** Point 2 Article 30 Circular 153/2010/TT-BTC stipulates:

2. Examination of invoices at the premise of invoice users

a/ When an organization, household or individual fails to give explanations or gives unsatisfactory explanations, a tax office shall issue a decision to examine invoices at the head office of such organization or individual.

b/ Invoice examination contents shall be specified in the decision on examination at the head office or sale places of the unit, including legal grounds for examination: subjects of examination, contents and scope of examination: examination time; head and members of the examination team; powers and responsibilities of the examination team and examined subjects.

c/ The head of the managing tax office; the organization, household or individual shall issue and take responsibility for the examination decision.

d/ Within five (05) working days after the date of its signing, the decision on invoice examination at the office of an organization, household or individual shall be sent to that organization, household or individual. Within three (03) working days after receiving an invoice examination decision or before the time of examination, if that organization, household or individual can prove the lawful making out, issuance and use of invoices, the head of the tax office shall issue a decision to cancel the invoice examination decision.

e/ Examination shall be conducted within ten (10) working days after a tax office issues an examination decision. When receiving an examination decision, an organization, household or individual that wishes to delay the examination shall make a written request to the tax office clearly staling the reason and the time for delay for the latter’s consideration and decision. Within live (05) working days after receiving a written request for delay of the examination, the tax office shall notify the organization, household or individual of its approval or disapproval of such delay.

The time for invoice examination at the head office of an organization, household or individual must not exceed five (05) working days counting from the first day of examination. When necessary, the head of the tax office may extend the examination time once, which must not exceed five (05) working days.

Within five (05) working days alter completing the examination, the examination team shall make an examination record.

The examined organization or individual may receive the invoice examination record, request explanations about this record and reserve its/ his/her opinions in the record (if any).

f/ Handling of examination results

Within five (05) working days after signing the examination record with the examined organization or individual, the head of the examination team shall report on examination results to the person issuing the examination decision. When there are administrative violations to be sanctioned, within ten (10) working days after signing the minute, the head of the tax office shall issue a decision lo sanction administrative violations. The examined organization, household or individual shall comply with the decision to handle examination results.

When violations of regulations on invoice management and use are detected through examination, which lead to tax-related handling procedures, depending on the nature and severity of violations, the tax office shall issue a decision on tax audit and inspection under the Tax administration Law, the Inspection Law and the process of tax  audit and inspection.

**Point 1 Article 30 Circular 153/2010/TT-BTC stipulates:

1. Examination at tax offices

a/ Tax offices shall examine the printing, issuance, management and use of invoices based on reports on invoice use by organizations, households and individuals.

b/ Within five (05) working days after detecting signs of violation, a tax office shall request in writing an organization, household or individual to give explanations.

*According to Article 35 Decree 51Principles and procedures for handling violations, extenuating and aggravating circumstances, enforcement, and time limit for enforcing sanctioning decisions

1. Principles for handling violations, sanctioning procedures, extenuating and aggravating circumstances, and statute of limitations for sanctioning administrative violations related to invoices specified in this Decree comply with the Ordinance on Handling of Administrative Violations.

2. The specific fine for an act of violation involving no aggravating or mitigating circumstance is the average level in the fine frame specified for such act. Such average level shall be determined by halving the total of the minimum and maximum levels. For an act of violation involving an aggravating or extenuating circumstance, an increased or reduced average level will apply, which shall be determined by halving the total of the minimum and average levels or the total of the maximum and average levels. For an act of violation involving more than one aggravating or extenuating circumstance, the maximum or minimum level will apply. I or an act of violation involving both aggravating and extenuating circumstances, they shall be offset against each other for the application of the fine frame on the principle that one aggravating circumstance shall be offset against one extenuating circumstance.

3. Organizations and individuals that are sanctioned under this Decree shall comply with sanctioning decisions within 10 days after receiving such decisions from competent agencies. Sanctioned organizations and individuals that fail to voluntarily comply with sanctioning decisions shall be coerced to comply with them under the Ordinance on Handling of Administrative Violations.

*According to Article 33 Decree 51:Sanctioning of violations of regulations on the use of invoices when selling goods and services:

1. A fine of between VND 200.000 and VND one million shall be imposed for acts of failing to fully fill in pre-printed contents when making out invoices or filling in them in contravention of Article 15 of this Decree.

2. A fine of between VND one million and VND 5 million shall be imposed for acts of:

a/ Making out invoices without handing them to buyers;

b/ Failing to make lists or make out general invoices under Clauses 1 and 2. Article 16 of this Decree.

3. A fine of between VND 2 million and VND 10 million shall be imposed for acts of:

a/ Failing to destroy under this Decree issued invoices which are not yet made out or no longer valid;

b/ Failing to report under regulations on invoices which have been used.

4. A fine of between VND 3 million and VND 15 million shall be imposed for acts of making out invoices with serial numbers not in ascending order.

5. A fine of between VND 5 million and VND 20 million shall be imposed for acts of failing to make out under this Decree invoices when selling goods or services valued at over VND 200.000 for buyers. At the same time, business organizations or individuals shall make out and hand invoices to buyers.

6. A fine of between VND 5 million and VNI) 25 million shall be imposed for acts of:

a/ Making out invoices with different contents in their copies;

b/ Failing to report on the loss of issued invoices which are not yet made out or of made-out invoices which are not yet handed to customers.

7. A fine of between VND 12 million and VND 60 million shall be imposed for acts of making out unlawful invoices.

8. A fine of between VND 15 million and VND 75 million shall be imposed for acts of giving away or selling issued invoices which are not yet made out.

9. A fine of between VND 20 million and VND 100 million shall be imposed for acts of making out false invoices.

In addition to fine, violators of Point a. Clause 3 of this Article shall destroy issued invoices which are not yet made out or no longer valid.

According to Article 2,VAT Law, value added tax is imposed on the added value of goods or services arising during the process from manufacture and distribution up to final consumption.

 VAT is an indirect taxin which the taxpayerand the person bearing the tax burden are not the same. The person that consumes goods and/or service bears the tax burden (the buying price has VAT included), but the taxpayer is the seller or producer of goods or service. In principle, indirect taxes are imposed on everyone at the same rate, regardless of the income of the tax bearer, which means a high-income person and a low-income person have to pay the same amount of tax if they purchase the same goods or service. For example, in case a television set costs 2,000,000 Dongsexcluding VAT and VAT tax rate is 10%, so the amount of VAT equals 200,000 Dongs, so the total selling price will be 2,200,000 Dongs.

When buying a television set, everyone has to pay the same price of 2,200,000 Dongs, regardless of his/her income. He /she has actually paid 200,000 dongs of VAT, but he/she does not care, or even doesn’t  know that he/she has paid tax.

VAT may be imposed on all stages of the production and distribution, but is imposed only on the amount of added value in each stage. The total amount of VAT which will be collectedby tax authority is exactly the same amount of tax calculated based on the selling price paid by the end consumer.

Value added is the new value/additional value created in the process from production to final consumption. The total added value in all stages is equal to the value added of the output when the goods or service is sold to the final consumer.

For example, Bim Son cement company sells cement to a material company at 800,000 Dongs/ton excluding VAT. The material company sells it to a private retailing company at 850,000Dongs/ton excluding VATand this retailing company sells to a consumer at 1,000,000 Dongs/tonexcluding VAT.

The VAT amounts will be calculated and paid by different parties as follows:

- Bim Son cement company: 800,000Dongs * 10% = 80,000Dongs

- The material trading company: 850,000Dongs * 10% = 85,000Dongs. But it has already paid 80,000 Dongsfor VAT, so that they can deduct 80,000 Dong as VAT input and have to pay 5,000Dongs.

- The company can deduct 85,000 Dong and has to pay 15,000Dongs for VAT.

So VAT is calculated on the added value as follows:

The added value arised from whole selling activity is 50,000Dongs, so the amount of VAT will be 5,000Dongs. The added value arised from retail selling activity is 150,000Dongs, so the amount of  VAT is 15,000Dongs.

Therefore, the total VAT amount arised from production to final consumption will be 80,000 + 5,000 + 15,000 = 100,000Dongs/ton.

Article 4 of VAT Law stipulates that taxpayers for VAT will be organizations and individuals engaging in manufacturing and conducting business in VAT taxable goods and services and organizations and individuals importing VAT taxable goods.

 *** Article 2 of Decree 123/2008/ND-CP dated 8 December 2008 stipulates:

1. VATtaxpayers include organizations and individuals producing or trading in goods or services subject to VAT(referred to as business establishments) and organizations and individuals importing goods subject to VAT(referred to as importers).

2. Vietnam-based production and business organizations and individuals that purchase services (including services associated with goods) from foreign organizations without Permanent Establishments in Vietnam or overseas individuals not residing in Vietnam shall pay VAT.

Goods and services (including goods and services purchased from organizations and individuals overseas) used for the purposes of production, trading and consumption in Vietnam shall be subject to VAT.

 VAT is imposed on taxable goods and services, and the person who consumes the goods or service has to pay VAT, regardless of his/her income.

*Article 3 of VAT Law stipulates: Goods and services used for manufacturing, trading and consumption in Vietnam shall be the objects subject to value added tax.

*** Clause 1 Section I part A of Circular 129/2008/TT-BTC dated 26 December 2008 that guides the implementation of some provisions in the VAT Law and Decree 123/2008/NĐ-CP dated  08 December 2008 of the Government that provides detailed guidance on implementation of some articles in the VAT Law stipulates as follows regarding taxable objects:

*In clauses 1, 2 and 3 of Article 22 of the Law on Tax Administration, the timeline for tax registration is stipulated as follows:

(a)  Taxpayers shallregister within ten working days afterbeing granted business registration certificates or establishment and operation licenses or investment certificates;Or Commencing the business operation, for organizations not subject to business registration, or households and individuals subject to business registration but having not been granted business registration certificates;

(b)     The responsibility for withholding and paying taxes on behalf of taxpayers or the need to apply for tax refund arises.

***Clause 1, section I part II of Circular 85/2007/TT-BTC stipulates as follows on timeline for tax registration and application for TIN:

Business entitiesobliged to registershall proceedtax registration according to a pre-set form with tax agencies within 10 working days from the date:

- When they are granted business registration certificates or establishment and operation licenses or investment certificates;

- They commence their business operation, if they have no business registration certificate, or their tax liabilities arise, if they are non-business organizations or individuals;

- The organizations or individuals shallwithhold and pay taxes on behalf of taxpayers ;

- They start performing the task of collecting taxesprescribed by law;

- Their personal income tax liabilities arise (the date they receive their incomes);

- Refundable value-added tax amounts arise under the tax law, for project owners (or authorized representatives like work management units) and the main foreign contractors.