This December 2020 publication of our Tax and Accounting Updates looks at administrative penalties for tax or invoice-related violations; clarity on exceptions to penalties for administrative violations arising from customs activities; guidelines for the implementation of the EVFTA agreement on trade remedies; and reducing interest rate ceilings for refinancing, rediscounting and short-term loans in Vietnamese Dong.
Administrative penalties for tax or invoice-related violations
On 19 October 2020, the Government issued Decree 125/2020/ND-CP detailing penalties for administrative violations related to taxes and invoices.
In general, the Decree has clarified, along with increased significantly, the penalties for violations
- Adding a new penalty level for taxpayers more than 90 days late with their initial tax registration or notifying of changes to registered tax information (a maximum of VND 10 million for late tax registration, and a maximum of VND 7 million for late notification of changes) (article 10, clause 4, and article 11, clause 5);
- Increased penalties where initial tax registration is more than 30 days late (article 10, clause 3) from a maximum of VND 2 million to a maximum of VND 6 million;
- Increased penalties from a maximum of VND 1 million to a maximum of VND 3 million where a taxpayer is more than 5 days late in providing information, documents and legal documents related to tax registrations at the request of tax authorities (article 14, clause 1);
- Clarified the penalties for failure to issue invoices for goods or services used for promotions, advertising, or sample goods, along with goods and services used to give, donate, present, exchange, or pay as employee salaries (article 24, clause 2, point b).
In the Decree, the Government also confirmed that the Decree does not apply to administrative violations related to fees and charges, or to administrative violations related to taxes on exported or imported goods of which collection is managed by customs authorities. The Decree also will not apply to violations against regulations on tax registration procedures, violations against regulations on notification of temporary business suspension, notification of premature business continuation of entities and individuals applying for tax registration together with corporate registration at business registration agencies or cooperative registration agencies.
In addition, where taxpayers apply e-invoices in accordance with the Law on Tax Administration 2019 along with legal documents guiding the Law, violations regarding e-invoices will be sanctioned according to the regulations in Decree 125.
The decree was effective from 5 December 2020.
Exceptions to penalties for administrative violations arising from customs activities are now made known
On 19 October 2020, the Government issued Decree 128/2020/ND-CP detailing administrative penalties for violations arising in the customs sector.
The Decree details cases where exemptions from penalties for administrative violations due to customs activities will be granted, including:
- Permitted exemptions from administrative penalties prescribed in Article 11 of the 2012 Law on Handling of Administrative Violations.
- Cases in which additional customs declarations are permitted under time limits stipulated in Clause 4 of Article 29 in the 2014 Law on Customs
- Cases in which parties making customs declarations receive punitive decisions relating to information to be provided for the identification of tax obligations received from competent authorities as per clause 11 of Article 16 in the Law on Tax Administration
- Permitted entry of goods into Vietnam which are inconsistent with contracts in accordance with Article 39 in the 2005 Law on Commerce after receipt of notifications from consignors, forwarders, consignees or legal representatives
Decree 128 took effect from 10 December 2020 and replaces Decree 127/2013/ND-CP and Decree 45/2016/ ND-CP.
Guidelines for the implementation of the EVFTA agreement on trade remedies
On 26 November 2020, the Ministry of Industry and Trade issued Circular 30/2020/TT-BCT guiding the implementation of the Free Trade Agreement between Vietnam and the European Union – EVFTA Agreement on Trade Remedies. This included:
- Guidance on the application of anti-dumping measures and anti-subsidy measures, covering: Consideration of socio-economic benefits; and
- Rule of lower tax rates
- Guidance on the application of bilateral safeguard measures covering: Principle of applying bilateral safeguard measures;
- Principle of applying bilateral safeguard measures;
- Dossiers requesting the application of bilateral safeguard measures;
- Notice of the investigation and application of bilateral safeguard measures;
- Investigation and application of bilateral safeguard measures; and
- Parties involved in an investigation to apply bilateral safeguard measures.
The provisions of Circular 30/2020/TT-BCT are applicable to goods originating from:
- European Union member territories;
- United Kingdom of Great Britain and Northern Ireland; and
- The Duchy of Ando, the Republic of San Mary.
The Circular is effective from 11 January 2021.
Short-term loan interest rate ceilings in Vietnamese dong continues to drop
On 30 September 2020, the State Bank of Vietnam issued Decision 1730/QD-NHNN on interest rate ceilings for short-term loans in Vietnamese Dong (“VND”) by credit institutions and foreign bank branches as prescribed in Clause 2 of Article 13 in Circular 39/2016/TT-NHNN.
The Decision detailed:
- Credit institutions and foreign bank branches (except for people’s credit funds and micro-finance institutions) will apply an interest rate ceiling of 4.50% pa for VND short-term loans (0.50% lower than the previous rate).
- People’s credit funds and micro-finance institutions will apply an interest rate ceiling of 5.50% pa for VND short-term loans (0.50% lower than the previous rate).
Interest rates for credit contracts or loan agreements signed prior to 1 October 2020 will be the same as those prescribed in these contracts or agreements in compliance with laws at the time of signing.
Decision 1730/QD-NHNN took effect on 1 October 2020.
Reducing interest for refinancing and rediscounting
On 30 September 2020, the State Bank of Vietnam issued Decision 1728/QD-NHNN on the interest rates for refinancing and rediscounting, overnight lending interest rates for interbank electronic payments and offsetting lending for capital shortages in clearing payments between the State Bank and banks.
Accordingly, regulations on interest rates of the State Bank of Vietnam are as follows:
- Refinancing interest rate: from 4.50% pa to 4.00% pa
- Rediscounting interest rate: from 3.00% pa to 2.50% pa
- Overnight lending interest rate for interbank electronic payments and offsetting lending for capital shortages in clearing payments between the State Bank and banks is reduced from 5.50% pa to 5.00% pa
Decision 1728/QD-NHNN took effect from 1 October 2020.