DECREE No.22-CP OF APRIL 17, 1996 OF THE GOVERNMENT ON SANCTIONS AGAINST ADMINISTRA- TIVE VIOLATIONS IN TAX PAYMENT

THE GOVERNMENT

Pursuant to the Law on Organization of the Government on September 30,1992;

Pursuant to the Tax Laws, the Tax Ordinance, and the current stipulations on the collection of revenues of the State Budget;

Pursuant to the Ordinance on the Handling of Violations of Administrative Regulations of July 6, 1995;

At the proposal of the Minister of Finance,

DECREES:

Chapter I

ACTS OF VIOLATION AND FORMS OF SANCTIONS AGAINST ADMINISTRATIVE VIOLATIONS IN TAX PAYMENT

Article 1.- The acts of administrative violation in tax payment mentioned in this Decree are acts of violating the provisions of the Tax Laws, the Tax Ordinance; the stipulations on the making of vouchers on the purchase and sale of goods, the opening and keeping of books of accounts; the current stipulations on the collection of other payments to the State Budget concerning administrative fines which are not so serious to be subject to examination for penal liability.

Article 2.- The rates of fine on violations of the stipulations on the procedure of business registration, the keeping of books of accounts, the making, use and keeping of vouchers and bills relating to the calculation and payment of taxes:

1. Issue of a warning or a fining of from 20,000 (twenty thousand) VND to 200,000 (two hundred thousand) VND; and up to 1,000,000 (one million) VND if the violation involves an aggravating factor as listed below:

a/ Delaying to make a tax declaration form to the taxation agency beyond the set time limit;

b/ Omitting some of the items listed in the tax declaration forms or in the accounting documents to be submitted to the taxation agency;

c/ Failing to fully observe the regime of making, keeping and using bills on the sale of goods according to State stipulations.

2. A fine of from 100,000 (one hundred thousand) VND to 1,000,000 (one million) VND, and up to 10,000,000 (ten million) VND if the violation involves an aggravating factor as listed below:

a/ Failing to produce the book of accounts and vouchers at the request of the taxation agency;

b/ Transporting goods without tax documents as provided for by the tax law;

c/ Failing to submit the tax declaration form to the taxation agency within the set time limit.

3. A fine of from 1,000,000 (one million) VND to 10,000,000 (ten million) VND, and up to 20,000,000 (twenty million) VND if the violation involves an aggravating factor as listed below,:

a/ Selling goods without issuing a bill to the customer as stipulated by the State;

b/ Deliberately refusing to submit the tax declaration forms, accounting reports and other related papers to the taxation agency as stipulated by law, although the taxation agency has issued a second notice;

c/ Destroying vouchers, books of accounts and reports before the expiry date as stipulated by the State;

d/ Using bills and receipts banned or not issued by the Ministry of Finance;

e/ Losing bills without promptly reporting it to the responsible agency, or letting another person use one's bills in conducting illegal trade to evade taxes.

Article 3.- The rates of fine on the falsification of tax declaration and tax evasion:

Any organization or individual that falsifies tax declaration forms and evades tax payment as stipulated in the Turnover Tax Law, the Profit Tax Law, the Special Consumption Tax Law, the Export and Import Tax Law, the Tax Law on the Use of Farm Land, and the Tax Law on the Transfer of Land-Use Right, must pay the tax fully as stipulated in addition to paying a fine as provided for by each of these laws.

In addition to administrative fines for the falsification of tax declaration forms and the evasion of tax payment as stipulated by the Tax Laws, any organization or individual that commits other acts of falsifying tax declaration forms and evades tax payment are liable to the following rates of fine, but the maximum shall not exceed 100,000,000 (one hundred million) VND:

1. A fine equal to the amount of tax evasion; if the violation involves an aggravating factor as listed below, the fine may double the evaded amount:

a/ Making false declarations for the calculation of tax rates as stipulated by each category of tax;

b/ Falsifying the books of accounts, bills and vouchers as compared with the actual situation of production and trade;

c/ Failing to register statistical or accounting figures as stipulated by the current accounting regime;

d/ Applying for temporary suspension of business to have tax reduction or exemption, while in fact still conducting business.

In case an organization or individual violate Points (a), (b) or (c), Item 1, of this Article, but if the violation is discovered before the set time, and the organization or person concerned fully declare their taxes and pay them fully, they shall not be fined for tax evasion, but shall be fined as stipulated in Item 2, Article 2 of this Decree.

2. A fine double the amount of evaded tax; if the violation involves an aggravating factor as listed below, it can be fined a sum treble the amount of evaded tax:

a/ Transporting goods without the necessary papers proving that the goods have been taxed or checked by the taxation agency as stipulated by law;

b/ Conducting business without making tax registration and tax payment declaration to the taxation agency;

c/ Falsifying bills on the sale of goods, cash receipts, tax payment receipts and other papers relating to the calculation of tax rates.

3. If an organization or individual evades a large amount of tax, or if they have been subjected to administrative fines for tax evasion and repeat the violation, the taxation agency shall submit their dossier to the authorized criminal court for settlement.

Article 4.- The rates of fine on violations of the regime of tax payment and fine payment:

1. A fine of from 100,000 (one hundred thousand) VND to 1,000,000 (one million) VND, and up to 10,000,000 (ten million) VND if the violation involves an aggravating factor as listed below,:

a/ Refusing to receive a tax payment notice, a tax payment order, a fining order, or a decision on fining for violations of tax provisions;

b/ Failing to perform their task as stipulated by law by those organizations assigned to collect tax payment;

c/ Delaying tax or fine payment as written in the tax notice or in the fining decision issued by the taxation agency;

d/ Deliberately delaying tax or fine payment.

2. In addition to paying fines as stipulated in Item 1 of this Article, an organization or individual that violates the regime of tax and fine payment must also pay a fine for delay of payment as stipulated by the Tax Laws and the Tax Ordinance.

Article 5.- The rates of fine on violations of the regime of checking goods and sealing goods:

A fine of from 100,000 (one hundred thousand) VND to 1,000,000 (one million) VND, and up to 10,000,000 (ten million) VND if the violation involves an aggravating factor as listed below:

a/ Refusing to let the taxation agency check the goods being transported, check the stores of goods and materials at the production and trade sites;

b/ Deliberately breaking the seal on warehouses, storages of materials and machines, and workshops within the time of sealing applied by the authorized agency as a measure to compel the payment of taxes or fines.

Article 6.- Stipulations on the confiscation of exhibits and means used in committing administrative violations in tax payment:

An organization or individual that contravenes the stipulations in Point (a), Item 2, Article 3, of this Decree can have their cash, goods, exhibits and means directly involved in the contravention confiscated.

The confiscation of goods, exhibits and means involved in a contravention can be applied only to those goods, exhibits and means permitted by law for confiscation.

Chapter II

JURISDICTION AND PROCEDURE TO FINE ADMINISTRATIVE VIOLATIONS IN TAX PAYMENT

Article 7.- The taxation agency has the following jurisdiction:

1. The tax collectors on mission have the right to serve a warning or impose a fine of up to 100,000 (one hundred thousand) VND on administrative violations in tax payment in the locality under their charge.

The Head of a Tax Collection Station and the Head of a Tax Collectors' Team have the right to serve a warning and impose a fine of up to 200,000 (two hundred thousand) VND on administrative violations in tax payment in the locality under their charge.

2. The Head of a Taxation Service has the right:

- To serve a warning or impose a fine of up to 2,000,000 (two million) VND on the administrative violations in tax payment stipulated in Articles 2, 4 and 5 of this Decree in the locality under his/her charge.

- To fine a sum equal to the evaded tax for the falsification and evasion of tax payment stipulated in Article 3 of this Decree.

- To confiscate the exhibits and means used in committing administrative violations in tax payment with a value of up to 10,000,000 (ten million) VND as stipulated in Article 6 of this Decree.

3. The Head of the Taxation Department has the right:

- To serve a warning or impose a fine of up to 20,000,000 (twenty million) VND on administrative violations in tax payment stipulated in Articles 2, 4 and 5 of this Decree in the locality under his/her charge.

- To fine a sum treble the amount of evaded tax regarding the falsification and evasion of tax payment stipulated in Article 3 of this Decree. With regard to export and import tariffs, he/she can impose a fine of up to 5 times the amount of evaded tax.

- To confiscate the exhibits and means used in committing administrative violations in tax payment.

The Head of a Taxation Service and the Head of the Taxation Department have the authority to issue a fining decision on the violations stipulated in Item 2, Article 4, of this Decree.

Article 8.- The People's Committees at various levels have the following jurisdiction to impose fines on administrative violations in tax payment:

1. The Presidents of the People's Committees of communes, wards and townships have the authority to serve a warning or impose a fine of up to 200,000 (two hundred thousand) VND on violations of tax payment in the use of farm land, tax payment on housing and land, and tax payment on animal slaughter in the localities under their charge after consulting the taxation agency of the same level.

2. The Presidents of the People's Committees of precincts, provincial capitals, districts and cities belonging to provinces, and the Presidents of the People's Committees of provinces and cities under the Central Government have the authority to impose fines on violations as stipulated in Article 27 and Article 28 of the Ordinance on the Handling of Violations of Administrative Regulations regarding administrative violations in tax payment at the proposal of the taxation agency of the same level.

Article 9.- The jurisdiction to impose fines on administrative violations in tax payment is prescribed as follows:

If an administrative violation in tax payment falls under the jurisdiction of many agencies, it shall be fined by the agency that is the first to handle the case as provided for by this Decree after consulting the taxation agency of the same level.

Article 10.- The procedure of fining administrative violations in tax payment shall comply with the provisions of the Articles in Chapter VI of the Ordinance on the Handling of Violations of Administrative Regulations of July 6, 1995.

Article 11.- The enforcement of decisions on the fining of administrative violations in tax payment is stipulated as follows:

1. With regard to those organizations and individuals that have been fined for administrative violations, but who refuse to comply with the fining decision, the authorized person who has issued the decision on administrative fine in tax payment has the authority to enforce observance of the decision on administrative fine in tax payment by the following measures:

a/ Deducting part of their salary or part of their income, or deducting money from their bank accounts. The organization or individual that is to pay the fine, or the Bank where the fined organization or individual opens their bank accounts shall have to comply with the compulsory decision of the taxation agency;

b/ Temporarily keeping the goods and exhibits to ensure a full collection of tax and fine;

c/ Registering part of the property that has a value equal to the amount of fine and tax for auction sale.

2. The agency authorized to issue the compulsory decision shall have to organize the compulsory registration of property for auction sale to fully collect the tax and fine. The handling of the exhibits and means involved in administrative violations in tax payment shall comply with Article 52 of the Ordinance on the Handling of Violations of Administrative Regulations.

3. The People's Police Force which is assigned to enforce the compulsory decision of the People's Committee of the same level must cooperate with the taxation agency to carry out the compulsory decision of the taxation agency.

4. The organization or individual that is compelled to carry out a compulsory decision must pay for all the expenses in organizing the implementation of compulsory measures and in organizing an auction sale.

Article 12.- The effective time for fining administrative violations in tax payment is 2 years beginning from the date when the violation is discovered. Within this effective time, if the organization or individual concerned commits a new violation or deliberately evades or obstructs the fining, this effective time shall not apply. As for the falsification of tax declaration forms and tax evasion stipulated in Article 3 of this Decree, the effective time for fining is 3 years beginning from the date when the violation is discovered.

Chapter III

COMPLAINT, DENUNCIATION AND THE HANDLING OF VIOLATIONS

Article 13.- Stipulations on complaint and denunciation:

Complaints about a decision on the fining of administrative violations, the procedure of settling complaints about a decision on the fining of administrative violations in tax payment and the procedure of settling denunciation of violations in tax payment shall have to comply with Articles 87, 88 and 90 of the Ordinance on the Handling Administrative Violations of July 6,1995.

Article 14.- Stipulations on the handling of violations:

The fining of violations committed by the persons authorized to impose fines on administrative violations in tax payment and the fining of violations committed by those persons found guilty of administrative violations in tax payment shall comply with Articles 91 and 92 of the Ordinance on the Handling of Violations of Administrative Regulations of July 6,1995.

Article 15.- Stipulations on the commendation and granting of awards on the discovery and handling of violations: an organization or individual that is credited with the discovery of a falsification of tax declaration form and tax evasion shall be awarded part of the evaded tax discovered after the fining decision or the decision to settle complaints takes effect. The rates of award are fixed as follows:

- 2% (two per cent) for the discovery of tax evasion in the State-owned economic sector.

- 5% (five per cent) for the discovery of tax evasion in the non-State economic sector.

The Ministry of Finance shall give guidance on the procedure of awarding and the principle of distributing and using the award money as mentioned above.

The remainder of the evaded tax collected after granting such award shall be remitted to the State Budget.

Chapter IV

IMPLEMENTATION PROVISIONS

Article 16.- This Decree takes effect from May 1st, 1996. Decree No.01-CP issued by the Government on October 18,1992 stipulating the fining of administrative violations in tax payment is now annulled.

Article 17.- The Minister of Finance shall give detailed guidance on the implementation of this Decree.

The Ministers, the Heads of the ministerial-level agencies, the Heads of the agencies attached to the Government, and the Presidents of the People's Committees of the provinces and cities under the Central Government shall have to implement this Decree.