When does a company’s legal representative face criminal liability for tax evasion?

Are you a foreigner operating a business in Vietnam? Are you worried after receiving a working invitation from authorities regarding tax issues? Can simple accounting errors lead to criminal liability? And in which cases must the legal representative “bear the responsibility”? This article will help you clearly understand the boundary between administrative risks and criminal liability—so you are not caught off guard.

When can tax evasion be criminally prosecuted in Vietnam?

In practice, not all tax mistakes lead to criminal liability. However, under certain conditions, such acts may be examined under criminal law in accordance with Vietnamese regulations.

Distinguishing administrative violations and tax evasion crimes

Many businesses, especially foreign-invested ones, often confuse:

• Tax declaration errors

• Late tax payments

• Tax evasion

According to the Law on Tax Administration and the 2015 Criminal Code (amended 2017), only when there is intentional conduct and certain thresholds are met will the act be considered a crime.

Common signs of tax evasion include:

• Failure to submit tax declarations despite obligations

• Use of fake or illegal invoices

• Recording fictitious expenses to reduce taxable income

• Concealing revenue or transactions

If the issue is merely technical errors or misunderstanding, administrative penalties usually apply. However, if authorities prove intent to reduce payable tax, criminal risk arises.

Criminal liability thresholds under current law

Under Article 200 of the 2015 Criminal Code, tax evasion may be prosecuted if:

• The evaded tax amount is from VND 100 million, or

• Below VND 100 million but with prior administrative penalties

Penalties may include:

• Fines

• Prohibition from holding positions

• Imprisonment (depending on severity)

Note: Vietnamese law evaluates intent, role, and consequences comprehensively, and does not automatically impose severe penalties without sufficient grounds.

When does the legal representative bear criminal responsibility?

This is one of the biggest concerns for foreign CEOs and directors. Not all legal representatives are prosecuted, but in many cases, they are the first to be examined.

Actual role determines liability

Under Vietnamese law, a legal representative:

• Acts on behalf of the company

• Signs financial statements and tax filings

• Oversees general management

However, in tax evasion cases, authorities will assess:

• Who actually directed the conduct?

• Who benefited?

• Who knew but allowed it?

Examples:

• If a director is nominal and operations are handled by others → liability may be shared

• If the director directly signs and instructs illegal invoicing → high criminal risk

Common risks for foreign individuals

Foreign clients often face issues such as:

• Lack of understanding of Vietnamese tax law

• Full reliance on internal accountants

• Signing documents without verification

This can lead to:

• Being considered as “knew or should have known”

• Being identified as the primary responsible person

Legal solutions & how to protect yourself during investigation

If you or your loved ones are in this situation, the key is not panic—but correct understanding and timely action.

Immediate steps when receiving an official invitation

• Do not provide explanations without full understanding

• Prepare complete accounting records

• Clarify your role in the company

For foreigners:

• Ensure proper legal interpretation and translation

• Avoid misunderstandings leading to unfavorable statements

Role of a lawyer in tax evasion cases

An experienced lawyer can:

• Assess whether criminal elements exist

• Clarify your personal liability

• Work effectively with authorities

• Protect your legal rights throughout proceedings

At DEDICA Law, we regularly:

• Advise foreigners involved in criminal cases in Vietnam

• Defend clients in tax and economic crimes

• Support communication with authorities

We understand that for foreigners, barriers include not only law—but also language and system differences.

Legal Disclaimer

Each case is unique. Criminal liability depends on:

• Specific documents

• Evidence

• Working process with authorities

This article is for reference only and does not replace formal legal advice.

Tax evasion is no longer “just a fine.” Especially for legal representatives—small actions like a signature can carry serious consequences.

Facing a similar issue?
Being investigated or invited to work regarding tax matters in Vietnam?

Contact DEDICA Law for the most appropriate legal strategy.

📞 Hotline: (+84) 39 969 0012 (WhatsApp, WeChat, Zalo)
🕒 Working hours: Mon–Fri (8:30–18:00)