2003, shall also apply.
- When making records, attention should be paid to the contents of violation acts for appropriate inscription.
11. Statute of limitations for complaint: Pursuant to the provisions of Article 31 of the Law on Complaints and Denunciations, the statute of limitations for complaint shall be 90 days counting from the date of receipt of the notices or handling decisions of tax officers, tax offices. Where the tax law which is promulgated and takes effect after the effective date of the Law on Complaints and Denunciations provides for the statute of limitations for complaint differently from Article 31 of the Law on Complaints and Denunciations, such tax law shall apply.
The General Department of Taxation hereby notifies the provincial/municipal Departments of Tax thereof for knowledge and implementation./.
FOR THE GENERAL DIRECTOR OF TAXATION
DEPUTY GENERAL DIRECTOR
Pham Duy Khuong