In the context of tax authorities strengthening management towards digitization, data comparison and post-inspection, many business households are suddenly penalized or pursued for tax even though they claim they "do not intentionally violate".
Reality shows that the main reason stems from the misunderstanding of regulations on tax violation penalties, especially the concept that "first violation will not be penalized".
First-time violations can still be penalized
According to the provisions of the Law on Handling of Administrative Violations and Decree 125/2020/ND-CP, tax violation penalties are not based on the number of violations, but on the nature, severity of violations and the consequences arising.
Business households are only considered for applying the form of warning instead of fines when they fully meet the conditions: first-time violation; mild behavior; not causing the amount of tax to be paid; and have proactively corrected errors as required by the tax authority.
Cases that are often considered for warning include: Delaying the first tax declaration dossier; writing incorrect information but not affecting tax obligations; or technical errors in the declaration process and timely adjustment.
However, exemption is not natural, but is considered specifically by the tax authority on each dossier and each act.
In fact, many business households are still penalized right in the first violation, because the violation has generated tax obligations. According to Article 17 of Decree 125/2020/ND-CP, acts such as not declaring revenue, not issuing invoices, and incorrect declarations that reduce the amount of tax payable are all penalized and tax arrears are collected, regardless of the number of violations.
In these cases, business households may simultaneously be:
- Recovering the remaining tax arrears;
- Calculate late payment fees according to regulations;
- Forcing remediation of arising consequences.
The act of "not intentionally" or "not knowing the regulations" is not considered a basis for exemption from legal responsibility.
Distinguishing administrative penalties and tax arrears
One point that many business households easily confuse is between administrative violation penalties and tax arrears.
Administrative penalties are applied to violations of tax procedures such as late declaration, incorrect declaration, and failure to prepare invoices. Meanwhile, tax arrears are applied when the tax authority determines that there is a shortage of tax compared to reality.
According to current regulations, a violation can simultaneously be:
- Administrative fines;
- Tax collection;
- Calculate late payment.
This is not a "double fine", but independent handling measures in accordance with legal regulations.
Proactively comply to avoid legal risks
To limit the risk of being fined or retroactively collected, the tax authority recommends that business households need to:
- Full and truthful declaration of generated revenue;
- Establish invoices at the right time and in accordance with regulations;
- Closely monitor their tax obligations;
- Proactively adjust errors when detected;
- Don't be subjective with the thought "small revenue is okay".
In the context of increasingly tight tax management, complying with regulations from the beginning is considered the most effective way for business households to avoid legal risks and stabilize long-term operations.
