The Ministry of Finance proposes adding Tax investigation function

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Many countries have assigned tax investigation functions to Tax administration agencies as investigation of criminal procedure.

In the Draft Proposal for the revised Law on Tax Administration according to the Ministry of Finance, international experience showed that many countries assigned the tax investigation function to the Tax administration agencies as the investigation of Criminal procedure. In case there were signs of criminal offenses to the extent of criminal prosecution, based on the investigation results, the Tax administration agencies shall apply measures to collect the maximum tax amounts which were evaded and defrauded, and simultaneously transfer the case to competent authorities to investigate in accordance with the provisions of the Criminal Procedure Law. Some countries organized Tax police, Tax court (such as the US, Russia and etc). Meanwhile, in Vietnam, the Tax authority has not been assigned such function.

Explaining this function, the draft specifies, in essence, the tax investigation is the Tax authority implement its right of legal proceeding on tax for taxpayers who intentionally shirk their obligations to the State budget (Tax evasion, Tax fraud) for the purpose of self-interest. The scope of investigation is the cases of suspected continuously and collusively tax evasion (including corruption).

The competence of investigation authority is to inspect without prior notice to the taxpayer and request and interrogate the taxpayer and related parties. Tax payer is allowed to use lawyer or representative during the investigation.

The representative of Ministry of Finance emphasized that national experience showed that many countries assigned tax investigation function to Tax administration authority such as criminal investigation. Tax investigators had right to request, inspect, seize and examine and distrain relevant documents and books to protect initial evidences. In the world, there were over 80 countries, in which many Asean countries set up tax investigation units.

The draft quoted assessment by the Japanese tax expert stating that the evidence relationships in taxation were very different from normal crime cases, and therefore required special experience and knowledge to collect evidence and evaluate the value of the evidence. The purpose of a tax investigation was to prosecute subjects who deliberately evade taxes. For voluntary investigations, Tax investigators had the right to question, inspect and seize. For the case of mandatory investigations, Tax investigators had the right to inspect and destrain the relevant books and documents in order to protect the initial evidence and co-ordinate with the Public security agency and the Procuracy agency for criminal prosecution and prevention of violation.

Therefore, the drafting agency has proposed adding in the draft the content of the competence of the Tax authority to request the relevant agencies, organizations and individuals to provide information and documents to serve the examination, inspection, investigation, verification of tax law violation acts and tax evasion acts. In addition, the Tax authority also has the right to require taxpayers to provide documents to verify when there are basis to believe that taxpayers have signs of tax law violations or tax evasion.

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The Ministry of Finance also proposed adding more power to Tax authorities and Tax officers to implement measures to prevent and fight against and stop tax law violations and tax evasion. "Where there are basics to believe that there are acts of tax law violation, tax evasion, heads of examination teams, heads of inspection teams, heads of sub-departments, and directors shall have right to seal goods, warehouses, dossiers and documents, temporarily detain people and escort the offenders. The order and procedures for detaining people and escorting offenders shall comply with the provisions of the Law on Handling of Administrative Violations " the draft stated.

Particularly, when detecting acts of tax law violation up to the level of criminal prosecution, Tax authority shall have the competence to prosecute the cases, prosecute the defendant, conduct investigation activities according to the provisions of the Criminal Procedure Code and the Law on Organization of Criminal Investigation Bodies.