Declaring a wrong HS code on a customs declaration is one of the most common — and most expensive — violations by import-export businesses, because the HS code determines the duty rate. The penalty depends on the consequence: a wrong code with no tax impact, a wrong code causing a tax shortfall, or a wrong code treated as tax evasion. This article analyzes the penalty framework under the currently effective instruments.
1. The applicable penalty instrument: Decree 169/2026/ND-CP
Decree 169/2026/ND-CP (issued 15/5/2026, effective 01/7/2026) governs administrative penalties in the customs sector, replacing Decree 128/2020/ND-CP and Article 2 of Decree 102/2021/ND-CP (clause 2, Article 38; transitional provisions in Article 39: violations committed before 01/7/2026 are handled under Article 39).
Important warning: all older articles and newsletters citing Decree 128/2020 are outdated since 01/7/2026. Only Decree 169/2026 applies to new violations.
2. Wrong HS code with no tax impact
Decree 169/2026 has removed the standalone violation of “misdeclaring the code of taxable imported goods without affecting the tax payable” (previously fined VND 1–2 million). As a result, a wrong HS code with no tax impact may not be penalized under the misdeclaration rules — but if the wrong code triggers a breach of goods-management policies (licenses, specialized inspection, prohibited goods, etc.), penalties still apply under the corresponding provisions (Articles 16–23).
Businesses should therefore not assume that “a wrong code with no tax impact is definitely penalty-free” — the management policy applicable to the goods must also be checked.
3. Wrong code causing a tax shortfall: 10% or 20%?
Misdeclaring quantity, goods name, quality, customs value, goods code, duty rate or tax level, causing a shortfall in tax payable or an increase in exempted/reduced/refunded/uncollected tax, is penalized under Article 10 of Decree 169/2026/ND-CP:
- 10% fine on the understated tax — where the taxpayer voluntarily discovers and makes a supplementary declaration in the cases listed in clause 2, Article 10 (after customs announces a direct dossier examination for goods under clearance; after 60 days from clearance but before a post-clearance inspection/audit decision; after the supplementary-declaration deadline for finalization reports but before an inspection decision);
- 20% fine on the understated tax — in the cases listed in clause 3, Article 10 (detected by customs during clearance; detected during post-clearance inspection/audit; failure to supplement the customs value where detected; voluntary supplementary declarations beyond concluded inspection/audit findings).
In addition to the fine, the business must pay the full understated tax (clause 5, Article 10) plus late-payment interest under the Tax Administration Law 108/2025/QH15 (effective 01/7/2026). Note: the 10%/20% is calculated on the understated tax amount (the difference), not on the goods value.
Caution: each article number, fine level and condition above should be checked directly against the full text of Decree 169/2026 (particularly clauses 2 and 3 of Article 10; clause 7 of Article 9; Article 39 on transition; Article 4 on organizational vs. individual fines) before applying to a specific case.
4. Failure to voluntarily remedy → treated as tax evasion
Violations under points b, c, d of clause 3, Article 10 where the violator does not voluntarily pay in full the tax due before the administrative-violation record is drawn up are penalized under point c, clause 1, Article 15 of Decree 169/2026 (clause 4, Article 10) — i.e., moved into the tax-evasion penalty frame.
5. When a wrong HS code counts as tax evasion: 1–3x fines
Under Article 15 of Decree 169/2026/ND-CP, misdeclaring the code, duty rate or tax level counts as tax evasion where the individual or organization had already been guided by the Ministry of Finance or the customs authority on the code, duty rate or tax level for goods with the same name, code, duty rate and tax level as the violating goods. Forms of guidance (clause 5, Article 15) include: (a) guidance documents of the Ministry of Finance; (b) classification analysis notices or advance determinations of code/duty rate/tax level by a competent customs authority; (c) tax imposition decisions or administrative-penalty decisions on prior misdeclaration of the code/duty rate/tax level of those goods.
Fine levels (clause 2, Article 15): 01x the evaded tax (no aggravating circumstances); each aggravating circumstance adds 0.2x, up to a maximum of 03x (where not criminally prosecuted). The full evaded tax must also be paid (clause 3, Article 15).
Practical takeaway: once a guidance document or advance ruling on the code exists and is ignored, the risk of being treated as tax evasion rises sharply — another reason to strictly follow issued advance determinations.
6. When does criminal liability arise?
Where the elements of the crime of tax evasion — Article 200 of the 2015 Penal Code (amended 2017) are met. Thresholds and frames (verified: Law 86/2025/QH15 did not amend Article 200):
- Individuals evading tax of VND 100,000,000 to under 300,000,000: fine of VND 100–500 million or 03 months–01 year imprisonment;
- VND 300,000,000 to under 1,000,000,000: fine of VND 500 million–1.5 billion or 01–03 years imprisonment;
- VND 1,000,000,000 or more: fine of VND 1.5–4.5 billion or 02–07 years imprisonment;
- Commercial legal entities: fines of VND 300 million–10 billion, possibly with suspension of operations.
Businesses should check the latest consolidated Penal Code before applying these thresholds to a specific case.
7. Cases exempt from penalties (2026 update)
Decree 169/2026 expands the cases exempt from administrative penalties, including: (a) misdeclaration voluntarily supplemented before customs announces a direct dossier examination for goods under clearance; (b) supplementary declarations within 60 days of clearance and before an inspection/audit decision for cleared goods; (c) supplementary customs-value declarations within the prescribed period for goods without an official price at declaration registration; (d) fulfilling tax obligations under an administrative document/decision of a competent authority.
8. Prevention: advance rulings and HS code reviews
The most effective prevention is to request an advance code determination before import (Articles 18 and 28 of the Customs Law), strictly follow code-guidance documents of the Ministry of Finance/Department of Customs, and periodically review the HS codes of regularly imported goods — especially when the import-export goods nomenclature is updated.
Disclaimer: This article is for general information only and does not constitute legal advice. Businesses should verify the legal instruments in force at the time of application and consult qualified counsel before making decisions.
Need legal support on customs penalties, HS code disputes or complaint procedures? Contact FLAT Law Firm for advice.
For reference only, not legal advice. Content quality-checked by the AI Legal Council; not yet reviewed by a human lawyer.
