Short answer: “VAT fraud” is a practical label — the law uses the concept of “tax evasion” in Article 200 of the Penal Code, which covers fraudulent VAT deduction and refund. When the VAT amount fraudulently deducted/refunded reaches VND 100,000,000 to under VND 300,000,000 (or under VND 100 million with a prior administrative sanction for evasion or an unexpunged conviction, and reoffending) → criminal prosecution.
VAT fraud acts under Article 200 of the Penal Code
Point d, paragraph 1 — directly covering fraudulent deduction/refund
“Using unlawful invoices or vouchers to account for input goods and materials in tax-liable operations, reducing tax payable or increasing tax exempted, tax reduced, or increasing tax deducted or tax refunded“
This is the provision directly governing the two most common VAT fraud forms: fraudulent VAT input deduction (inflating deductible tax) and fraudulent VAT refund (inflating refundable tax).
Point đ, paragraph 1
“Using other unlawful documents to misstate tax payable or tax refundable“
Covers fraudulent VAT refunds using unlawful non-invoice documents.
Point c, paragraph 1 — output-side fraud
“Failing to issue invoices when selling goods or services, or recording on the sales invoice a value lower than the actual payment received for the goods or services sold”
Covers output-side VAT evasion: selling without invoices or understating invoice values to reduce VAT payable.
Thresholds and penalty frames
Thresholds and frames are the same as for all Article 200 conduct:
- Paragraph 1: evaded tax (including VAT fraudulently deducted/refunded) of VND 100,000,000 to under VND 300,000,000 → fine of VND 100–500 million or 3 months–1 year imprisonment; or under VND 100,000,000 with a prior administrative sanction for tax evasion or a prior conviction (unexpunged) for this or the listed offences (Articles 188–196, 202, 250, 251, 253, 254, 304–306, 309, 311) and reoffending.
- Paragraph 2: VND 300,000,000 to under VND 1,000,000,000 (or organized, abusing position, 2+ offences, dangerous recidivism) → fine of VND 500 million–1.5 billion or 1–3 years’ imprisonment.
- Paragraph 3: VND 1,000,000,000 or more → fine of VND 1.5–4.5 billion or 2–7 years’ imprisonment.
- Commercial legal entities (Article 76 covers Article 200): starting threshold of VND 200,000,000–under VND 300,000,000 (or VND 100–under 200 million with prior sanction/conviction) → fine of VND 300 million–1 billion.
The fraudulently obtained VAT amount is determined through tax inspection/audit and judicial expertise — no self-invented calculation.
The administrative boundary: the Article 16(1)(đ) “shield”
Not every use of an unlawful invoice is a crime. Article 16(1)(đ) of Decree 125/2020/ND-CP (per consolidated document 27/2026/VBHN-ND-BTC, Ministry of Finance, 27/8/2026) provides: using unlawful invoices or vouchers to account for inputs, reducing tax payable or increasing tax refunded, but proving the fault lies with the seller and having fully recorded the accounting → only a 20% fine on the understated tax (treated as misdeclaration), not tax evasion.
This is a key practical boundary: a good-faith buyer that fully accounted for the transaction and proves the seller’s fault is shielded from an “evasion” characterization.
Where evasion conduct falls below the criminal threshold → administrative sanction under Article 17 of Decree 125: 1–3x the evaded tax + mandatory full payment.
Distinguishing Article 200 from Article 203 — the easiest confusion
- Article 200 (point d, paragraph 1): “using unlawful invoices to commit tax fraud” — i.e., using illegal invoices to deduct/refund VAT.
- Article 203: “illegally printing, issuing, or trading invoices” — i.e., producing and circulating illegal invoices.
One is using unlawful invoices to evade tax; the other is printing, issuing, trading unlawful invoices. Different offences — do not mix them.
FAQ
1. Is using an unlawful invoice for VAT deduction always a crime?
No. Below the Article 200 threshold without recidivism → administrative sanction (Article 17, Decree 125). If the buyer proves the seller’s fault and full accounting → treated as misdeclaration, 20% fine (Article 16(1)(đ)).
2. Which Article 200 point covers fraudulent VAT refunds?
Point d, paragraph 1 (using unlawful invoices/vouchers to increase refunded tax) and point đ, paragraph 1 (using other unlawful documents to misstate refundable tax).
3. Is “VAT fraud” a statutory offence name?
No. It is a practical label; the law uses “tax evasion” (Article 200), which includes fraudulent deduction/refund.
4. What about selling goods without issuing VAT invoices?
Point c, paragraph 1 of Article 200 (output-side fraud) — criminally prosecuted at the monetary threshold or with recidivism as above.
5. How are companies punished?
Legal entities: starting threshold VND 200 million → fine of VND 300 million–1 billion (see the Article 200 article for detail).
Practical recommendations
- Buyers should keep complete records proving genuine transactions and full accounting — this is the Article 16(1)(đ) “shield” when a seller’s invoice is found unlawful.
- Never dismiss small amounts: a prior administrative sanction for tax evasion turns a later sub-100-million violation into a crime.
- Clearly identify whether conduct falls under Article 200 (using unlawful invoices) or Article 203 (printing/issuing/trading unlawful invoices) — two offences, two different regimes.
Legal basis (verified 14/10/2026)
- 2015 Penal Code (Law 100/2015/QH13; effective 01/01/2018) — Article 200 (paragraph 1 points c, d, đ; paragraphs 2, 3, 5), Article 76; per Consolidated Document 135/VBHN-VPQH dated 05/9/2025. Article 200 most recently amended by Law 12/2017/QH14 (effective 01/01/2018); Law 86/2025/QH15 (effective 01/7/2025) and Law 59/2024/QH15 did not amend Article 200.
- Decree 125/2020/ND-CP — Article 16(1)(đ), Article 17; per Consolidated Document 27/2026/VBHN-ND-BTC dated 27/8/2026 (Ministry of Finance). Do not cite the original 2020 text.
- Law on Tax Administration 108/2025/QH15 (effective 01/7/2026) — current law, replacing Law 38/2019/QH14 (expired 01/7/2026). Do not cite Law 38/2019 as current authority.
Suggested internal links: article on tax evasion under Article 200 (FLAW-P0027), article distinguishing criminal tax evasion from administrative tax violations (FLAW-P0028), article on illegal invoice trading under Article 203 (FLAW-P0030).
Need advice on VAT risk? Contact FLAT Law Firm for an assessment of your specific situation.
For reference only, not legal advice. Content quality-checked by the AI Legal Council; not yet reviewed by a human lawyer.