Exploring CHANGE’s Tax Issues- Part 8: What Can Vietnamese Non-profit Organizations Do to Prevent Tax Evasion Charges?

When there is a failure of the law and government regulations, the non-profit organizations in Vietnam must save themselves.

Exploring CHANGE’s Tax Issues- Part 8: What Can Vietnamese Non-profit Organizations Do to Prevent Tax Evasion Charges?

Thuy Tung wrote this article in Vietnamese, which was published in Luat Khoa Magazine on October 5, 2023. Lee Nguyen translated the article into English.

The previous sections of this series demonstrated that the Vietnamese government considers CHANGE a business entity despite the ample evidence indicating that this organization was not formed under the Law on Enterprises and does not generate profit.

In addition, tax evasion charges were levied against CHANGE because it failed to follow accounting, value-added tax (VAT), and corporate income tax (CIT) procedures as an enterprise.

This incident may have caused other organizations that have been established in a similar way or operate similarly to CHANGE to be concerned for their own survival.

What should other non-profit organizations (NPOs), including social and charity funds, do to minimize these risks?

Should they wait for the Vietnamese government to introduce a comprehensive, clear, and applicable accounting system for all NPOs not affiliated with the state, whether or not they receive foreign aid?

If this is not an option, NPOs temporarily have three accounting options to consider.

The first is the administrative-accounting system - the public sector. While this option applies to agencies and organizations that use and do not use the state budget, the specific guidelines demonstrate that these tasks associated with this system mainly relate to the state budget. [1]

The second is the accounting system for charitable and humanitarian activities. This alternative applies to social funds, charities, the fundraising boards for the Fund for the Poor at central and local levels, and organizations, agencies, units, and individuals implementing fundraising, receiving, distributing, and utilizing voluntary contributions to carry out charitable activities [2].

However, the fundraising objectives for this option are very narrow. Organizations can only raise funds to deal with issues caused by natural disasters and epidemics, to address emergencies, and to support patients with serious illnesses and injuries.[3]

The third option is the business accounting system, which applies to businesses across all sectors, different economic components, and different scales. Depending on the annual total revenue and the number of employees, this system can be applied to large, small and medium-sized enterprises or micro-enterprises [4] [5] [6].

In this context, scientific and technological organizations may be unwilling to apply the third accounting option for several reasons:

  • The regulations surrounding this administrative accounting system state that public non-business units that ensure frequent investment expenditures can be subject to the business accounting regime. [7] This implies that this accounting system should not be applied to non-public scientific and technological organizations.
  • The regulations regarding the establishment and operations of social funds and charitable organizations show that the establishment and operation of these funds differ from scientific and technological organizations [8][9]. Fundraising objectives are limited, making this accounting system unsuitable for scientific and technological organizations.
  • The operating licenses of scientific and technological organizations indicate they can also engage in (non-profit) scientific and technological service contracts and raise aid from domestic and foreign entities and individuals. 

The temporary adaptation of the business accounting framework for tax reporting is not an indication that the state relies on tax regulations as a means to accuse the leader of CHANGE (and also MEC or LPSD).

In principle, only tax authorities have the jurisdiction to determine whether an organization has generated profits and whether those profits are distributed to members. Therefore, organizations must choose the most suitable accounting system for tax reporting.

When organizations prepare annual tax reports, tax authorities require audit reports, even though they are not mandatory. Tax reports and VAT invoice declarations are also a way to demonstrate whether an organization has generated revenue from scientific and technological services.

Why are scientific and technological organizations considered businesses even though tax authorities do not rigorously enforce final tax settlements for them as they do for actual businesses?

The answer is that only investigative agencies, prosecution offices, and courts consider scientific and technological organizations as businesses.

Tax authorities cannot consider scientific and technological organizations as businesses because the tax registration records do not contain any terms indicating that these organizations are legal entities established under the Law on Enterprises. CHANGE is no different in this regard.

Furthermore, the Ministry of Finance has not regulated the financial management of the state system for non-state budget foreign aid. As a result, there is no mechanism for the government to implement tax settlements for NPOs that use foreign aid not derived from the state budget.

In some cases, tax authorities have also verbally stated that scientific and technological organizations do not need to submit tax reports.

Regardless, one should not rely on the absence of mechanisms and the lack of tax settlements to conclude that it is the responsibility of the Vietnamese state. The role of scientific and technological organizations is to continue registering their accounting system to demonstrate that they do not conceal any off-the-books transactions.

Nonetheless, many costs will be incurred by organizations that start applying the business accounting system and tax procedures. Particularly for organizations that have operated for several years without registration, they may face administrative penalties. The severity of these penalties depends on the scale and duration of their activities.

According to the law, tax evasion includes actions such as not submitting tax registration documents, failing to file tax declaration dossiers, or submitting tax declaration dossiers 90 days from the due date or extended deadline.

If deemed to have committed tax evasion, NPOs will be subject to fines ranging from one to three times the amount of evaded taxes [10]. Furthermore,  some aggravating circumstances and additional penalties and fines for late tax declaration and payment may also be imposed [11].

Additionally, implementing any accounting system and updating legal receipts for tax reporting and other tax-related tasks represent a substantial workload. Consequently, additional labor costs will be incurred to complete this volume of work.


The “Exploring CHANGE’s Tax Evasion Charges” series concludes here. The Vietnamese Magazine hopes to have addressed your questions regarding why a non-profit organization like CHANGE, could be involved in a tax evasion case, as well as the inconsistencies in Vietnam's laws and law enforcement efforts.


  1. Clause 1, Article 2, Circular No. 107/2017/TT-BTC of the Vietnam Ministry of Finance.
  2. Article 2 of Circular No. 41/2022/TT-BTC of the Vietnam Ministry of Finance.
  3. Decree No. 93/2021/ND-CP of the Vietnamese government. 
  4. Circular No. 200/2014/TT-BTC of the Vietnam Ministry of Finance.
  5. Circular No. 133/2016/TT-BTC of the Vietnam Ministry of Finance.
  6. Circular No. 132/2018/TT-BTC of the Vietnam Ministry of Finance.
  7. Clause 2, Article 2, Circular No. 107/2017/TT-BTC of the Ministry of Finance.
  8. Article 14 of Decree No. 93/2019/ND-CP of the Vietnamese government.
  9. The 2013 Law on Science and Technology.
  10.  Article 17 of Decree No. 125/2020/ND-CP of the Vietnamese government.
  11.  Article 10 of the Law on Handling of Administrative Violations 2012 (amended in 2022).

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