When a foreign-invested enterprise (FDI company) is suspected of tax evasion, the case does not stop at an administrative tax decision — it may pass through several stages: tax inspection, tax audit, transfer of the file to the investigative authority and, in some cases, initiation of a criminal case. This article systematises those stages and the company’s legal rights at each stage.
1. Stage 1: tax inspection and audit under the Law on Tax Administration 108/2025
The first stage of any suspected tax violation takes place within the administrative tax sphere and applies equally to all companies — FDI or domestic.
- The Law on Tax Administration No. 108/2025/QH15 (adopted 10 December 2025, effective 1 July 2026) has replaced Law No. 38/2019/QH14. All rules on tax inspection and audit and on the responsibilities of tax authorities are now measured against Law 108/2025.
- Where an inspection or audit uncovers a tax violation showing signs of a crime (tax evasion, tax fraud) serious enough for criminal prosecution, the tax authority transfers the case file to the competent investigative authority.
Company rights at the administrative tax stage
- The right to be notified of the inspection/audit decision;
- The right to explain and provide documents and evidence relating to its tax obligations;
- The right to complain against tax treatment decisions or acts of tax officials where its lawful rights and interests are infringed.
2. Stage 2: transfer of the file from the tax authority to the investigative authority
This intermediate stage decides whether the case moves into criminal proceedings. Two different time-limit rules exist in different instruments, governing two different procedural steps — they are not interchangeable:
- The reporting/request step: under the former Law 38/2019 regime, internal tax-sector procedures imposed a 10-working-day time limit from discovery for the team leader to report and submit the transfer request to the head of the agency. Law 38/2019 is now expired (replaced by Law 108/2025) — so the 10-day figure and the exact applicable article must be cross-checked against Law 108/2025, not automatically treated as still applicable. The old citation “Article 108 of the 2019 Law on Tax Administration” is no longer valid.
- The file transfer and prosecution-request step: under Decision 489/QD-TCT of 2022 (Regulations on transferring crime reports and prosecution-request files by tax authorities), the person issuing the audit/inspection decision transfers the file together with the written prosecution request to the investigative authority within 5 working days.
Note: companies should not assert a single unified deadline for “the transfer of a tax file to the investigative authority” — the two procedural steps above must be distinguished, and only rules still in force should be applied.
3. Stage 3: criminal proceedings — from crime report to investigation
Once the tax authority transfers the file, the investigative authority proceeds under the Criminal Procedure Code 101/2015/QH13 (as amended by Laws 02/2021/QH15, 34/2024/QH15, 59/2024/QH15 and 99/2025/QH15; the core procedural stages remain unchanged through these amendments):
- Receipt and handling of crime denunciations, reports and prosecution requests from the tax authority;
- Initiation of a criminal case when sufficient signs of a crime exist;
- Investigation of the case under criminal procedure, including investigative and preventive measures prescribed by law.
Criminal threshold for tax evasion (brief note)
Tax evasion under Article 200 of the Penal Code: the minimum threshold is VND 100 million for individuals and VND 200 million for commercial legal entities (or VND 100–200 million where the entity has previously been administratively sanctioned for an act under Article 200 or for one of the crimes under Articles 188–196 and has not yet been deemed unpunished or had its criminal record expunged). Article 200 is listed in Article 76 — commercial legal entities bear criminal liability. See the dedicated article on Article 200 for details on thresholds and penalty frames.
4. Rights of the FDI company in criminal proceedings
A commercial legal entity participates in criminal proceedings through its legal representative. The rights and obligations of the representative are set out in Article 435 of the Criminal Procedure Code (to be cross-checked against the latest consolidated text):
- To be notified of the reason for initiating proceedings and to receive procedural decisions and documents;
- To give statements; not to be compelled to testify against the legal entity;
- To present evidence, documents and objects; to request the proceeding authority to examine and assess evidence;
- To request replacement of proceeding officers as prescribed;
- To defend itself or retain a defence counsel;
- To read and copy case file materials from the end of the investigation;
- To appeal court judgments and decisions; to complain against procedural decisions and acts; to denounce violations by proceeding officers.
In addition, throughout the process the company has the right to complain against procedural decisions and acts and to denounce legal violations by proceeding officers.
Coercive measures applicable to legal entities
Under Article 436 of the Criminal Procedure Code, competent authorities may apply coercive measures against legal entities such as: seizure of assets, freezing of accounts, temporary suspension of operations — measures with direct and very practical impact on the business of an FDI company.
Criminal liability of the legal entity does not exclude individual liability
Under Clause 2, Article 75 of the Penal Code, the criminal liability of a commercial legal entity does not exclude the criminal liability of individuals — the individuals who directly committed the act (the executive who directed it, the accountant who carried it out) may still be prosecuted independently.
5. Specifics for FDI companies
- No immunity on account of foreign capital: the investigation and prosecution process applies equally to all companies; an FDI company is not immune merely because of foreign investment.
- International treaties and reciprocity: for involved foreign nationals, applicable international treaties to which Vietnam is a party or the principle of reciprocity apply; persons enjoying diplomatic or consular immunity are dealt with through diplomatic channels (Article 3 of the Criminal Procedure Code — cross-check the article number against the latest consolidated text).
- Language rights: the Criminal Procedure Code guarantees the right to use one’s mother tongue and the right to interpretation in proceedings — foreign companies and related individuals may use the language they know and be provided interpretation.
- Related-party transactions and transfer pricing: the tax authority has the power to examine transfer-pricing determinations in related-party transactions; transfer-pricing issues affecting the FDI company’s tax obligations must be measured against the rules in force at the time of inspection.
Reference information only — not legal advice. FDI companies subject to tax inspection, audit or investigation for tax evasion should engage counsel early to protect their lawful rights and interests.
For reference only, not legal advice. Content quality-checked by the AI Legal Council; not yet reviewed by a human lawyer.