When Can Tax Errors Become Criminal Offenses in Vietnam?

Is your company being reviewed by the tax authorities? Are you worried that incorrect tax declarations could result in criminal liability in Vietnam? In an increasingly strict legal environment, where is the line between an administrative mistake and a criminal offense?

When Does an Incorrect Tax Declaration Become a Crime?

Many businesses – especially foreign-invested companies – assume that incorrect tax declarations only result in administrative penalties. However, the legal reality in Vietnam shows that not all mistakes are “safe.”

Incorrect tax declarations can arise from various reasons: accounting errors, misunderstanding of legal regulations, or in some cases, intentional acts aimed at reducing tax obligations. The key factors that determine criminal liability are intent and the level of damage caused.

For foreigners living, working, or investing in Vietnam, the risks are even greater due to differences in legal systems and tax administration practices.

Common Tax Misdeclaration Behaviors That May Trigger Criminal Investigation

Under the 2015 Penal Code of Vietnam (as amended and supplemented), tax evasion may be subject to criminal prosecution if it meets the elements of a crime. Common behaviors include:

• Failure to declare or underreporting revenue to reduce tax payable
• Use of illegal invoices or fraudulent documents
• Recording fictitious expenses to reduce taxable income
• Failure to issue invoices when providing goods or services

If these acts are determined to be intentional and result in loss of state revenue, they may no longer be treated as mere administrative violations.

Severity Matters: The Key Factor in Criminal Prosecution

Not every incorrect tax declaration leads to criminal charges. Vietnamese law sets relatively clear thresholds for criminal liability, for example:

• Tax evasion amount of VND 100 million or more, or
• Less than VND 100 million but repeated violations after administrative penalties

Additionally, the level of liability depends on various factors such as:

• The nature and seriousness of the conduct
• Duration of the violation
• Whether the act was organized
• Remedial actions taken (such as repayment of tax and penalties)

This means that the same conduct can lead to very different legal outcomes depending on the circumstances.

What Should Businesses and Foreigners Do When Suspected of Tax Misdeclaration?

If you or your company is under tax inspection, or worse, has been invited to work with investigation authorities, the most important thing is not panic – but understanding the situation correctly and acting promptly.

In many cases handled by DEDICA, a single delay or improper response can escalate a matter from an “administrative violation” to a “criminal case.”

Common Mistakes That Increase Legal Risks

From a practical perspective, businesses – especially foreign individuals and companies – often make critical mistakes such as:

• Providing explanations to tax authorities without legal counsel
• Submitting incomplete or inconsistent documentation
• Not fully understanding their rights and obligations when dealing with investigators
• Assuming the issue is “just a minor mistake”

These actions can unintentionally raise suspicion from authorities.

Safe Approach and Necessary Legal Strategy

In tax-related cases with potential criminal implications, the approach must be strategic – not merely explanatory.

Key steps include:

• Reviewing all accounting and tax records to assess the actual level of risk
• Evaluating the element of fault (intentional or unintentional) – a decisive factor in criminal liability
• Preparing a consistent and well-structured explanation strategy
• Working with lawyers experienced in both criminal law and tax matters

For foreigners, having legal counsel who understands both Vietnamese law and how local authorities operate is particularly important.

DEDICA – Legal Support for Foreigners in Tax and Criminal Matters

With extensive experience advising and defending foreign clients in Vietnam, DEDICA Law understands the pressure you may be facing.

We have supported:

• Foreign clients under investigation for tax evasion
• FDI enterprises subject to tax inspections with potential criminal risks
• Foreign individuals invited to work with authorities regarding financial and accounting records

The key in these cases is not simply determining right or wrong, but choosing the right approach and legal strategy from the very beginning.

DEDICA does not make absolute guarantees on outcomes, as each case has its own complexities. However, we are committed to:

• Accurately analyzing the legal nature of each case
• Providing tailored strategies for each specific situation
• Maximizing the protection of our clients’ legitimate rights and interests

Contact DEDICA Law Firm for Professional Legal Support

📞 Hotline: (+84) 39 969 0012 (Available via WhatsApp, WeChat, Zalo)

🕒 Working Hours: Monday – Friday (8:30 – 18:00)

Contact us today for a free initial consultation with our experienced lawyers!