Legal provisions governing the failure to declare tax obligations

I. Current situation concerning the failure to declare tax obligations

At present, the failure to declare tax obligations occurs across many enterprises, from omissions and inaccurate declarations to intentionally failing to submit tax dossiers. The primary causes include a lack of understanding of legal requirements and compliance awareness, or attempts to reduce financial obligations.

Such conduct not only results in a loss of State budget but also creates significant legal risks, potentially leading to administrative sanctions or even criminal prosecution if it satisfies the elements of the offence of tax evasion. Thus, full compliance with tax declaration obligations is essential to safeguard corporate interests. 

II. Legal provisions governing the failure to declare tax obligations

To understand the severity of violations and legal consequences of the failure to declare tax obligations, it is necessary to examine the specific provisions under applicable tax laws and administrative sanction regulations.

1. What constitutes a failure to declare tax obligations?

Failure to declare tax obligations refers to an act of a taxpayer failing to set up or submit a tax declaration dossier (including declarations, schedules, and relevant documents) as required by law, thereby preventing the determination of payable tax amounts or concealing tax liabilities.

Under the Law on Tax Administration and its implementing legal instruments, taxpayers must fully and truthfully declare all required information, regardless of where no tax liability arises. Failure to declare tax obligations constitutes a violation of tax administration regulations and may result in tax assessment, administrative sanctions, or criminal prosecution if sufficient elements of the offence are met.

2. Circumstances constituting the failure to declare tax obligations

The law recognizes multiple circumstances that constitute the failure to declare tax obligations, reflecting various levels of non-compliance by taxpayers. Specifically:

• Failure to submit tax dossiers on time: A frequent violation occurring when enterprises or individuals submit tax declarations late or fail to submit them at all, as provided under Articles 7 and 8 of Decree No. 126/2020/ND-CP.
• Failure to declare generated revenue or income: Taxpayers engaging in business, investment, or income-generating activities fail to declare accurate and specific amounts for payable tax assessment, thereby violating the obligation of truthful declaration.
• Failure to declare in specific transactions: It includes transactions such as capital transfers, real estate transfers, receipt of dividends, or income from abroad - circumstances in which tax obligations arise independently.
• Failure to declare during operation suspension or termination: Even when an enterprise temporarily suspends operations, if tax obligations still arise, the failure to declare is considered a violation.

All of the above constitute failures to declare tax obligations and may result in administrative sanctions or criminal prosecution if they cause significant loss to the State budget.

3. When does the failure to declare tax obligations constitute a criminal offence?

The failure to declare tax obligations constitutes the criminal offence of tax evasion only when the conditions under Article 200 of the Penal Code 2015 (amended in 2017) are satisfied:

• Objective conduct: Such as failing to submit tax declarations, submitting declarations more than 90 days past the deadline, or using unlawful invoices/documents to reduce payable tax.
• Quantified consequence: The amount of evaded tax must meet the statutory threshold; If not, only administrative sanctions apply. 
• Subject: Individuals aged 16 or older, or commercial legal entities with criminal capacity.
• Subjective element: The taxpayer intentionally performs violation acts. They must know such acts are unlawful yet still violate to appropriate the payable tax amount.

III. Questions regarding the failure to declare tax obligations

In the process of fulfilling tax obligations, many individuals and enterprises have difficulties in non-declaration, its legal consequences, and remedial measures. Below are detailed responses.

1. Is the failure to declare tax obligations considered tax evasion under Vietnamese law?

Under Article 200 of the Penal Code 2015 (amended in 2017), failure to declare tax obligations may constitute tax evasion if the taxpayer intentionally fails to submit or submits wrong declarations to reduce, avoid, or appropriate payable tax. If the conduct does not meet the elements of the crime, administrative sanctions will apply according to Decree No. 125/2020/ND-CP.

2. Does repeated failure to declare tax obligations result in aggravated sanctions? 

If an enterprise repeatedly fails to declare tax obligations, the recurrence is considered an aggravating factor when determining administrative sanctions. Under Article 5 of Decree No. 125/2020/ND-CP, the principle of sanctioning takes into account multiple violations as a basis for increasing sanctions. 

However, even with aggravating circumstances, sanctions must remain within the statutory maximum (for example, the maximum administrative sanction for procedural tax violations committed by organisations is 200,000,000 VND).

Thus, repeat non-declaration results in stricter handling with higher sanctions than first-time violations, but not exceeding legal limits.

3. Does the failure to declare tax obligations affect an enterprise’s ability to obtain bank loans?  

The failure to declare tax obligations can directly affect an enterprise’s ability to secure bank financing.

First, when reviewing loan applications, banks assess the financial records and tax compliance history of the enterprise. Any non-compliance, such as failure to declare or false declarations resulting in sanctions, will be considered as a credit risk, thereby reducing the ability of loan approval.  

Second, tax violations may negatively affect an enterprise’s credit rating and result in stricter lending conditions or higher interest rates.

Accordingly, non-declaration not only violates the law but also significantly diminishes an enterprise’s access to bank financing.

4. What is the maximum administrative sanction for intentionally failing to declare tax obligations?

If an enterprise intentionally fails to declare tax obligations, the maximum administrative sanction may reach 200,000,000 VND for organisations under Article 7 of Decree No. 125/2020/ND-CP.

Specifically:

• Fine from 15,000,000 VND to 25,000,000 VND: It is applicable when an enterprise submits a tax declaration 91 days or more past the deadline and has incurred tax payable and paid the full amount of tax and late payment fees.
• Fine from 2,000,000 VND to 5,000,000 VND: Where the declaration is submitted 01 - 30 days late.
• Fine from 5,000,000 VND to 8,000,000 VND: Where the declaration is submitted 31 - 60 days late.
• Fine from 8,000,000 VND to 15,000,000 VND: Where the declaration is submitted 61 - 90 days late.

The specific sanction will depend on the level of violation and any mitigating or aggravating factors.

Enterprises must strictly comply with tax declaration regulations to avoid administrative sanctions and protect their commercial reputation.

5. What preventive measures does current law provide to reduce non-declaration of tax obligations?

Current law sets out several preventive measures to limit non-declaration, including:

• Enhancing taxpayer responsibility: Under Article 17 of the Law on Tax Administration 2019, taxpayers must register for tax, declare accurately, truthfully and fully, and submit dossiers on time; and take legal responsibility for the accuracy and completeness of tax dossiers.
• Encouraging supplementary declarations: Under Official Letter No. 3034/CT-CS dated August 8, 2025 and Article 47 of the Law on Tax Administration 2019 (as amended by Clause 6, Article 6 of Law No. 56/2024/QH15), enterprises may submit supplementary declarations:
• Before January 1, 2025: If the tax authority has already conducted inspection and audit, and the supplementary declaration reduces tax payable or increases deductible/exempt/refundable tax, it shall comply with the regulations on handling complaints.
• After January 1, 2025: Additional declarations may be made within 10 years from the deadline for submitting the dossier, if the dossier is not within the scope or period of inspection or examination.
• Promoting digitalisation in tax administration: The Government encourages electronic tax declaration, payment, and communication with tax authorities, especially for enterprises operating in areas with adequate IT infrastructure.
• Strict enforcement: Under Article 14 of Decree No. 126/2020/ND-CP, taxpayers may be subject to tax assessment where they fail to register or declare tax, or declare incompletely or inaccurately.

These measures aim to enhance tax-compliance awareness while enabling enterprises to fulfil their tax obligations accurately and promptly.

IV. Legal consultancy services relating to the failure to declare tax obligations

If you encounter difficulties or require assistance regarding the failure to declare tax obligations, NPLaw provides specialised legal consultancy services. Our team of experts will advise comprehensively on tax-declaration obligations, legal risks, and methods for handling erroneous or undeclared tax dossiers. 

NPLaw also represents enterprises in resolving disputes and filing complaints with tax authorities, and provides preventive legal guidance to ensure compliance and avoid administrative or criminal sanctions.