Pursuant to July 2, 2002 Ordinance No. 44/2002/PL-UBTVQH10 of the Standing Committee of the National Assembly of the Socialist Republic of Vietnam on handling of administrative violations;

Pursuant to the Government's Decree No.100/2004/ND-CP of February 25, 2004 prescribing the sanctioning of administrative violations in the tax domain;

Pursuant to the Government's Decree No.134/2003/ND-CP of November 14, 2003 detailing the implementation of a number of articles of the 2002 Ordinance on Handling of Administrative Violations;

Pursuant to the Government's Decree No.77/2003/ND-CP of July 1, 2003 defining the functions, tasks, powers and organizational structure of the Finance Ministry;

The Finance Ministry hereby provides specific implementation guidance as follows:

A. GENERAL PROVISIONS

I. SCOPE AND SUBJECTS OF APPLICATION

Vietnamese and foreign individuals, agencies or organizations (hereinafter referred collectively to as individuals and organizations) that commit acts of intentionally or unintentionally violating the provisions of tax legislation, which are not crimes, must be sanctioned for administrative violations in the tax domain under the provisions of this Circular, except otherwise provided for by international agreements which Vietnam has signed or acceded to.

The administrative violations in the tax domain include:

a) Violations of regulations on tax registration, tax declaration, tax elaboration, payment and settlement;

b) Violations of regulations on tax and fine money collection and payment;

c) Violations of regulations on tax examination and inspection;

d) Acts of tax evasion.

II. PRINCIPLES FOR SANCTIONING OF ADMINISTRATIVE VIOLATIONS IN THE TAX DOMAIN

1. All administrative violations must be detected in time and immediately stopped. The handling of administrative violations must be effected in a swift, fair and absolute manner; all consequences caused by administrative violations must be addressed strictly according to law provisions.

2. Individuals and organizations are sanctioned for administrative violations in the tax domain only when they commit violations prescribed in Article 1 of Decree No. 100/2004/ND-CP of February 25, 2004 and Section I, Part A of this Circular.

3. The sanctioning of administrative violations must be effected by competent persons strictly according to law provisions.

4. An act of administrative violation is sanctioned only once.

If many persons commit one act of administrative violation, each violator shall be sanctioned.

If a person commits many acts of administrative violation, he/she shall be sanctioned for every act of violation.

5. The sanctioning of administrative violations must be based on the nature and seriousness of the violations, the personal records of the violators and the extenuating as well as aggravating circumstances in order to decide on appropriate sanctioning forms and measures. The specific fine level for an act of administrative violation is the average level of the fine bracket prescribed for such act. In cases where extenuating circumstances are involved, the fine level shall be reduced but must not be lower than the minimum level of the fine bracket. In cases where aggravating circumstances are involved, the fine level may be higher but must not exceed the maximum level of the fine bracket.

6. Sanctions shall not be imposed on administrative violations in the tax domain in the following cases:

a) The statute of limitations for sanctioning of administrative violations as prescribed at Points 1 and 2, Section III, Part A of this Circular have expired;

b) The administrative violations show criminal signs, including:

- Administrative violations in the tax domain showing criminal signs, and the dossiers thereon have already been transferred to competent procedure-conducting bodies for settlement;

- Administrative violations in the tax domain showing criminal signs, which are being considered and settled by procedure-conducting bodies;

- Administrative violations in the tax domain showing criminal signs and the procedure-conducting bodies propose in writing the transfer of dossiers thereon for considering the penal liability examination;

c) The administrative violations committed in the fields of accounting, invoices but before the time prescribed at Point 3, Section VI, Part A of this Circular;

d) The persons who commit acts of administrative violation while suffering from mental or other diseases which deprive them of the capacity to cognize or control their acts;

e) The administrative violations are committed in case of urgent circumstance, legitimate self-defense or unexpected incidents.

- Urgent circumstances mean the circumstances where persons who wish to ward off a danger actually threatening the interests of the State, agencies or organizations, the rights and legitimate interests of their own or of other persons have no other alternative than having to cause a damage smaller than the to be-warded off damage;

- Legitimate self-defense means acts of a person who, for the purpose of protecting the interests of the State, agencies and/or organizations, the legitimate rights and interests of his/her own or other persons, has necessarily resisted the person who is committing act of infringing upon the above-said interests;

- Persons commiting acts due to unexpected incidents, meaning the cases where they cannot foresee or are not compelled to foresee the consequences of such acts;

III. STATUTE OF LIMITATIONS FOR SANCTIONING OF ADMINISTRATIVE VIOLATIONS AND TIME LIMITS FOR BEING CONSIDERED NOT YET SANCTIONED FOR ADMINISTRATIVE VIOLATIONS IN THE TAX DOMAIN

1. The statute of limitations for sanctioning of an administrative violation is two years, counting from the date such act of administrative violation is committed to the date it is detected. Particularly for acts of administrative violation in the tax domain, which are determined as acts of tax evasion, the statute of limitations for sanctioning of administrative violations shall comply with the provisions of the tax laws, tax ordinances.

2. Individuals who have been instituted with criminal cases, prosecuted or brought to trial according to the criminal procedures under issued decisions, but later get decisions on suspension of investigation or the cases, but their violation acts show signs of administrative violations in the tax domain, shall be sanctioned for administrative violations. Within three days as from the date of issuing a decision to suspend the investigation or suspend a case, the person who has issued such decision shall have to send it together with the case dossier to the person having the sanctioning competence. For this case, the statute of limitations for sanctioning of administrative violations is three months as from the date the person with sanctioning competence receives the suspension decision and the complete dossier on the violation case.

3. If during the period of calculating the statute of limitations for sanctioning of administrative violations in the tax domain, the individuals or organizations commit new administrative violations or deliberately shirk or obstruct the sanctioning, the way of counting the statute of limitations prescribed at Points 1 and 2 of this Section shall not apply. For this case, the statute of limitations for sanctioning of administrative violations shall be recounted from the time the new administrative violation acts are committed or from the time the acts of shirking or obstructing the sanctioning stop.

4. The date when the act of shirking or obstructing the sanctioning is the date the involved persons voluntarily go to tax offices, reporting thereon and committing to execute the sanctioning decisions of the tax offices. The tax offices must make records acknowledging this.

5. Individuals and organizations sanctioned for administrative violations in the tax domain, if past one year counting from the date of completely serving the sanctioning decisions or the date when the statute of limitations for executing the sanctioning decisions has expired they do not relapse into violation, shall be considered as being not yet sanctioned for administrative violations in the tax domain.

6. The persons having sanctioning competence, if letting the statute of limitations for sanctioning of administrative violations expire, shall be handled according to the provisions of Article 121 of the Ordinance on Handling of Administrative Violations and Point 4, Article 3 of Decree No. 100/2004/ND-CP of February 25, 2004 of the Government.

IV. SANCTIONING FORMS

1. For each administrative violation, the violating individual or organization shall be subject to one of the following principal sanctioning forms:

a) Caution;

b) Fine.

2. Depending on the nature and seriousness of the violations, the violating individuals or organizations may also be subject to the additional sanctioning form of confiscating material evidences and/or means used for committing the administrative violations.

3. Apart from the principal and additional sanctioning forms, the violating individuals or organizations may also be subject to the application of the following remedial measures:

a) Forced destruction of invoices, vouchers and/or accounting books which are printed and/or issued in contravention of regulations;

b) Suspension of the use of invoice.

The suspension of the use of invoice shall apply only when tax payers fail to comply with the decisions on sanctioning of administrative violations in the tax domain. The duration of suspending the use of invoices shall not exceed 3 months as from the date the organizations or individuals fail to properly execute the sanctioning decisions; in cases where the violations are remedied within less than 3 months, the suspension of the use of invoice shall cease to be valid immediately after the date the violations are completely redressed. In cases where the 3-month time limit expires while the tax payers still fail to properly execute the sanctioning decisions, they shall be subject to the application of the measure of coercive execution.

V. EXTENUATING CIRCUMSTANCES, AGGRAVATING CIRCUMSTANCES

1. Extenuating circumstances

a) The persons committing administrative violations have warded off or reduced the harms caused by such violations or have voluntarily overcome the consequences, paid damages;

b) The persons committing administrative violations have voluntarily reported thereon and truly redeemed their mistakes;

c) The violations are committed while the violators are in the state of being mentally provoked by illegal acts of other persons;

d) The violations are committed due to coercion or material or spiritual dependence;

e) The violators are pregnant women, weak elders, diseased persons or disabled persons who have restricted capacity to cognize or control their acts;

f) The violations are committed due to particularly difficult plights not caused by the violators themselves;

g) The violations are committed due to backwardness.

2. Aggravating circumstances

Only the following circumstances are considered aggravating circumstances:

a) Violations are committed in an organized manner;

b) Violations are committed time and again in the same domain or repeated in the same domain;

c) Inciting or dragging minors to commit violations, forcing the materially and/or spiritually dependent persons to commit violations;

d) Violations are committed in the state of being intoxicated by alcohol, beer or other stimulants;

e) Abusing positions and powers to commit violations;

f) Taking advantage of war, natural calamity situation or other particular difficulties of the society to commit violations;

g) Committing violations in the period of serving penalties of criminal judgments or serving the decisions on handling of administrative violations;

h) Continuing to commit acts of administrative violation even though the competent persons have requested the stoppage of such acts;

i) After the violations, having committed acts of escape or covering up administrative violations.

VI. TERM INTERPRETATION

1. Taxes means revenues prescribed by law, including taxes and other revenues, excluding revenues from charges and fees managed by the tax-collecting agencies.

2. Acts of tax evasion mean acts of individuals or organizations violating law provisions on tax, thus leading to decrease of payable tax amounts or increase of reimbursed, exempt or reduced tax amounts. The criteria for determining acts of tax evasion shall be:

+ The subjects of tax evasion acts are individuals or organizations being tax payers.

+ The consequences of the violation acts mean the decrease of payable tax amounts or the increase of reimbursed, exempt or reduced tax amounts.

3. The time for determining that individuals or organizations have completed tax evasion acts in order to sanction their tax evasion acts means the time such individuals or organizations have completed the declaration of the payable tax amounts according to tax law provisions or the time the competent agencies issue decisions to reimburse, exempt or reduce tax (if any) according to the requesting dossiers of such individuals or organizations, concretely as follows:

a) In cases where the law prescribes the regime of monthly declaration and temporary payment and annual settlement, the time for individuals and organizations to submit the annual tax settlements under the provisions of tax legislation is the time the declaration of the payable tax amounts is completed;

b) In cases where the law prescribes the tax declaration and lump-sum payment, it is the time when individuals and organizations complete the declaration of the payable tax amounts according to the tax law provisions;

c) For case of tax reimbursement, exemption or reduction, it is the time when the tax reimbursement, exemption or reduction decisions of the competent tax offices take effect or the time when the individuals or organizations complete the declaration of enterprise income tax exemption or reduction according to law provisions;

d) In cases where the tax legislation permits tax payers to adjust, supplement the tax declaration, tax settlement and/or enterprise income tax exemption or reduction declaration, the time for determining individuals or organizations complete their acts of tax evasion is the time the individuals or organizations have already completed the declaration of adjustment, supplementation of the tax declaration, tax settlement, enterprise income tax exemption, reduction declaration.

4. Goods, raw materials, materials mentioned in this Circular are goods, raw materials and materials of the categories not banned from business by law. The circulated goods include: goods, raw materials and materials being transported en route; goods, raw materials and materials being displayed for sale at sale places; goods, raw materials and materials in stocks or goods, raw materials and materials being at production and/or business places.

5, Non-registration of tax means the cases where the tax registration is made more than 10 working days later than the deadline or past more than 10 working days have elapsed, the tax registration has not yet been made.

6. Non-submission of written tax declarations means the cases where the tax declarations are submitted more than 10 working days later than the deadline or past more than 10 working days the tax declarations have not yet been submitted.

7. Non-submission of tax settlement means the cases where the tax settlements are submitted more than 90 working days later than the deadline or past more than 90 working days the tax settlements have not yet been submitted.

B. VIOLATION ACTS, SANCTIONING FORMS AND LEVELS

Pursuant to the provisions of Articles 8, 9, 10 and 11 of Chapter II of the Government's Decree No. 100/2004/ND-CP of February 25, 2004, the acts of administrative violation in the tax domain, the specific sanctioning forms and levels are as follows:

I. SANCTIONING FORMS AND LEVELS FOR ACTS OF VIOLATING THE REGULATIONS ON PROCEDURES FOR TAX REGISTRATION, TAX DECLARATION, TAX SETTLEMENT ELABORATION AND SUBMISSION

1. The specific fine level for an act of administrative violation is VND 75,000.

- In cases where one extenuating circumstance is involved, the fine level is VND 60,000;

- In cases where two or more extenuating circumstances are involved, the fine level is VND 50,000.

- In cases where one aggravating circumstance is involved, the fine level is VND 90,000;

- In cases where two or more aggravating circumstances are involved, the fine level is VND 100,000.

For one of the following acts:

a) Registering tax with the tax offices between 1 and 5 working days later than the prescribed deadline, including cases of additional registration of any change;

b) Giving inaccurate arithmetic figures on the tax declarations and/or tax settlements or declaring inadequately the norms on the tax declarations or tax settlements but not distorting the payable tax amounts after the period of adjustment or additional declaration under the provisions of tax legislation;

c) Submitting tax declarations between 1 and 5 working days later than the prescribed deadline.

d) Submitting tax settlements between 1 and 10 days later than the prescribed deadline.

The sanctioning form of caution shall apply only to acts of first-time violation. Caution is given in written decisions.

2. The specific fine level for an act of administrative violation is VND 600,000;

- Where one extenuating circumstance is involved, the fine level is VND 400,000;

- Where two or more extenuating circumstances are involved, the fine level is VND 200,000;

-Where one aggravating circumstance is involved, the fine level is VND 800,000;

- Where two or more aggravating circumstances are involved, the fine level is VND 1,000,000;

For one of the following acts:

a) Making tax registration, submitting tax declarations 5 to 10 working days later than the prescribed deadline;

b) Submitting tax settlements 10 to 20 working days later than the prescribed deadline.

3. The specific fine level for an act of administrative violation is VND 1,500,000;

- Where one extenuating circumstance is involved, the fine level is VND 1,200,000;

- Where two or more extenuating circumstances are involved, the fine level is VND 1,000,000;

- Where one aggravating circumstance is involved, the fine level is VND 1,700,000;

- Where two or more aggravating circumstances are involved, the fine level is VND 2,000,000;

For one of the following acts:

a) Making tax registration, submitting tax declarations over 10 working days later than the prescribed deadlines or past the prescribed deadlines for more than 10 working days, tax registration has not yet been made or tax declarations have not yet been submitted.

b) Submitting tax settlements between 20 and 30 working days later than the prescribed deadlines.

4. The specific fine level for an act of administrative violation is VND 3,000,000;

- Where one extenuating circumstance is involved, the fine level is VND 2,500,000;

- Where two or more extenuating circumstances are involved, the fine level is VND 2,000,000;

- Where one aggravating circumstance is involved, the fine level is VND 3,500,000;

- Where two or more aggravating circumstances are involved, the fine level is VND 4,000,000.

For acts of submitting the tax settlements between 30 and 40 working days later than the prescribed deadlines.

5. The specific fine level for an act of administrative violation is VND 7,000,000;

- Where one extenuating circumstance is involved, the fine level is VND 5,000,000;

- Where two or more extenuating circumstances are involved, the fine level is VND 4,000,000;

- Where one aggravating circumstance is involved, the fine level is VND 8,000,000;

- Where two or more aggravating circumstances are involved, the fine level is VND 10,000,000;

For acts of submitting tax settlements between 40 and 90 working days later than the prescribed deadlines.

6. The specific fine level for an administrative act is VND 20,000,000;

- Where one extenuating circumstance is involved, the fine level is VND 18,000,000;

- Where two or more extenuating circumstances are involved, the fine level is VND 15,000,000;

- Where one aggravating circumstance is involved, the fine level is VND 22,000,000;

- Where two or more aggravating circumstances are involved, the fine level is VND 25,000,000;

For acts of submitting the tax settlements more than 90 working days later than the prescribed deadlines or past the deadlines for more than 90 working days, the tax settlements have not yet been made.

7. Individuals and organizations committing violation acts prescribed at Item a, Point 3 and Point 6, Section I, Part B of this Circular, that, after being sanctioned for administrative violations, still fail to make tax registration, to submit the tax declarations or tax settlements, shall have to pay provisional tax amounts fixed according to the provisions of tax legislation.

II. SANCTIONING FORMS AND LEVELS FOR ACTS OF VIOLATING THE REGULATIONS ON TAX AND FINE MONEY COLLECTION AND PAYMENT

1. Individuals and organizations, that commit acts of paying tax or fine money later than the deadlines stated in the tax payment notices, collection orders or the payment deadlines prescribed by legal documents or decisions on sanctioning of administrative violations in the tax domain, shall be sanctioned according to the provisions of tax legislation. In cases where they have already been sanctioned but still fail to pay the tax and/or fine money under decisions of competent bodies, they may be subject to the application of measure of suspension of the use of invoice.

The tax offices directly managing the tax collection shall issue decisions on suspension of the use of invoices as provided for at Point b, Clause 3, Article 5 of the Government's Decree No. 100/2004/ND-CP of February 25, 2004 on sanctioning of administrative violations in the tax domain.

2. The specific fine level for an act of administrative violation is VND 3,500,000;

- Where one extenuating circumstance is involved, the fine level is VND 2,500,000;

- Where two or more extenuating circumstances are involved, the fine level is VND 2,000,000;

- Where one aggravating circumstance is involved, the fine level is VND 4,000,000;

- Where two or more aggravating circumstances are involved, the fine level is VND 5,000,000;

Organizations and individuals paying wages or incomes and banks, or other financial or credit institutions where the sanctioned subjects open their accounts, that fail to deduct tax and/or fine money amounts for remittance into the State budget according to the collection orders, decisions on deductions for remittance into the State budget of the competent bodies within 10 days after being handed the collection orders, deduction decisions, shall be sanctioned for administrative violations, and the sanctioning levels shall comply with the provisions of Point 2, Section II, Party B of this Circular, and the conditions for considering the sanctioning shall comply with the provisions at Item 2.1.a, Point 2, Section II, Part D of this Circular.

The agencies which issue decisions to deduct wages, deduct incomes, deduct bank accounts or tax, fine money collection orders, when handing the collection decisions or orders, must make records on hand-over and reception of collection decisions or orders with the representatives of organizations, agencies, individuals for use as bases for sanctioning.

III. SANCTIONING FORMS AND LEVELS FOR ACTS OF VIOLATING THE REGULATIONS ON TAX INSPECTION, EXAMINATION

1. The specific fine level for an administrative violation act is VND 750,000;

- Where one extenuating circumstance is involved, the fine level is VND 600,000;

- Where two or more extenuating circumstance is involved, the fine level is VND 500,000;

- Where one aggravating circumstance is involved, the fine level is VND 900,000;

- Where two or more aggravating circumstances are involved, the fine level is VND 1,000,000.

For acts of failing to abide by the inspection, examination decisions of competent agencies.

2. The specific fine level for an administrative violation act is VND 1,500,000;

- Where one extenuating circumstance is involved, the fine level is VND 1,200,000;

- Where two or more extenuating circumstances are involved, the fine level is VND 1,000,000;

- Where one aggravating circumstance is involved, the fine level is VND 1,700,000;

- Where two or more aggravating circumstances are involved, the fine level is VND 2,000,000.

For acts of failing to supply vouchers accompanying goods, raw materials, materials being transported en route to prove the goods lots for which tax was already paid or which have been managed for tax collection according to law provisions within the maximum time limit of 24 hours counting from the time of examination and detection.

In cases where past the permitted time limit, individuals or organizations cannot supply vouchers according to regulations, they shall not be sanctioned under the provisions of this Point but shall be sanctioned for acts of evading tax, prescribed at Item h, Point 1, Section IV, Part B of this Circular.

3. The specific fine level for an administrative violation act is VND 2,500,000;

- Where one extenuating circumstance is involved, the fine level is VND 2,200,000;

- Where two or more extenuating circumstances are involved, the fine level is VND 2,000,000;

- Where one aggravating circumstance is involved, the fine level is VND 2,700,000;

- Where two or more aggravating circumstances are involved, the fine level is VND 3,000,000;

For one of the following acts:

a) Declining, delaying or shirking to supply documents, vouchers, accounting books related to the determination of payable tax amounts for 5 or more working days as from the date of receiving the written requests of competent inspecting or examining agencies or persons;

b) Failing to abide by the sealing orders of competent inspecting, examining agencies or persons, or sealing the dossiers, documents, vouchers, accounting books, fund safes, goods storehouses, raw materials warehouses, machinery, workshops in contravention of regulations.

4. The specific fine level for an administrative violation act is VND 7,000,000;

- Where one extenuating circumstance is involved, the fine level is VND 5,000,000;

- Where two or more extenuating circumstances are involved, the fine level is VND 4,000,000;

- Where one aggravating circumstance is involved, the fine level is VND 8,000,000;

- Where two or more aggravating circumstances are involved, the fine level is VND 10,000,000;

For acts of moving, displacing seals without permission or other acts which alter the sealing of storehouses of documents, vouchers, accounting books and other documents, fund safes, goods storehouses, raw materials warehouses, machinery, workshop.

IV. SANCTIONING FORMS AND LEVELS FOR ACTS OF TAX EVASION

Individuals and organizations committing acts of tax evasion shall, apart from fully paying the evaded tax amounts according to regulations, be imposed with fines multiplied by the evaded tax amount for each time of violation. The following fine level multiplied by the evaded tax amount for each violation act shall not exceed VND 100,000,000, except otherwise provided for by tax laws.

1. The specific fine level for an administrative violation act is 1.5 times the evaded tax amount.

- Where extenuating circumstance(s) is (are) involved, the fine level is equal to the evaded tax amount;

- Where aggravating circumstance(s) is (are) involved, the fine level is two times the evaded tax amount;

For one of the following acts:

a) Leaving outside the accounting books the accounting data or entering the accounting books against the regulations of the accounting regime, thus reducing the payable tax amounts or increasing the reimbursable, exempt or reduced tax amounts;

b) Modifying, erasing accounting vouchers, accounting books in order to reduce the payable tax amounts or to increase the reimbursable, exempt or reduced tax amounts;

c) Formulating procedures to destroy supplies, goods or reducing the volumes or values of supplies, goods untrue to the reality, thus reducing the payable tax amounts or increasing the reimbursable, exempt or reduced tax amounts;

d) Selling goods or providing services with volumes or values inscribed in the invoice copies handed to customers being larger than those in the archived invoice copies;

e) Selling goods or providing services with values inscribed in the invoices being 20% (twenty per cent) or more lower than the average selling prices of goods, services of the same types on the markets of the localities where goods are sold, excluding the following cases:

e.1) Selling fresh and raw commodities of low quality;

e.2) Selling in-stock goods due to their deteriorated quality, obsolete designs, which are no longer suitable to customers' tastes;

e.3) Selling seasonal farm produce, foodstuff;

e.4) Selling goods for sale promotion according to law provisions;

e.5) Selling goods at discount prices in case of bankruptcy, dissolution, termination of production and/or business, change of production and/or business lines.

Cases of goods sale at discount prices prescribed in this Point must be publicly and clearly posted up at stores, transaction places, regarding the old prices, the new prices, the discount duration.

f) Using counterfeit invoices, other units' invoices, expired invoices to sell goods, provide services, but failing to fully declare the payable tax amounts;

g) Untruthfully declaring, determining grounds for tax calculation according to the provisions of each tax law, thus entailing the reduction of payable tax amounts or the increase of reimbursable, exempt or reduced tax amounts, including:

g.1) Declaring untruthfully the origins, use purposes, categories, volumes, specifications, practical conditions of goods, services, tax calculation prices, tax rates and tax codes;

g.2) Untruthfully declaring subjects, goods items, business forms, operating areas in order to deceive incomes eligble for tax exemption or reduction; inadequately declaring turnover or declaring non-arising expenses in order to reduce taxable income;

g.3) Failing to settle or to re-declare with the tax offices the goods, services or incomes, which have already enjoyed tax exemption or reduction, reimbursement, but been actually used for other purposes subject to retrospective collection of tax;

g.4) Declaring in the tax calculating expenses amounts not allowed to be calculated into the reasonable expenses in order to determine the taxable incomes prescribed in the legal documents guiding in detail the implementation of Enterprise Income Tax Law;

g.5) Expenses evidenced by adequate valid vouchers, but declared beyond the maximum controlled level under the provisions of legislation on enterprise income tax must be excluded from the reasonable expenses in order to determine the taxable incomes;

h) Circulating goods, raw materials, materials without accompanying vouchers to prove that tax has already been paid for the goods lots or the goods lots have been managed by the tax offices according to law provisions, except for the cases prescribed at Point 2, Section III, Part B of this Circular;

i) Other acts other than those prescribed in Section IV, Part B of this Circular, thus reducing the payable tax amounts or increasing the reimbursable, exempt or reduced tax amounts.

2. The specific fine level for an administrative violation act is 2.5 times;

-Where extenuating circumstance(s) is (are) involved, the fine level is 2 times;

- Where aggravating circumstance(s) is (are) involved, the fine level is 3 times;

For one of the following acts:

a) Selling goods, providing services without making invoices and fully declaring the tax payment;

b) Reporting the destruction of invoices used for the supply of goods or services to customers in order to reduce the payable tax amounts or increase the reimbursable, exempt or reducted tax amount;

3. The specific fine level for an administrative violation act is 4 times;

- Where extenuating circumstance(s) is (are) involved, the fine level is 3 times;

- Where aggravating circumstance(s) is (are) involved, the fine level is 5 times;

For one of the following acts:

a) Using blank invoices or other blank accounting vouchers for the purposes of reducing the payable tax amounts or increasing the reimbursable, exempt or reduced tax amounts;

b) Canceling accounting vouchers, accounting books for the purposes of reducing the payable tax amounts or increasing the reimbursable, exempt or reduced tax amounts;

c) Re-establishing the system of accounting books inscribed with different contents in order to reduce the payable tax amounts or increase the reimbursable, exempt or reduced tax amounts;

d) Doing business without making tax declaration and/or registration.

4. Individuals and organizations committing violation acts prescribed at Points 1, 2 and 3, Section IV, Part B of this Circular and being unable to determine the payable tax amounts shall be subject to the measure of imposing fixed tax amounts according to provisions of tax legislation.

5. Individuals and organizations committing violation acts of using blank invoices shall, apart from the sanction specified at Item a, Point 3, Section IV, Part B of this Circular, be subject to the application of the measure of suspending the use of invoices as provided for at Item b, Point 3.2. Section C of Circular No. 120/2002/TT-BTC of December 30, 2002 of the Finance Ministry, guiding the implementation of the Government's Decree No. 89/2002/ND-CP of November 7, 2002 on printing, issuance, use and management of invoices.

6. Vouchers, invoices and accounting books being material evidences of administrative violations can be subject to the measure of forced destruction of material evidences and/or means used for commission of administrative violations.

7. Individuals and organizations committing violation acts prescribed in Items a, b (excluding cases of erasing, modifying invoices), Point 1; Item b (excluding cases of canceling invoices), Item c, Point 3, Section IV, Part B of this Circular before the time prescribed at Point 3, Section VI, Part A of this Circular, shall not be sanctioned for acts of tax evasion under the provisions of this Article, but shall be sanctioned under the law provisions on sanctioning of administrative violations in the accounting domain.

8. Individuals and organizations committing acts specified in Item c (excluding cases of erasing, modifying other accounting vouchers or accounting books), Items d, e, f of Point 1; Point 2; Items a, b (excluding cases of canceling other accounting vouchers of accounting books) of Point 3, Section IV, Part B of this Circular before the time prescribed at Point 3, Section VI, Part A of this Circular shall not be sanctioned for acts of tax evasion under the provisions of this Article, but shall be sanctioned under the Government's regulations on printing, issuance, use and management of invoices.

9. Where subjects that pay tax by mode of declaration and are being in the period of enjoying preferences of enterprise income tax exemption are detected as having committed such violations as raising expenses in order to raise loss amounts, raising costs in order to reduce profits, reducing costs in order to raise profits and wrongly identifying conditions for enjoying enterprise income tax exemption preferences,

- If violations are examined and detected right in the preference years of enterprise income tax exemption, they shall not be sanctioned for tax evasion, but shall be sanctioned for other relevant administrative violations;

- If the above-mentioned violations are not detected yet while individuals or organizations do not adjust by themselves the consequences of reducing the enterprise income tax amount of the subsequent year upon the expiry of the enterprise income tax exemption duration, they shall be sanctioned for tax evasion.

C. COMPETENCE TO SANCTION ADMINISTRATIVE VIOLATIONS

I. TAX OFFICES’ COMPETENCE TO SANCTION ADMINISTRATIVE VIOLATIONS

Except where tax laws otherwise provide for the sanctioning level, the following persons have competence:

1. Tax officers on duty have the rights:

a) To impose caution;

b) To impose fines of up to VND 100,000.

2. Heads of the tax stations, leaders of the tax teams, within the ambit of their respective functions and tasks, have the right:

a) To impose caution;

b) To impose fines of up to VND 2,000,000.

3. Directors of the Tax Sub-Departments, within the geographical areas under their respective management, have the right:

a) To impose caution;

b) To impose fines of up to VND 10,000,000;

c) To confiscate material evidences, means used for commission of administrative violations;

d) To apply remedial measures prescribed at Point 3, Section IV, Part A of this Circular.

4. The directors of the provincial/municipal Tax Departments, within the geographical areas under their respective management, have the right:

a) To impose caution;

b) To impose fines of up to VND 100,000,000;

c) To confiscate material evidences, means used for commission of administrative violations;

d) To apply remedial measures prescribed at Point 3, Section IV, Part A, this Circular.

II. CUSTOMS' COMPETENCE TO SANCTION ADMINISTRATIVE VIOLATIONS

Except where laws otherwise provide for the sanctioning levels, the following persons shall, according to their respective functions and tasks of managing and collecting taxes on export and import goods, raw materials, materials, have the competence to sanction administrative violations in the tax domain as follows:

1. Leaders of the operation teams of the Customs Sub-Departments have the right:

a) To impose caution;

b) To impose fines of up to VND 500,000.

2. Directors of the Customs Sub-Departments, leaders of the control teams under the provincial, inter-provincial or municipal Customs Departments (hereinafter referred collectively to as the Customs Departments), leader of the Anti-Smuggle Control Team and head of the Sea Control Flotilla under the Anti-Smuggle Investigation Department of the General Department of Customs have the right:

a) To impose caution;

b) To impose fines of up to VND 10,000,000;

c) To confiscate material evidences, means used for commission of administrative violations, valued at up to VND 20,000,000.

3. Directors of the Customs Departments have the right:

a) To impose caution;

b) To impose fines of up to VND 20,000,000;

c) To confiscate material evidences, means used for commission of administrative violations;

d) To apply the measures prescribed at Point 3, Section IV, Part A of this Circular;

e) To apply remedial measures prescribed at Points c and d, Clause 3, Article 12 of the Ordinance on Sanctioning of Administrative Violations.

4. The director of the Anti-Smuggle Investigation Department of the General Department of Customs has the right:

a) To impose caution;

b) To impose fines of up to VND 100,000,000;

c) To confiscate material evidences, means used for commission of administrative violations;

d) To apply the measures specified in Item b, Point 3, Section IV, Part A of this Circular.

III. COMPETENCE OF THE PRESIDENTS OF PEOPLE'S COMMITTEES AT ALL LEVELS TO SANCTION ADMINISTRATIVE VIOLATIONS IN THE TAX DOMAIN

To comply with Articles 28, 29 and 30 of the Ordinance on Handling of Administrative Violations.

IV. AUTHORIZATION OF SANCTIONING OF ADMINISTRATIVE VIOLATIONS AND PRINCIPLES FOR DETERMINING THE COMPETENCE TO SANCTION ADMINISTRATIVE VIOLATION IN THE TAX DOMAIN

1. The authorization of sanctioning of administrative violations is effected as follows:

a) The authorization of sanctioning of administrative violations by persons holding the titles prescribed in Article 41 of the Ordinance on Handling of Administrative Violations shall be effected only for their immediate deputies. The authorization is made only in writing and in cases where the heads are absent;

b) The deputies authorized by their heads have the right to sanction administrative violations according to their heads' competence they are authorized and must bear responsibility for their decisions to sanction administrative violations. The authorized persons must not further authorize any other persons.

2. Principles for determining the competence to sanction administrative violations prescribed in Section I, Section II, Section III, Part C of this Circular are prescribed as follows:

a) The presidents of the People's Committees of all levels have competence to sanction administrative violations in the domains of State management in their respective localities;

b) Where an administrative violation falls under the sanctioning competence of many persons, the sanctioning shall be effected by the person who receives the case first;

c) The competence to impose pecuniary fines is determined on the basis of the maximum level of the fine bracket prescribed for each administrative violation act;

d) The competence to apply the measure of confiscating administrative-violation material evidences, means must be determined on the basis of the practical value of violation material evidences, means.

e) The competence to apply remedial measures shall comply with the provisions of legal documents permitting such titles to have competence to apply remedial measures; and at the same time be based on the specific violation acts subject to the application of remedial measures as prescribed;

f) Where the fine levels, the value of confiscated material evidences and/or means or one of the sanctioning forms or remedial measures do not fall under their competence or fall beyond their competence, the persons who have received the violation cases must promptly transfer such cases to the persons with sanctioning competence.

3. In cases where a person is sanctioned for many administrative violation acts, the sanctioning competence shall be determined as follows:

a) If the sanctioning form and level prescribed for each act fall under the competence of the sanctioner, the sanctioning competence still belongs to such person;

b) If the sanctioning form and level prescribed for one of the violation acts go beyond the sanctioner's competence, such person must transfer the violation case to authorities with sanctioning competence.

D. PROCEDURES FOR SANCTIONING OF ADMINISTRATIVE VIOLATIONS AND EXECUTION OF SANCTIONING DECISIONS

I. PROCEDURES FOR SANCTIONING OF ADMINISTRATIVE VIOLATIONS

1. Caution: Caution is applied to individuals and organizations that commit petty administrative violations for the first time, which involve extenuating circumstances, or to all administrative violation acts committed by minors aged between full 14 and under 16 years old. Caution is decided in writing.

2. Simple sanctioning procedures: Sanctioning according to simple procedures mean the case of sanctioning thereby the persons with sanctioning competence do not make records but issue sanctioning decisions on spot. Cases of sanctioning according to the simple procedures include:

a) Administrative violation acts subject to the prescribed sanctioning level of caution or a fine of up to VND 100,000;

b) A person commits many administrative violation acts and the sanctioning form and level prescribed for each of such acts is caution or a fine of up to VND 100,000;

c) In case of sanctioning according to simple procedures, the competent persons shall not make records but issue decisions to sanction on spot. The sanctioning decisions must comply with Form No. 05 attached to this Circular (not printed herein). The sanctioned individuals and organizations may pay fines on spot to the persons having the sanctioning competence and receive the fine collection receipts issued by the Finance Ministry.

3. Making records on administrative violations

Persons competent to sanction administrative violations in the tax domain, who are on duty, upon detecting administrative violations in the tax domain, shall have to make records thereon in time, except for the cases of sanctioning according to simple procedures and cases of sanctioning for delayed payment of tax and/or fine money under the provisions of tax legislation.

Such a record must be made in at least 2 copies and signed by the record maker and the violator or the representative of the violating organization; if there are witnesses, they shall also sign the record; in cases where a record contains many sheets, the record maker must sign every sheet of the record. Where individual violators, representatives of the violating organizations and/or witnesses refuse to sign the records, the record makers must clearly inscribe the reasons therefor in the records and the individuals or agencies conducting inspection or examination still realize the proposals and decisions stated in such records and take responsibility before law for such conclusions and proposals.

The completed records must be handed to violating individuals or organizations, each with a copy; where the record makers have no competence to sanction, their bosses who are competent to sanction must also sign the records; in case of necessity, verification shall be made before signing the records; if violation cases go beyond the sanctioning competence of the record makers, they must send the records to the persons with sanctioning competence.

4. Time limits for issuing sanctioning decisions

a) For simple cases where violation acts are obvious and need not to be further verified, the sanctioning decisions must be issued within 10 days as from the date of making the records on administrative violation acts. The decisions on sanctioning administrative violations must comply with the set form;

b) For cases involving many complicated circumstances such as the material evidences and means need to be expertised, the administrative violators need to be clearly identified or other complicated circumstances, the time limit for issuing a sanctioning decision shall be 30 days as from the date of making the records;

c) In case of deeming it necessary to have more time for verification, gathering of evidences, at least 10 days before the time limit prescribed at Point b above expires, the persons having sanctioning competence must report thereon in writing to their immediate bosses to ask for extension; the extension must be made in writing; the extension duration shall not exceed 30 days.

Past the above-mentioned time limit, the persons having sanctioning competence must not issue sanctioning decisions; in case of non-issuance of sanctioning decisions, they can still apply remedial measures prescribed at Point 3, Section IV, Part A of this Circular and confiscate the administrative-violation material evidences which are banned from circulation.

8. Procedures for confiscating material evidences and/or means of administrative violations

When the confiscation of material evidences and/or means of administrative violations is inscribed in the sanctioning decisions, the persons having the sanctioning competence must make records thereon. The records must be inscribed clearly with the names, volumes, catergories, registration numbers (if any), conditions and quality of confiscated things, money, goods and means, and must be signed by the confiscators, the sanctioned persons or representatives of sanctioned organizations and the witnesses.

Where the violation material evidences and/or means need to be sealed, the sealing thereof must be conducted in the presence of the sanctioned persons or representatives of the sanctioned organizations and the witnesses; if the sanctioned persons or representatives of the sanctioned organizations are absent, there must be two witnesses.

9. Handling of material evidences and means of administrative violations

a) For confiscated material evidences and/or means of administrative violations, the persons who have decided on the confiscation thereof have the responsibility to preserve the material evidences and/or means.

- If the material evidences and/or means of an administrative violation case are valued at VND 10,000,000 or more, the confiscation decider must hand them to the provincial-level auction service center of the locality where exist the confiscated material evidences and/or means. If the material evidences and/or means of an administrative violation case are valued at under VND 10,000,000, the confiscation decider must hand them to the district-level finance body for organizing the auction thereof. The auction of material evidences and means of administrative violations shall comply with the law provisions on auction;

- The proceeds from the auction of material evidences and means of administrative violations, after subtracting expenses according to law provisions, must be remitted into the State budget via accounts opened at State Treasuries;

b) For administrative-violation material evidences and/or means being harmful cultural products, fake goods of no use value, articles causing harms to human health, domestic animals or crops, which must be destroyed, the competent persons must set up the handling council for destruction. Depending on the nature of material evidences and/or means, the handling council shall be composed of representatives of the concerned State agencies. The destruction of material evidences and/or means of administrative violations must be proved with records signed by the members of the handling council;

c) For goods, articles and means which are forced to be taken out of the Vietnamese territory or to be re-exported the violating individuals or organizations must take them out of the Vietnamese territory before the deadlins inscribed in the sanctioning decisions;

d) For administrative-violation material evidences being goods or articles easy to decay, the competent persons must make records thereon and organize the immediate sale thereof. The proceeds therefrom must be remitted into the finance bodies' custody accounts opened at the State Treasury. If such material evidences are then confiscated under decisions of competent persons, such proceeds must be remitted into the State budget; in cases where the material evidences are not confiscated, the proceeds must be returned to their lawful owners, managers or users;

e) For material evidences and means of administrative violations other than those prescribed in Items b, c and d of Point 9, Section I, Part D of this Circular, whose lawful owners, managers or users are unidentified or do not come to reclaim them, the persons competent to confiscate them must publish announcements on the mass media or post them up at their offices; within 30 days as from the date the announcements are publicly posted up, if their lawful owners, managers or users cannot be identified or these persons refuse to reclaim them, the competent persons must issue decisions to confiscate the violation material evidences and/or means for handling according to the provisions of Item a, Point 9, Section I, Part D of this Circular;

f) For material evidences and/or means which were illegally seized and used for commission of administrative violation, they shall be returned to their lawful owners, managers or users;

g) The expenses for storage and preservation of administrative-violation material evidences and/or means and other expenses compliant with law provisions shall be subtracted from the proceeds from the sale of material evidences and/or means of administrative violations. The storage and preservation charges shall not be collected when the material evidences and/or means are temporarily seized if the material evidence or means owners are not at fault in the commission of the administrative violations or the measure of confiscating material evidences and/or means is not applied.

II. EXECUTION OF SANCTIONING DECISIONS

1. Execution of decisions on sanctioning of administrative violations

The execution of decisions on sanctioning of administrative violations in the tax domain is prescribed as follows:

a) The sanctioned individuals and organizations must execute the decisions on sanctioning of administrative violations within 10 days as from the dates they are handed the sanctioning decisions, except otherwise provided for by law. After issuing sanctioning decisions, the persons with sanctioning competence must hand such decisions to the sanctioned persons or notify them to come and receive the decisions; the time the sanctioned persons receive the sanctioning decisions is considered the time they are handed the sanctioning decisions;

b) If sanctioned individuals or organizations fail to voluntarily comply with the time limit prescribed at Point a above, they shall be forced to execute the decisions;

c) In cases where past one year the competent persons cannot deliver the sanctioning decisions to the sanctioned persons as such persons do not come to get them and their addresses cannot be identified or for other objective reasons, the persons who have issued the sanctioning decisions shall issue decisions to suspend the enforcement of principal sanctioning forms and remedial measures inscribed in the decisions, but still have to enforce the additional sanctioning forms such as the confiscation of material evidences and/or means used for commission of administrative violations, inscribed in the sanctioning decisions.

2. Forced execution of decisions on sanctioning of administrative violations:

2.1. Individuals and organizations sanctioned for administrative violations, if past the time limit prescribed at Point 1, Section II, Part D of this Circular they still fail to voluntarily abide by the sanctioning decisions, shall be subject to forced execution through the following measures:

a) Subtracting part of their wages or incomes, making deductions from their accounts at banks, credit institutions or other financial organizations.

Organizations and individuals that pay salaries, incomes or banks, other financial or credit institutions where the sanctioned organizations and/or individuals open their accounts shall have to execute decisions of competent agencies.

Where the accounts of sanctioned individuals or organizations have no balances or have balances which are not enough for tax and/or fine payment, immediately after the accounts of the sanctioned individuals or organizations see balances, banks or other financial or credit institutions shall have to deduct the outstanding tax and/or fine amounts for remittance into the State budget before executing other money transfer orders of the sanctioned subjects;

b) Temporarily seizing goods, material evidences to ensure full collection of tax and/or fine money;

c) Distraining assets, goods with a value equal to the tax and/or fine amounts stated in the decisions on sanctioning of administrative violations in the tax domain for auction;

d) Not carrying out procedures for export or import of the subsequent goods lots until tax and/or fine amounts are fully paid.

2.2. Competence to issue coercion decisions

The following persons are competent to issue coercion decisions and have to organize the coercive execution of the sanctioning decisions of their own and of their subordinates:

a) Directors of the Tax Sub-Departments;

b) Directors of the Tax Departments;

c) Directors of the Customs Department directly managing the tax collection;

d) Director of the Anti-Smuggle Investigation Department of the General Department of Customs;

e) Presidents of the People's Committees at the commune, district or provincial level.

2.3. Some contents on coercive execution of decisions on sanctioning of administrative violations

a) Individuals and organizations that receive the coercion decisions must strictly abide by such decisions;

b) The coerced individuals and organizations must bear all expenses for organizing the application of coercive measures;

c) In case of necessity, the coercion through measures prescribed at Items b and c, Point 2.1, Section II, Part D of this Circular must be notified in writing before its implementation to the presidents of the People's Committees of the communes where the coercion is to be effected for coordinated implementation;

d) The functional bodies of the People's Committees shall have to realize the coercion decisions of the presidents of the People's Committees of the same level under the People's Committee presidents' assignment;

e) The people's police force shall have to ensure order and security in the course of enforcing the coercion decisions of the presidents of the People's Committees of the same level or the coercion decisions of other State bodies when such bodies so request;

f) The procedures for application of coercive measures shall comply with the Government's regulations.

3. Postponing the execution of fining decisions

a) Individuals fined with VND 500,000 or more may postpone the execution of sanctioning decisions in cases where they are meeting with particular economic difficulties and file their applications therefor with certification by the People's Committees of the localities where they reside or by the organizations where such persons work;

b) The time limit for postponement of a fining decision shall not exceed three months as from the time the postponement decision is issued;

c) The persons who have issued fining decisions are entitled to decide on the postponement of execution of such fining decisions.

4. Transferring the dossiers of violation cases with criminal signs for penal liability examination.

When considering violation cases prescribed in Point 4, Section III, Part B; Points 1, 2, 3, 4, Section IV, Part B of this Circular in order to decide on sanctioning thereof, if deeming that the violation acts show criminal signs under the provisions of the Penal Code, the competent persons shall have to transfer their dossiers to the competent criminal procedure-conducting bodies.

It is strictly prohibited to retain cases of violation with criminal signs for administrative sanction.

Where a sanctioning decision has been already issued but later the violation acts are detected to show criminal signs while the statute of limitations for penal liability examination has not yet expired, the person who has issued the sanctioning decision must cancel such decision and within three days thereafter transfer the violation case dossiers to the competent criminal procedure-conducting bodies.

The criminal procedure-conducting bodies, which have received the case dossiers, shall have to notify the handling results to the agencies which transferred the dossiers proposing the penal liability examination.

5. The statute of limitations for execution of decisions on sanctioning administrative violations

The statute of limitations for execution of a decision on sanctioning of administrative violations in the tax domain is one year counting from the date the sanctioning decision takes effect; if past this time limit, such decision remains unexecuted, it shall not be executed but the measures prescribed at Point 3, Section IV, Part A of this Circular are still applied, provided that such measures are inscribed in the decision. Where sanctioned individuals or organizations deliberately evade or delay the execution thereof, the above-said statute of limitations shall be recounted from the time such evading or delaying acts terminate.

D. COMPLAINTS, DENUNCIATIONS, COMMENDATION AND HANDLING OF VIOLATIONS

I. COMPLAINTS, DENUNCIATIONS

1. Individuals and organizations sanctioned for administrative violations in the tax domain or their lawful representatives may complain about decisions on sanctioning of administrative violations, decisions on application of measures to prevent and ensure the handling of administrative violations.

2. All citizens are entitled to denounce illegal acts in handling of administrative violations.

3. The competence, procedures, time limits for settling complaints, denunciations shall comply with the provisions of legislation on compliants and denunciation.

II. INITIATING ADMINISTRATIVE LAWSUITS

The initiation of lawsuits against decisions on sanctioning of administrative violations, decisions on application of measures to prevent and ensure the handling of administrative violations shall comply with the law provisions on procedures for settling administrative cases.

III. COMMENDATION

1. Individuals and organizations that record achievements in preventing and combating administrative violations in the tax domain shall be commended and/or rewarded according the general regime of the State.

2. It is strictly forbidden to deduct and use money collected from the sanctioning of administrative violations or from the sale of confiscated goods, material evidences for rewards.

IV. HANDLING OF VIOLATIONS

1. The persons competent to handle administrative violations, who harass for bribes, tolerate, cover up, fail to handle or handle not in time, not properly, handle beyond their prescribed jurisdiction the administrative violations, are at fault in letting the statute of limitations for handling of administrative violations expire, shall, depending on the nature and seriousness of their violations, be disciplined or examined for penal liability; if causing damage, they must pay compensations therefor according to law provisions.

2. Persons sanctioned for administrative violations, if committing acts of resisting people on duty, delaying, evading the execution or committing other violation acts, shall, depending on the nature and seriousness of the violations, be handled for administrative violations or examined for penal liability; if causing damage, they must pay compensations therefor according to law provisions.

E. IMPLEMENTATION EFFECT

This Circular takes effect 15 days after its publication in the Official Gazette. To annul Circular No. 128/1998/TT-BTC of September 22, 1998, Circular No. 30/2001/TT-BTC of May 16, 2001 amending and supplementing Circular No. 128/1998/TT-BTC of September 22, 1998, Circular No. 114/1999 of September 23, 1999 supplementing Circular No. 128/1998/TT-BTC of September 22, 1998 of the Ministry of Finance, guiding the implementation of the Government's Decree No. 22/CP of April 17, 1996 on sanctioning of administrative violations in the tax domain.

If any problems arise in the course of implementation, organizations and individuals are requested to report them to the Ministry of Finance for timely settlement.

For Minister of Finance
Vice Minister
TRUONG CHI TRUNG