Foreigners Accused of Tax Evasion in Vietnam: Criminal or Administrative?

Being summoned by the police or tax authorities for suspected tax evasion in Vietnam is a situation that makes many foreigners anxious—fearing detention, deportation, or even imprisonment. Is this merely an administrative violation, or can it escalate into criminal liability? When does the risk become serious, and what should you do immediately to protect yourself?

Foreigners Accused of Tax Evasion in Vietnam – Why the Risks Are Significant

From lawyers’ practical experience, tax evasion is not just about money. It directly affects a foreigner’s residence status, visa, personal reputation, and even personal freedom in Vietnam.

Many clients seek legal assistance while facing situations such as:

• Being “invited to work” with tax authorities or the police

• Being temporarily prohibited from leaving Vietnam without a clear explanation

• Hearing that there are “criminal signs” even though no formal charges have been filed

• Lacking understanding of Vietnamese law, facing language barriers, and fearing they may say something wrong

One crucial point to understand from the outset: not every act of tax evasion leads to criminal prosecution, but many cases have escalated from administrative penalties to criminal cases simply because of improper handling at the early stage.

Distinguishing Administrative Penalties from Criminal Liability for Tax Evasion

When are foreigners subject only to administrative penalties?

Under the Law on Tax Administration 2019 and Decree No. 125/2020/ND-CP, foreigners who violate tax obligations but whose conduct does not constitute a crime will be subject to administrative penalties.

Common situations include:

• Incorrect declarations leading to underpaid tax

• Late submission of tax returns

• Mistakes in determining personal income tax or corporate income tax obligations

• No clear fraudulent intent or concealment of conduct

Possible penalties may include:

• Tax arrears recovery

• Monetary fines (often from one to three times the underpaid tax amount)

• Late payment interest

Note:
Being “only administratively fined” does not necessarily mean you are completely safe. If statements or documents provided during the process are inconsistent or deemed dishonest, the case may still escalate.

When can tax evasion lead to criminal prosecution?

Under Article 200 of the 2015 Criminal Code (as amended and supplemented in 2017), tax evasion may result in criminal liability if one of the following conditions is met:

• The evaded tax amount is VND 100 million or more; or

• The evaded amount is below VND 100 million, but the individual has previously been administratively sanctioned for tax evasion and continues to violate

Intentional fraudulent acts may include:

• Using fake invoices

• Concealing revenue

• Establishing “shell” companies

• Failing to declare income earned in Vietnam despite having tax obligations

Potential penalties can be severe, including:

• Fines

• Fixed-term imprisonment

• Prohibition from holding certain positions or engaging in certain business activities

Additional consequences may include detention, exit bans, and deportation after serving the sentence.

A lawyer’s key emphasis:
Whether imprisonment applies depends on many factors—such as the amount involved, specific conduct, level of cooperation, evidence, and, critically, how the case is handled from the very beginning.

Common Mistakes Foreigners Make During Tax Evasion Investigations

Working with authorities without a lawyer

Many foreigners believe it is “just an administrative matter” and attend meetings alone, unaware that:

• Meeting minutes may later become criminal evidence

• An inaccurate statement may be interpreted as an admission of wrongdoing

Misunderstanding tax obligations in Vietnam

Foreigners often mistakenly believe that:

• Income earned overseas does not need to be declared

• They are unsure whether they qualify as tax residents or non-residents

• Informal advice from brokers or unqualified accountants is reliable

Seeking legal help too late - after the case has escalated

Many clients only contact a lawyer after formal criminal charges are filed, while early legal involvement could have significantly reduced criminal risks.

How Can a Lawyer Assist Foreigners in Tax Evasion Cases?

Early legal risk assessment

Lawyers can:

• Analyze tax records, transactions, and cash flows

• Assess whether the case is likely to remain administrative or escalate to criminal liability

• Identify sensitive issues to avoid in statements

Accompanying clients in meetings with authorities

A lawyer’s presence helps to:

• Protect lawful rights and interests

• Minimize risks arising from language misunderstandings

• Control the content of official meeting minutes

Developing a tailored legal strategy for each stage

Depending on the case, lawyers may:

• Propose lawful remedial measures to address tax consequences

• Guide proper cooperation in compliance with the law

• Defend the client’s rights if the case moves into criminal proceedings

Why Should Foreigners Work with Lawyers Who Understand Vietnam’s Legal System?

Vietnamese law has unique characteristics:

• Legal application differs from common law jurisdictions

• Documents, records, and statements play a critical role

• The “pre-indictment” stage often determines the fate of the case

DEDICA Law Firm regularly:

• Advises and protects the rights of foreign clients

• Participates in criminal defense cases in Vietnam

• Works directly with competent authorities in both Vietnamese and English

DEDICA focuses on safe and realistic legal strategies—making no unrealistic promises, but closely accompanying clients to control risks and protect their legitimate interests.

Contact DEDICA Law Firm for Professional Legal Support

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

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