Criminal sanctions are not appropriate to the nature and level of the illegal purchase and sale of invoices

Recently, many illegal invoice trading rings have been arrested. Source: Internet

Business entities may be permanently suspended from operation for the crime of buying and selling invoices

Regarding the issue of illegal buying and selling of invoices, the People's Committee of Ho Chi Minh City proposed to amend administrative and criminal sanctions for illegal buying and selling of invoices, ensuring deterrence and strictness of the law, contributing to creating a transparent, equal and fair business environment for enterprises to comply with laws; gradually improve taxpayers' compliance with the law, facilitate tax authorities in resolving value-added tax refunds.

Regarding this issue, the GDT said that according to current law, the act of illegal buying and selling of invoices and illegal use of invoices will depend on the nature, the level of violation to decide administrative sanctions or criminal prosecution.

Regarding criminal handling, According to the General Department of Taxation (GDT), under the Criminal Code 2015 (amended in 2017), the act of using illegal invoices to record goods and raw materials in activities that generate tax obligations, resulting in a decrease in the amount of tax payable or an increase in the amount of tax exempted, reduced, or deducted, or the amount of tax refunded to the extent that criminal liability is incurred, will be prosecuted for the crime of tax evasion (Article 200).

In addition, the act of illegally buying and selling invoices to the point of being prosecuted for criminal liability will be handled for the crime of illegally printing, issuing, and dealing in illegal invoices and receipts for payment of state revenues (Article 203).

For acts of using illegal invoices that constitute tax evasion, they will be prosecuted and tried for tax evasion according to the provisions of Article 200 of the 2015 Penal Code (amended and supplemented in 2017).

If you are an individual, you will be tried with 3 main penalty frames, with a fine ranging from VND100 million to VND4.5 billion or a term of imprisonment from 3 months to 7 years. Offenders can also be fined from VND20 million to VND100 million, banned from holding positions, practicing certain occupations or doing certain jobs for 1-5 years or having part or all of their assets confiscated.

If it is a commercial legal entity, it will be tried with 4 main penalty frames: fine from VND300 million to VND10 billion or suspension of operations for a period of 6 months to 3 years or permanent suspension of operations. Commercial legal entities can also be fined from VND50 million to VND200 million, banned from doing business, banned from operating in certain fields or banned from raising capital for 1-3 years.

The act of illegally buying and selling invoices constitutes the crime of illegally buying and selling invoices and will be prosecuted and tried for the crime of illegally printing, issuing, and dealing invoices and receipts for payment of state revenues following Article 203 of the 2015 Penal Code (amended and supplemented in 2017)

If an individual is tried, there are two main penalty frames a fine of VND50 million to VND500 million or a community sentence (non-custodial) for up to 3 years or imprisonment from 6 months to 5 years. Offenders can also be fined from VND10 million to VND50 million, banned from holding positions, practicing certain occupations or doing certain jobs for 1-5 years.

If it is a commercial legal entity, it will be tried with two main penalty frames a fine from VND100 million to VND1 billion or permanent suspension of operations. Commercial legal entities may also be fined from VND50 million to VND200 million, banned from doing business, banned from operating in certain fields for 1-3 years or banned from raising capital for 1-3 years.

Propose sanctions appropriate to the situation and level of the group of violations of invoice trading

According to the GDT, basically, administrative and criminal sanctions for acts of illegally buying and selling invoices and using illegal invoices have been specifically and fully regulated in the legal system on handling administrative violations and criminal law based on the nature, severity and scale of the violation.

Implementing the Program to develop laws and ordinances in 2024, the Ministry of Finance has submitted to the Government and the National Assembly a draft of the VAT Law (amended), which has amended and supplemented regulations on VAT refund to make policies transparent, consistent with emerging realities and avoid problems in implementation. For example, clearer regulations on tax refund conditions; and regulating the order and procedures for tax refunds to ensure the authority of the regulations being implemented stably in the documents under the Law and in synchronization with the law on tax administration.

However, according to GDT, for the act of illegally buying and selling invoices, in some cases with a wide scope, very large scale, and a very large amount of illegal profits, the level of sanctions according to the current criminal law is not appropriate to the nature and extent of the violation.

For example, according to judgment No. 115/2023/HS-ST dated December 29, 2023 of the People's Court of Phu Tho province related to the case of illegal purchase and sale of invoices occurring in Phu Tho province and many provinces and cities across the country, in which Nguyen Minh Tu used 637 companies to illegally sell 1,025,712 VAT invoices to 88,083 units and organizations with total sales of VND63,762,282,612,727.

However, Nguyen Minh Tu was only sentenced to prison for illegally buying and selling invoices with a sentence of 4 years in prison and the confiscation of VND272.1 billion, which was the illegal profit of the group of defendants selling invoices.

Accordingly, from the recommendation of Ho Chi Minh City People's Committee, the GDT said it would research and evaluate sanctions for the act of buying and selling invoices to propose sanctions appropriate to the situation and level of the group of acts of violations of buying and selling invoices, then reporting and submitting to competent authorities for amending and supplementing relevant legal regulations.