Dinh The Hung, "Scientific Commentary on the 2015 Penal Code Amended and Supplemented in 2017, Chapter XVIII: Crimes Infringing upon Economic Management Order", World Publishing House,
TAX EVASION UNDER VIETNAMESE CRIMINAL LAW
Concept of the crime
Taxes are the primary source of revenue for a country, representing mandatory contributions that individuals and organizations are required to make in accordance with legal regulations 1 Paying taxes is an obligation for businesses and all citizens, while tax evasion is an act strictly prohibited by law
In legal science, one perspective holds that tax evasion involves the use of fraudulent means to avoid paying taxes or to pay less than the required amount 2 Another perspective simply defines tax evasion as failing to pay taxes to the state as required by law 3 However, a more comprehensive definition is provided by Master Luong Huu Hai, who states that tax evasion is the act of using methods to avoid paying taxes, paying less than the required amount, or increasing the number of tax exemptions, reductions, deductions, or refunds 4 In Vietnamese positive law, legislators have not provided an official definition of the term "tax evasion," but behaviors considered as tax evasion are described and listed in the 2019 Tax Administration Law 5 and the 2015 Penal Code 6 Not all acts of tax evasion are subject to criminal prosecution and are considered crimes; depending on the nature and severity, they may be subject to administrative penalties or criminal prosecution
In the 2015 Penal Code, the crime of tax evasion falls under the group of crimes infringing upon the economic management order, specifically regulated in Chapter XVIII Crimes infringing upon the economic management order are defined as socially dangerous acts that harm the national economy, causing damage to the interests of the state, the legitimate interests of organizations, and citizens by violating state regulations on economic management 7 According to Dr Le Van Cam, tax evasion becomes a criminal offense when the act of tax evasion poses a danger to society and is committed
1 Le Son Tung (2021), “Nhận diện thủ đoạn của tội phạm trốn thuế và những vấn đề đặt ra đối với công tác phòng chống”, Journal of Legal Sciences, October 2021, p 41
2 Nguyen Mai Bo (2004), Pháp luật hình sự về các tội xâm phạm trật tự quản lí kinh tế, Legal Publishing House, Hanoi, p 119
3 Dinh Van Que (2005), Bình luận khoa học BLHS phần các tội phạm, Ho Chi Minh City Publisher, p 111
4 Luong Huu Hai (2023), “Tội trốn thuế trong Bộ luật Hình sự 2015 những hạn chế, vướng mắc và kiến nghị hoàn thiện”, https://tkshcm.edu.vn/toi-tron-thue-trong-bo-luat-hinh-su-nam-2015-nhung-han-che-vuong-mac-va- kien-nghi-hoan-thien/, Access: 23/02/2025
5 Refer to Article 143 of the 2019 Law on Tax Administration
6 Refer to Article 200 of the 2015 Penal Code
7 Hanoi Law University (2022), Giáo trình luật hình sự Việt nam phần các tội phạm quyển 1, Legal
10 by a person with criminal responsibility capacity with intentional fault 8 Currently, there is no official regulation defining the concept of "tax evasion crime." Nevertheless, based on the above analysis, in my perspective, the crime of tax evasion is:
“The crime of tax evasion refers to intentional acts by individuals with criminal responsibility capacity or legal entities using fraudulent means to avoid paying taxes, pay less than the required amount, or increase the amount of tax exemptions, reductions, deductions, or refunds, thereby causing harm to the interests of the state, the legitimate interests of organizations, and citizens, and infringing upon the national economy to a degree severe enough to warrant criminal prosecution as stipulated by law.”
Elements of the crime
The subject of the crime of tax evasion falls into two categories: individuals aged
16 or older with criminal liability capacity and commercial legal entities that meet the conditions stipulated in Article 75 of the Penal Code 9
For individuals, Vietnamese law establishes the basis for criminal liability as specific persons who meet the conditions prescribed by law, specifically: (1) having the capacity to perceive and control their actions (referred to as fault capacity); and (2) being of the age to bear criminal responsibility A person who satisfies both conditions is considered to have criminal liability capacity 10 The first condition is the ability to recognize the socially dangerous nature of their actions and to control such actions If a person commits a socially dangerous act but does not recognize its danger or cannot control the act, they are deemed not to have criminal liability capacity 11 According to Article 21 of the 2015 Penal Code, which regulates the state of lacking criminal liability capacity, a person who commits a socially dangerous act while suffering from a mental illness or another condition that deprives them of the ability to perceive or control their actions is not criminally liable In addition to the state of lacking criminal liability capacity, Vietnamese criminal law also recognizes the state of limited criminal liability capacity This refers to cases where, due to illness, the subject's ability to perceive or
8 Le Van Cam (2005), Những vấn đề cơ bản trong khoa học Luật Hình sự (Phần chung), VNU Publishing House, Hanoi, p 297
9 Le Van Cam, Trinh Tien Viet (2023),Giáo trình Luật Hình sự Việt Nam Phần các tội phạm Tập 1, VNU Publishing House, p 393
10 Dinh Thi Kim Hanh (2017), Chủ thể của tội phạm theo pháp luật Hình sự Việt Nam từ thực tiễn thành phố Đà Nẵng, Vietnam Academy of Social Sciences, Hanoi
11 Trinh Van Toan (2017), “Cơ sở lý luận và thực tiễn của việc quy định những trường hợp loại trừ trách nhiệm hình sự trong Bộ luật hình sự 2015”, https://soxaydung.daklak.gov.vn/co-so-ly-luan-va-thuc-tien-cua-viec- quy-dinh-nhung-truong-hop-loai-tru-trach-nhiem-hinh-su-trong-bo-luat-hinh-su-2015-227.html, Access 25/02/2025
11 control their actions is limited Such individuals are not entirely exempt from fault, but their limited criminal liability capacity affects the degree of fault Their fault is considered limited, and therefore, Vietnamese criminal law treats limited criminal liability capacity as a mitigating circumstance for criminal responsibility This circumstance is stipulated alongside others in Article 51 of the Penal Code 12 Regarding the second condition, the age for criminal liability is specified in Article 12 of the Penal Code According to Clause
1 of Article 12: "Persons aged 16 or older must bear criminal responsibility for all crimes, except for crimes for which this Code provides otherwise." Clause 2 of Article 12 stipulates that persons aged 14 or older but under 16 are only criminally liable for the crimes of murder, intentional infliction of bodily harm or damage to the health of others, rape, rape of a person under 16, sexual assault of a person aged 13 to under 16, robbery, and kidnapping for the purpose of property appropriation; as well as for very serious or particularly serious crimes specified in Articles 123, 134, 141, 143, 144, 150, etc 13 Since tax evasion is not among the crimes listed in Clause 2 of Article 12, and there are no other provisions mentioned in Clause 1 of Article 12, the age for criminal liability for tax evasion is 16
For legal entities, according to the 2015 Penal Code, the subject of a crime is not limited to individuals; for certain crimes, the subject may also include commercial legal entities 14 According to Clause 1 of Article 2 of the Tax Administration Law, taxpayers include: a) organizations, households, business households, and individuals paying taxes as prescribed by tax laws; b) organizations, households, business households, and individuals paying other state budget revenues; and c) organizations and individuals withholding taxes Therefore, the subject of tax evasion may include organizations engaged in business or trading activities for profit, particularly enterprises and economic organizations 15 However, not all commercial legal entities can be subjects of tax evasion; they must also meet the conditions for bearing responsibility for tax evasion According to Clause 1 of Article 75 of the Penal Code, a commercial legal entity is criminally liable only if the following conditions are met: a) the criminal act is committed in the name of the commercial legal entity; b) the criminal act is committed for the benefit of the
12 Huynh Van Thong (2023), “Tìm hiểu về “năng lực trách nhiệm hình sự” của cá nhân trong bộ luật hình sự Việt Nam 2015 (sửa đổi, bổ sung 2017)”, https://truongchinhtri.binhthuan.dcs.vn/Trang-chu/post/220451/tim-hieu- ve-nang-luc-trach-nhiem-hinh-su-cua-ca-nhan-trong-bo-luat-hinh-su-viet-nam-2015-sua-doi-bo-sung-2017, Access 25/02/2025
13 Refer to Clause 2, Article 12 of the 2015 Penal Code (amended in 2017)
14 The Supreme People's Procuracy of Vietnam, (2016), Tài liệu tập huấn bộ luật hình sự năm 2015, Hanoi, p 89
15 Huong My (2024), “Dấu hiệu pháp lý của tội trốn thuế?”, https://baovephapluat.vn/tu-van-phap-luat/luat- su-cua-ban/dau-hieu-phap-ly-cua-toi-tron-thue-160169.html, Access 25/02/2025
12 commercial legal entity; c) the criminal act is committed under the direction, management, or approval of the commercial legal entity; and d) the statute of limitations for criminal prosecution specified in Clauses 2 and 3 of Article 27 of this Code Additionally, Vietnamese criminal law recognizes tax evasion under Article 200 of the
2015 Penal Code as falling within the scope of criminal liability for commercial legal entities 16
1.2.2 Actus Reus of the crime (Objective aspect of a crime)
The objective aspect of a crime refers to the external manifestation of the crime, including the actions or events that occur or exist in the external world 17 The objective aspect encompasses: acts, consequences, the causal relationship between the dangerous act and its consequences, and other factors such as the time, place, tools, and means used to commit the crime Among these, the most critical element is the socially dangerous act, as a crime is essentially a socially dangerous act Other factors only serve to supplement and influence the nature and degree of danger posed by the act 18 The acts constituting the crime of tax evasion are outlined in Clause 1, Article 200 of the 2015 Penal Code (from Points a to h), including the following:
- According to Point a, Clause 1, Article 200 of the 2015 Penal Code: “Failure to submit the application for tax registration; failure to submit tax declaration; failure to submit tax declarations on schedule as prescribed by law.” According to Clause 1, Article
143 of the 2019 Tax Administration Law (amended in 2024), submitting tax declaration documents more than 90 days after the deadline or the expiration of an extended deadline is considered tax evasion The deadlines for tax payment and extensions are specified in Articles 55 and 62 of the 2019 Tax Administration Law (amended in 2024) Specifically, under Clause 3, Article 62, extensions are granted:
For up to 2 years from the tax payment deadline in cases of material damage directly affecting production or business due to force majeure events 19 Taxpayers suffer material damage due to force majeure cases such as natural disasters, disasters, epidemics,
16 Refer to Clause 1, Article 76 of the 2015 Penal Code (amended in 2017)
17 Hanoi Law University (2020), Giáo trình luật Hình sự Việt Nam (Phần chung), People's Public Security Publishing House, Hanoi, p 116
18 Dinh Van Que (2021), “Cấu thành tội phạm và các giai đoạn thực hiện tội phạm: Những vấn đề lý luận và thực tiễn”, https://lsvn.vn/cau-thanh-toi-pham-va-cac-giai-doan-thuc-hien-toi-pham-nhung-van-de-ly-luan-va-thuc- tien-a14612.html, Access 27/02/2025
19 Refer to point a, clause 3, Article 62
13 fires, unexpected accidents or other force majeure cases according to Government regulations 20
For up to 1 year from the tax payment deadline if the taxpayer must cease operations due to relocation of production or business facilities as required by competent authorities, affecting business results 21
- According to Point b, Clause 1, Article 200 of the 2015 Penal Code: “Failure to record revenues related to the determination of tax payables in accounting book” This act is also recognized as tax evasion under Clause 2, Article 143 of the 2019 Tax Administration Law (amended in 2024) This behavior is common among small and medium-sized enterprises and business households seeking to evade taxes, as they are not subject to mandatory audits such as Foreign-invested enterprises; Public companies, securities issuing organizations, and trading organizations; under Article 37 of the 2011 Independent Audit Law (amended by the 2015 Law on Fees and Charges) 22
Penalties prescribed for Tax evasion
31 Tran Dinh Hai (2020), “Bàn về lỗi cố ý gián tiếp hay lỗi vô ý vì quá tự tin dưới góc độ tâm lý tội phạm”, https://tapchitoaan.vn/ban-ve-loi-co-y-gian-tiep-hay-loi-vo-y-vi-qua-tu-tin-duoi-goc-do-tam-ly-toi-pham?, Access 27/02/2025
32 Nguyen Phi Hung (2022) “Lỗi cố ý gián tiếp theo quy định của Bộ luật Hình sự năm 2015”, https://lsvn.vn/loi-co-y-gian-tiep-theo-quy-dinh-cua-bo-luat-hinh-su-nam-20151663516666-a124065.html, Access 27/02/2025
33 Luong Huu Hai (2023), “Tội trốn thuế trong Bộ luật Hình sự 2015 những hạn chế, vướng mắc và kiến nghị hoàn thiện”, https://tkshcm.edu.vn/toi-tron-thue-trong-bo-luat-hinh-su-nam-2015-nhung-han-che-vuong-mac- va-kien-nghi-hoan-thien/, Access 23/02/2025
For individuals, the law stipulates three main penalty brackets and one supplementary penalty bracket Specifically, these are as follows:
- According to Clause 1, Article 200 of the 2015 Penal Code (amended and supplemented in 2017), any person who commits any of the following acts of tax evasion with an amount of tax evaded from VND 100,000,000 to under VND 300,000,000, or with an amount of tax evaded under VND 100,000,000 despite the fact that he/she previously incurred a civil penalty for the tax evasion or has a previous conviction for any of the offences specified in Article 188, 189, 190, 191, 192, 193, 194, 195, 196, 202, 248,
249, 250, 251, 252, 253, 254, 304, 305, 306, 309 and 311 hereof which has not been expunged, shall be liable to a fine of from VND 100,000,000 to VND 500,000,000 or face a penalty of 03 - 24 months' imprisonment
- According to Clause 2, Article 200 of the 2015 Penal Code (as amended and supplemented in 2017), this offense committed in any of the following cases shall carry a fine of from VND 500,000,000 to VND 1,500,000,000 or a penalty of 01 - 03 years' imprisonment: a) The offense is committed by an organized group; b) The amount of tax evaded is from VND 300,000,000 to under VND 1,000,000,000; c) The offense involves the abuse of the offender's position or power; d) The offense has been committed more than once; đ) Dangerous recidivism
Regarding organized crime, Article 17 of the 2015 Penal Code (as amended and supplemented in 2017) defines organized crime as a form of complicity where there is close coordination between two or more individuals who intentionally commit a crime This is a complex form of complicity, where offenders have specific roles, either through a detailed and clear plan or an implicit division of responsibilities, with each person accountable for their assigned task In other words, in an organized crime, each participant has a specific role, and they collaborate to commit and conceal the crime 34 In cases of tax evasion, if the offense is committed in an organized manner, it qualifies as an aggravating factor, leading to harsher penalties under Clause 2, Article 200 of the 2015 Penal Code (as amended in 2017)
Regarding the aggravating circumstance of abusing one's position or authority, this is a factor that increases the penalty bracket for the crime of tax evasion Individuals with positions or having authority may exploit their power to commit tax evasion more easily,
34 Nguyen Nguyen (2022), “Quy định về chuẩn bị phạm tội, phạm tội có tổ chức, che dấu tội phạm theo Bộ luật Hình sự năm 2015 (sửa đổi, bổ sung năm 2017)”, https://pbgdpl.haiphong.gov.vn/Cong-tac-PBGDPL/Quy-dinh- ve-chuan-bi-pham-toi-pham-toi-co-to-chuc-che-dau-toi-pham-theo-Bo-luat-Hinh-su-nam-2015-sua-doi-bo-sung- nam-2017-93818.html, Access 28/02/2025
19 making it more difficult for authorities to detect and address such violations compared to ordinary individuals Therefore, this is recognized as an aggravating circumstance that elevates the severity of the offense
Regarding the aggravating circumstance of committing the crime two or more times, Joint Circular No 17/2007/TTLT-BCA-VKSNDTC-TANDTC-BTP provides the following clarification: “The circumstance of "committing the crime multiple times" as stipulated in Clause 2 of Articles 193, 194, 195, 196, 197, 198, 200, and 201 of the Penal Code is understood as having committed the crime two or more times, where each instance meets the elements of the crime as defined in Clause 1 of the corresponding article Additionally, none of the prior offenses should have been prosecuted or subject to criminal liability, and the statute of limitations for prosecution must not have expired for any of the offenses.”
The aggravating circumstance of dangerous recidivism is understood as the case wherein an individual has been convicted of a very serious crime or particularly serious crime committed intentionally, has not had their criminal record expunged, and subsequently commits another very serious or particularly serious crime intentionally, or has previously been convicted of recidivism, has not had their criminal record expunged, and intentionally commits another crime 35 In this regard, recidivism, as stipulated in Clause 1, Article 53 of the 2015 Penal Code (amended and supplemented in 2017), recidivism is a situation in which a person who has a previous conviction for the same offense which has not been expunged deliberately commits a very serious crime or involuntarily commits an extremely serious crime Since tax evasion is not classified as a very serious or particularly serious crime, the aggravating circumstance of dangerous recidivism in this context shall apply to cases wherein the offender has previously been convicted of recidivism, has not had their criminal record expunged, and intentionally commits tax evasion again
- According to Clause 3, Article 200 of the 2015 Penal Code (as amended and supplemented in 2017), If the evaded tax is VND 1,000,000,000 or over, the offender shall be liable to a fine of from VND 1,500,000,000 to VND 4,500,000,000 or face a penalty of 02 - 07 years' imprisonment
- According to Clause 4, Article 200 of the 2015 Penal Code (as amended and supplemented in 2017), The offender might also be liable to a fine of from VND
35 Refer to See Clause 2, Article 53 of the 2015 Penal Code (amended and supplemented in 2017)
20,000,000 to VND 100,000,000, be prohibited from holding certain positions or doing certain works for 01 - 05 years, or have all or part of his/her property confiscated
This pertains to the supplementary penalties for the crime of tax evasion Supplementary penalties constitute a component of the state's system of measures to address criminal behavior, playing a supportive, reinforcing, and enhancing role in the effectiveness of the principal penalties Although supplementary penalties do not carry the same decisive significance as principal penalties, they still play a positive role in punishing and rehabilitating offenders 36 Although supplementary penalties do not carry the same decisive significance as principal penalties, they still play a positive role in punishing and rehabilitating offenders Clause 3, Article 32 of the 2015 Penal Code (amended and supplemented in 2017) stipulates: "The offender shall incur only one primary sentence for a crime committed and possibly one or more additional sentences." Vietnamese criminal law allows courts to impose one or more supplementary penalties alongside the principal penalty, provided that such imposition is based on the nature and degree of social danger of the criminal act, the personal circumstances of the offender, and any aggravating or mitigating factors If the principal penalty is deemed sufficient to punish and rehabilitate the offender, supplementary penalties may not be applied 37 Supplementary penalties are categorized as either mandatory or discretionary For the crime of tax evasion, supplementary penalties are discretionary, as the law stipulates that the offender "may" be subject to a fine, prohibition from holding certain positions, prohibition from practicing certain professions or engaging in specific activities, or confiscation of part or all of their property 38 In cases where the law provides for discretionary supplementary penalties, the court is responsible for deciding whether or not to impose such penalties 39 The supplementary penalties stipulated in Clause 4, Article
200 of the 2015 Penal Code (amended and supplemented in 2017) include the following:
+ The offender is prohibited from holding certain positions or doing certain works for 01 - 05 years The purpose of this provision is to reinforce and enhance the effectiveness of the principal penalty while preventing the offender from exploiting or abusing their position, profession, or specific tasks to commit further crimes
36 Nguyen Quang Hien (2014), “Hình phạt bổ sung: Thực trạng và kiến nghị”, Legal Profession Magazine, Issue 3, 2014, p 32
37 Le Van Hao (2020), Các hình phạt bổ sung theo quy định của Bộ luật Hình sự năm 2015, Hanoi Law University, Hanoi, p 11
38 Refer to Clause 4, Article 200 of the 2015 Penal Code (amended and supplemented in 2017)
39 Le Van Hao (2020), Các hình phạt bổ sung theo quy định của Bộ luật Hình sự năm 2015, Hanoi Law University, Hanoi, p 12
+ The offender has all or part of his/her property confiscated The purpose of the penalty of confiscation of property is to recover assets obtained through unlawful gains, thereby depriving the offender of favorable economic conditions that could enable them to re-offend in the future and pose a danger to society This measure also serves to educate offenders about the importance of respecting the law According to Article 45 of the 2015 Penal Code (amended and supplemented in 2017), confiscation of property shall only be imposed upon people who are convicted of serious crimes, very serious crimes, or extremely serious crimes against national security, drug-related crimes, corruption, or other crimes prescribed by this Code Additionally, confiscation of property shall be so carried out that the convict and his/her family are still able to carry on their life
TAX EVASION UNDER SOME COUNTRIES’ CRIMINAL LAW
Tax Evasion in the Criminal Legislation of Various Nations
France and the United States are selected for comparative analysis in this chapter France represents the civil law tradition, characterized by a codified legal framework that parallels Vietnam’s statutory system, offering insights into harmonizing domestic legislation with international standards In contrast, the U.S exemplifies the common law system, emphasizing judicial precedent and prosecutorial discretion, which underscores the role of dynamic enforcement mechanisms in deterring tax evasion By juxtaposing these divergent legal paradigms, this analysis seeks to synthesize the rigidity of codified statutes with the adaptability of case law, thereby proposing actionable recommendations for Vietnam’s legal and institutional reforms
2.1.1 Tax Evasion under the provisions of U.S Criminal Law
The Internal Revenue Code of 1986 (IRC) is the primary source of Federal tax law in the United States It is codified in statute as Title 26 of the United States Code, the official "consolidation and codification of the general and permanent laws of the United States," 45
The federal crime of tax evasion is defined under Section 7201 of the Internal Revenue Code (26 U.S.C § 7201):
Any person who willfully attempts in any manner to evade or defeat any tax imposed by this title or the payment thereof shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, shall be fined not more than
$100,000 ($500,000 in the case of a corporation), or imprisoned not more than 5 years, or both, together with the costs of prosecution 46
Moreover, Cornell University Law School defines tax evasion as the use of illegal means to avoid paying taxes, which can involve an individual or corporation misrepresenting their income to the Internal Revenue Service (IRS) 47 IRS is a division of the U.S Department of the Treasury and is responsible for determining, assessing, and
45 United States Congress, “How Our Laws Are Made”, https://www.congress.gov/help/learn-about-the- legislative-process/how-our-laws-are-made, Access 02/03/2025
46 Title 26 Subtitle F Chapter 75 Subchapter A Part I Section 7201 United States Code
47 Cornell University Law School (2015), “Tax Evasion: An Overview”, https://www.law.cornell.edu/wex/tax_evasion, Access 02/03/2025
26 collecting domestic federal taxes in the United States 48 This concept has clarified the concept defined by Dictionary.com: “Tax evasion is the nonpayment of taxes, as through the failure to report taxable income” 49 The use of the word “illegal” is very important because it distinguishes “tax avoidance” and “tax evasion” While “tax avoidance” refers to the use of legal methods to minimize the amount of income tax owed by an individual or a business and is a legal strategy that many taxpayers use to lower their tax bills, “Tax evasion” relies on illegal methods such as underreporting income and falsifying deductions 50
From the above analysis, tax evasion as a crime can be interpreted:
Tax evasion crime is the use of illegal means with willful attempts to evade or defeat paying taxes imposed by Federal law by an individual or corporation and will result in serious consequences from financial penalties to criminal conviction and imprisonment
The criminal justice system in America carefully defines exactly what a crime is The system also takes care in defining what must be proven to convict a person of a crime Almost every crime has four basic elements: A prohibited act (Actus Reus); Criminal intent (Mens rea); Concurrence of the act and the intent (concurrence of Actus Reus and Mens rea); and Causation 51 Concurrence in criminal law occurs when there is an intention to commit the crime and voluntary criminal action, known as actus reus and mens rea , respectively As such, it is dependent upon the guilty state of mind and the guilty act coinciding In other words, the concurrence of act and intent must be present for concurrence in a criminal act to occur 52
In tax evasion crime, in order for the government to obtain a conviction for tax evasion under section 7201, it must establish the following three elements: An attempt to evade or defeat a tax or the payment of a tax; An additional tax due and owing and Willfulness 53 This is entirely consistent with the elements of the crime because: An
48 Internal Revenue Service, “About IRS”, https://www.irs.gov/about-irs, Access 02/03/2025
49 Dictionary.com, “Tax evasion”, https://www.dictionary.com/browse/tax-evasion, Access 02/03/2025
50 Julia Kagan (2024), “What Is Tax Avoidance? Types and How It Differs From Tax Evasion”, https://www.investopedia.com/terms/t/tax_avoidance.asp, Access 02/03/2025
51 Marshall Croddy, Bill Hayes (2012), “Criminal Justice in America, fifth edition”, Constitutional Rights Foundation, p 10
52 France, S (2002), “The uncertain limits of recklessness in the criminal law”, Otago Law Review, 10(4),
631 https://www.austlii.edu.au/nz/journals/OtaLawRw/2002/4.pdf, Access 28/02/2025
53 U.S Department of Justice (2014), “8.00 Attempt to Evade or Defeat Tax”, Criminal Tax Manual, p.5 https://www.justice.gov/sites/default/files/tax/legacy/2014/11/06/CTM%20Chapter%208.pdf, Access 28/02/2025
27 attempt to evade or defeat a tax or the payment of a tax is “Actus Reus”; Willfulness is
“Mens rea”; An additional tax due and owing is part of “Causation” In addition to the above elements of a crime, the subject of the crime is equally important Correctly identifying the subject helps ensure that only individuals or organizations with full criminal capacity are prosecuted a) Subject of the crime
The subject of tax evasion under U.S law can be a legal entity or an individual 54
For individual subjects, regarding the age of criminal responsibility, 18 U.S.C §
5031 stipulates: “For the purposes of this chapter, a “juvenile” is a person who has not attained his eighteenth birthday ” This is a rule that applies to the federal judicial system, distinguishing between juveniles and adults While juveniles are typically tried in juvenile court, unless a juvenile case is transferred to adult court under 18 U.S.C § 5032, and a reduction in the sentence is considered, adults (age 18 and older) in the United States judicial system assume full criminal responsibility as independent citizens Regarding the mental state of the individual in criminal liability, under the Insanity Defense Reform Act of 1984 (18 U.S.C § 17), a defendant is not criminally responsible if, at the time of the offense, they suffered from a severe mental disease or defect that prevented them from understanding the wrongfulness of their actions An affirmative defense is a legal mechanism that allows a defendant to present evidence to prove circumstances that exempt or mitigate criminal liability, in this case demonstrating a serious mental illness or defect that prevented them from appreciating the nature and quality or wrongfulness of their actions 55 The defendant has the burden of proving the defense of insanity with clear and convincing evidence 56 However, 18 U.S.C § 17 also states: “mental disease or defect does not otherwise constitute a defense.” This provision makes it clear that mental illness in itself is not sufficient to excuse liability unless it affects the ability to perceive or control behavior Moreover, a criminal defendant does not have a constitutional right to present evidence of voluntary intoxication to negate the required mental state of a crime 57
For legal entities, according to the U.S Constitution, the provisions on criminal liability are decentralized to the states and are mainly based on the 1962 American Law Institute Model Penal Code Accordingly, only individuals who intentionally commit
54 26 U.S.C § 7201 prescribes fines and imprisonment for individuals and fines for corporations Thus, a tax evader under U.S law can be an individual or a legal entity
28 violations are prosecuted for criminal liability U.S law assigns criminal liability to legal entities through individuals with authority or assigned tasks, committing violations that benefit the legal entity; in other words, "legal entities are considered subjects that can be brought to trial and convicted for crimes committed by individual directors, managers, and even low-level employees".After the Court determines the motive for the crime, as well as the level of sincerity in remedying the consequences and cooperating in the investigation, the penalty applied to the legal entity committing the crime is a fine and the legal entity must be responsible for compensating the victims 58 A corporation, under 26 U.S.C § 7201, may be fined up to $500,000 if convicted of tax evasion b) Actus Reus
Actus Reus is the Latin word for “guilty act”, which refers to the physical act or conduct that constitutes a crime It is concerned with what the perpetrator actually did, rather than their mental state The law does not punish people for having criminal thoughts alone Actus Reus is wide in its reach It includes both positive acts and omissions, like failure to do a task that one is legally bound to do, resulting in any action that is prohibited by law 59
The Internal Revenue Code (IRC) forms the basis of all criminal tax prosecutions in the United States 60 The code covers various criminal acts by a taxpayer in Part I Subchapter A Chapter 75 Subtitle F Title 26, however, tax evasion is specifically prescribed in Section 7201 of this code The conduct that constitutes tax evasion under 26 U.S.C § 7201 is: “in any manner to evade or defeat any tax imposed by this title”
In addition to legal provisions, to determine the acts constituting the crime of tax evasion under 26 U.S.C § 7201, it is necessary to consider relevant case law U.S law is built on the foundation of English law, so U.S case law also has the basic characteristics of English case law, such as recognizing case law as a legitimate source of law in addition to written law 61 In the United States legal system, courts rely on both statutory law and case law to determine whether an act constitutes a crime Regarding tax evasion, U.S statutory law broadly defines the offense under 26 U.S.C § 7201 as an attempt "in any
Lesson learned from International Practice
The criminal law of the United States and France regarding tax evasion contains many aspects that Vietnam can refer to in order to improve its legal system
The first aspect is the criminalization the acts of tax evasion This reflects a clear difference in the legal approach between countries, showcasing the policy philosophy and crime prevention objectives of each jurisdiction Specifically, some jurisdictions criminalize acts of non-compliance with tax procedures, such as intentionally failing to submit tax returns as required or creating multiple accounts In such cases, businesses or individuals are considered guilty of tax evasion, regardless of whether actual tax evasion occurred or the amount evaded In this situation, the court imposes appropriate penalties without determining the exact value of the evaded or avoided tax Meanwhile, in other jurisdictions, including Vietnam, tax violations are criminalized based on the actual amount of tax evaded or fraudulently avoided 158 Specifically, Vietnamese law regulates acts of tax evasion under Article 200 of the 2015 Penal Code (amended and supplemented in 2017) However, these acts are only considered tax evasion crimes if the evaded tax amount ranges from 100,000,000 VND to 300,000,000 VND In cases where the evaded tax amount is less than 100,000,000 VND, it is still considered tax evasion if the offender has previously been administratively sanctioned for tax evasion or has been convicted of this crime or one of the crimes specified in Articles 188, 189, 190, 191, 192, 193, 194,
195, 196, 202, 250, 251, 253, 254, 304, 305, 306, 309, and 311 of the 2015 Penal Code and has not had their criminal record expunged Thus, according to the 2015 Penal Code, tax law violations ranging from 100,000,000 VND to 300,000,000 VND are considered
156 Article 1741 CGI states: “for a period not exceeding three years from the taxation of income for the year following that of the conviction.”
157 Refer to paragraph 12 Article 1741 CGI
158 Nguyen Thi Huong (2024), “Cấu thành tội trốn thuế - Nhìn từ góc độ Luật học so sánh và thực tiễn áp dụng tại Việt Nam”, Law and Development Magazine https://phapluatphattrien.vn/cau-thanh-toi-tron-thue nhin-tu- goc-do-luat-hoc-so-sanh-va-thuc-tien-ap-dung-tai-viet-nam-d1237.html, Access 17/03/2025
52 tax evasion crimes 159 Under United States law, to establish a violation of 26 U.S.C §
7201 which provides for tax evasion, the following elements must be proven: An affirmative act constituting an attempt to evade or defeat a tax or the payment thereof; An additional tax due and owing; and Willfulness 160 At the same time, the provisions on tax evasion at 26 U.S.C § 7201 also do not require a minimum level of tax violation to be considered tax evasion, but based on intentional behavior (willfulness) of tax procedure violations such as not filing a return, destroying documents, or using virtual accounts is enough to constitute tax evasion 161 The criminalization of tax evasion in the United States, in my opinion, is built on the principle of "crime prevention" 162 , thus focusing on intentional tax violations rather than waiting for specific damages This approach reflects the unique legal philosophy of the United States, which places greater importance on protecting confidence in the tax system than simply calculating financial harm 163
Secondly, the addition and expansion of certain penalties involving the deprivation of rights for individuals aim to enrich the penalty system and individualize criminal responsibility Vietnam's criminal law on tax evasion stipulates: “Offenders may also be subject to a fine ranging from 20,000,000 VND to 100,000,000 VND, prohibition from holding certain positions, practicing certain professions, or performing certain jobs for a period of one to five years, or confiscation of part or all of their assets.” 164 It can be seen that Vietnam's penalties involving the deprivation of rights are mainly limited to professional restrictions and have little impact on fundamental civil rights In contrast, according to the French Tax Code (CGI) on tax fraud, any person convicted under this article may be deprived of civic, civil, and family rights, in accordance with the provisions set out in Articles 131-26 and 131-26-1 of the Criminal Code 165 Article 131-26 stipulates the rights that can be prohibited include: (1) The right to vote; (2) The right to
159 Nguyen Thi Huong (2024), “Cấu thành tội trốn thuế - Nhìn từ góc độ Luật học so sánh và thực tiễn áp dụng tại Việt Nam”, Law and Development Magazine https://phapluatphattrien.vn/cau-thanh-toi-tron-thue nhin-tu- goc-do-luat-hoc-so-sanh-va-thuc-tien-ap-dung-tai-viet-nam-d1237.html, Access 17/03/2025
160 U.S Department of Justice (2014), 8.00 Attempt to Evade or Defeat Tax, Criminal Tax Manual, p 5 https://www.justice.gov/tax/file/629241/dl?inline=, Access 17/03/2025
161 26 U.S.C § 7201: “Any person who willfully attempts in any manner to evade or defeat any tax imposed by this title or the payment thereof shall, in addition to other penalties provided by law, be guilty of a felony [ ]”
162 National Crime Prevention Council (2007), Crime prevention basics, Shawano County, https://www.co.shawano.wi.us/i/f/files/Crime%20Prevention%20Basics.pdf: “Crime prevention is a pattern of attitudes and behaviors directed at reducing the threat of crime and enhancing the sense of safety and security, to positively influence the quality of life in our society, and to develop environments where crime cannot flourish.”
163 Harvard Law Review (2015), The Role of Intent in Tax Crimes, Vol 128, No 7 In this article, the author states that: “By focusing on willfulness and affirmative acts, § 7201 shifts the legal focus from quantifying harm to punishing moral culpability, thereby safeguarding public trust in the tax system."
164 Refer to Clause 4 Article 200 Vietnam’s Penal Code
53 stand for election; (3) The right to hold a judicial office or to act as an expert witness before a court, or to represent or assist a party in legal proceedings; (4) The right to testify in court, except for making simple statements; (5) The right to serve as a guardian or curator 166 In addition, offenders under provisions from paragraphs 2 to 8 of Article 1741 of the French Tax Code (CGI) may also be deprived of the right to tax reductions or deductions on income tax or property tax as an additional penalty These penalties have a profound impact on the legal and social status of individuals, not only restricting their professional activities but also affecting their right to participate in democratic life As can be seen, French law has a more comprehensive and stringent system of deprivation of rights compared to Vietnam, focusing on sociomoral punishment rather than solely economic deterrence However, adopting this model in Vietnam requires careful consideration of legal-cultural compatibility, human rights principles, and the enforcement capacity of the judicial system
Thirdly, the subject of tax evasion can be a non-commercial legal entity Under Vietnamese law, in addition to the provisions in Clauses 1, 2, 3, and 4 specifying individuals as the subjects liable for the crime of tax evasion, currently Clause
5, Article 200 of the 2015 Penal Code only stipulates that the subject committing the crime of tax evasion is a commercial legal entity The content of this clause indicates that the legislature’s current stance is to only impose criminal liability for the crime of tax evasion on commercial legal entities, while not yet regulating criminal liability for non- commercial legal entities (e.g public non-business units engaged in activities that generate tax obligations) 167 According to Article 75 of the Vietnam Civil Code 2015: ”1
A commercial legal entity is a legal entity whose main objective is to seek profits and the profits are distributed to its members.” Meanwhile, Law on Public Employees 2015 stipulates that no public non-business units shall be established to perform only commercial, for-profit services So that public non-business units are not commercial legal entities Public non-business units are not commercial legal entities because their purpose of establishment is not to seek profits from business activities, however, they can still be taxable entities Under Law on Corporate Income Tax (CIT) No 14/2008/QH12, public non-business units engaged in business activities involving goods and services that generate taxable CIT income - provided they can determine revenue,
166 Refer to paragraphs 1 to 6 of Article 131-26 of French Penal Code
167 Nguyen Van Tuyen (2024), “Hành vi trốn thuế, tội trốn thuế trong pháp luật Việt Nam và một số kiến nghị”, Journal Of Legal Studies - Special Issue: 'Celebrating the 45th Anniversary of Hanoi Law University (1979 -
54 expenses, and taxable income - are required to pay CIT like ordinary enterprises 168 Specifically, point d, clause 1, Article 2 Law on Corporate Income Tax No 14/2008/QH12 prescribes: “1 Corporate income taxpayers are organizations engaged in production and business of goods and services with taxable income according to the provisions of this Law (hereinafter referred to as enterprises), including: d) Non-business units established pursuant to the law of Vietnam.” Therefore, tax evasion can occur without sanctions to punish it On the other hand, under French law, the French Tax Code stipulates that anyone (quiconque) who has fraudulently evaded or attempted to fraudulently evade tax shall be liable, regardless of the tax penalties imposed, to a five- year prison sentence and a fine of 500,000 euros, an amount which may be doubled the amount of the violation 169 The French term "quiconque" translates to "whoever" or
"anyone who" in English It is an indefinite pronoun that refers to any person without exception, including non-commercial legal entities Furthermore, Article 121-2 of the French Penal Code stipulates: “Legal persons, excluding the State, are criminally liable [ ] for offences committed on their behalf by their bodies or representatives.” Therefore, under French law, legal entities in general, whether commercial or non-commercial, can be held criminally liable To overcome the limitations and shortcomings of Vietnamese law, lawmakers can amend and supplement the provisions of Article 200 of the 2015 Penal Code (amended and supplemented in 2017) in the direction of clearly defining the criminal prosecution of non-commercial legal entities 170