Circular No. 49/2008/TT-BTC guiding compensation for losses suffered by taxpayers and declarants due to violations of the law by tax officials and customs officials while performing their duties

CIRCULAR

Guidelines for compensating losses to taxpayers and declarants due to violations of the law by tax officials and customs officials while performing their duties

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Pursuant to the Tax Administration Law No. 78/2006/QH11 dated November 29, 2006;

Pursuant to Decree No. 85/2007/NĐ-CP dated May 25, 2007 of the Government detailing certain provisions of the Tax Administration Law;

Pursuant to Decree No. 97/2007/NĐ-CP dated June 7, 2007 of the Government on handling violations of the law and enforcing administrative decisions in the customs sector;

Pursuant to Decree No. 98/2007/NĐ-CP dated June 7, 2007 of the Government on handling violations of the law related to taxes and enforcing administrative tax decisions;

The Ministry of Finance provides guidelines for compensating losses to taxpayers and declarants due to violations of the law by tax officials and customs officials while performing their duties as follows:

I. COMPENSATION FOR DAMAGE

1. Liability for Compensation for Damage

a) The tax management agency directly managing tax officials and customs officials (hereinafter referred to as the tax management agency) shall compensate for damage caused to taxpayers and declarants by the illegal acts of officials during the performance of their duties.

b) The tax management agency has the responsibility to create favorable conditions for taxpayers and declarants to exercise their right to compensation; promptly resolve compensation for damage in a transparent, fair, and lawful manner.

2. Taxpayers and declarants, upon discovering actions that violate the law by tax officials and customs officials which may cause damage to themselves, must warn the tax officials, customs officials, or the tax management agency.

In cases where they have sufficient conditions to request compensation for damage, taxpayers and declarants must submit a claim for compensation (the claim must clearly state: the name and address of the person requesting compensation; the name and address of the agency directly managing the tax officials and customs officials causing damage; reasons for requesting the tax management agency to compensate; the damages and amount requested; the number and summary of the decision on handling complaints from the competent state authority or the judgment and decision of the Court) and provide relevant information and documents to determine the amount of compensation to be sent to the tax management agency for consideration and resolution.

3. Cases of Compensation for Damage

The tax management agency has the responsibility to compensate taxpayers and declarants (hereinafter referred to as the damaged party) in the following cases where tax officials and customs officials have the following actions:

a) Making decisions on refunding tax or determining tax not in accordance with the provisions of the law;

b) Handling and issuing administrative penalties for tax violations contrary to the provisions of the tax law;

c) Handling and issuing decisions to enforce administrative tax decisions and other decisions on administrative penalties in the customs sector contrary to the provisions;

d) Implementing measures to prevent administrative violations without proper grounds and in accordance with the provisions of the tax and customs laws;

In cases where tax officials and customs officials cause financial or property damage to the damaged party but it is determined to be due to the fault of the damaged party, the tax management agency does not have to compensate for the damage; if the damaged party is at fault, the tax management agency only has to compensate for the portion of the damage corresponding to the degree of fault caused by the tax officials and customs officials.

4. Conditions for Compensation for Damage

Compensation for damage will be implemented when the following conditions are met:

a) There is a decision on handling complaints from the competent state authority or a court judgment or decision determining that the actions of tax officials and customs officials are contrary to the law and have caused damage;

b) There is actual damage caused by the violation of the law by tax officials and customs officials while performing their duties to taxpayers and declarants, falling under one of the cases specified in Clause 3, Section I of this Circular;

c) The damaged party submits a claim for compensation within two years from the date of the decision on handling complaints from the competent state authority or the court judgment or decision determining that the actions of tax officials and customs officials are contrary to the law and have caused damage;

5. Principles for Implementing Compensation

a) For damage involving tax payments, fines, or confiscations, the tax management agency is responsible for:

- Refunding the tax payment, fine, or confiscated amount (if already deposited into the state budget, procedures for returning the budget should be carried out) and compensating interest on the incorrect tax, fine, or confiscated amount to the damaged party.

The interest period is calculated from the date the damaged party paid the tax or fine, or was confiscated, to the date recorded in the compensation decision of the tax management agency.

The interest amount is calculated based on the basic interest rate published by the State Bank and effective at the time the tax management agency issues the compensation decision.

b) For damage involving property, the tax management agency is responsible for:

- If the property still exists and is not damaged: return the property to the damaged party;

- If the property still exists but is damaged and can be repaired: return the property to the damaged party and compensate for all repair costs; if the property is damaged and cannot be repaired, the tax management agency is responsible for compensating for the loss as if the property were lost and disposing of the damaged property according to regulations;

- If the property no longer exists (lost or sold at auction): compensate for the property at the market price of similar property or property with the same functionality, technical standards, and level of wear and tear at the time of compensation resolution;

6. Procedures and Formalities for Resolving Compensation for Damage

a) The tax administration authority shall be responsible for receiving claims and files requesting compensation for damages. For files requesting compensation for damages that do not have a decision on the resolution of complaints from competent state agencies or judgments, decisions of the Court determining that the actions of tax customs officials were contrary to the law causing damage, the officer receiving the file must immediately inform the person requesting compensation for damages that the claim and file will not be accepted due to insufficient conditions for examination and resolution of compensation.

b) For files requesting compensation for damages that meet the conditions for examination and resolution of compensation, the tax administration authority shall classify the files to examine and handle the responsibility for compensating damages.

- If the file requesting compensation for damages already has a specific conclusion regarding the violation behavior of tax customs officials and the extent of damage in the decision on complaint resolution of competent state agencies or judgments, decisions of the Court, within fifteen days from the date of receipt of the file, the head of the tax administration authority or the head of the directly superior agency (in case the person causing damage is the head of the responsible compensation agency) shall be responsible for reviewing the file and if they agree with the conclusion in the above document, issue a decision on compensating damages.

In case they disagree with the conclusion in the judgment, decision of the Court, the head of the tax administration authority or the head of the directly superior agency (in case the person causing damage is the head of the responsible compensation agency) has the right to refuse to resolve compensation for damages and appeal according to civil litigation procedures.

- If the file requesting compensation for damages only concludes on the violation behavior but does not specifically determine the extent of damage in the decision on complaint resolution of competent state agencies or judgments, decisions of the Court, the tax administration authority shall handle it according to the correct procedure stipulated in point c, Clause 6, Section I of this Circular.

c) Procedure for resolving files requesting compensation for damages where the decision on complaint resolution of competent state agencies or judgments, decisions of the Court do not specifically determine the extent of damage:

- The tax administration authority shall receive the claim, establish a file for handling compensation for damages (initial verification of the actual extent of damage caused by the violation of tax customs officials' laws), and within five days from the date of receipt of the claim for compensation for damages, must notify in writing the person suffering damage about the proposed time and place for negotiation or resolution of the compensation request.

- Within ten days from the date of receipt of the claim for compensation for damages, the head of the tax administration authority or the head of the directly superior agency (in case the person causing damage is the head of the responsible compensation agency) must establish a Compensation Damage Resolution Board and repay the compensation amount (hereinafter referred to as the Compensation Damage Resolution Board).

The Compensation Damage Resolution Board consists of three to five members, including: the head of the tax administration authority or the head of the directly superior agency (in case the person causing damage is the head of the responsible compensation agency) as Chairman of the Board; the person in charge of financial accounting work at the tax administration authority as a member; representatives of relevant specialized units in tax customs related to the compensation case; direct leaders of the tax customs officials causing damage; experts in the damaged field (if necessary).

The Compensation Damage Resolution Board is tasked with proposing to the authorized person to issue a Decision on compensating damages regarding the amount and method of compensating damages; proposing responsibility for repayment, the amount and method of repayment of the compensation amount as stipulated in point a, Clause 3, Section II of this Circular.

The Compensation Damage Resolution Board operates under the principle of collective work, deciding by majority, and dissolving after completing its tasks.

Within ten days (fifteen days for complex cases) from the date of the Decision establishing the Board, the Compensation Damage Resolution Board shall be responsible for sending a written proposal to the authorized person to issue a Decision on compensating damages regarding the amount and method of compensating damages (accompanied by the Minutes of the Compensation Damage Resolution Board meeting).

Within ten days from the date of receipt of the written proposal from the Compensation Damage Resolution Board, the head of the tax administration authority or the head of the directly superior agency (in case the person causing damage is the head of the responsible compensation agency) shall organize negotiations with the person suffering damage based on the amount and method of compensating damages proposed by the Compensation Damage Resolution Board and issue a decision on compensating damages.

The Decision on compensating damages must be based on the results of negotiations; in case negotiations fail, it must be based on the proposal of the Compensation Damage Resolution Board to consider and decide. The Decision on compensating damages must clearly state the amount of compensation for damages; the method of compensating damages (cash or transfer); the deadline for compensating damages (not exceeding fifteen days from the date of signing the Decision on compensating damages); and must be sent to the responsible compensation agency, the person entitled to compensation for damages, and the person obligated to repay.

In case the person suffering damage disagrees with the Decision on compensating damages of the tax administration authority, they have the right to appeal to the superior agency or request the Court to resolve according to the provisions of the law on appeals and complaints.

The compensation for damages shall be carried out in cash and paid in one lump sum (except where the parties have agreed otherwise) in accordance with the provisions on the amount, method, and deadline for compensation set forth in the Compensation Decision. If the tax management agency fails to carry out the compensation within the time limit specified in the Decision, it must pay interest on the compensation amount for the period of delay in compensation at the basic interest rate published and effective at the time the tax management agency carries out the compensation, as announced by the State Bank.

7. Compensation funds: based on the Compensation Decision of the competent authority, the tax management agency may use the sources of funds within its management scope to promptly compensate the person suffering damage.

The funds already used for compensation of damages shall be replenished from the refund amount of the tax officials and civil servants causing the damage; the proceeds from the disposal of assets (in cases where the damaged assets were sold at auction or liquidation due to irreparable damage); from the amounts of compensation for property damage by insurance companies (if any); and from other lawful sources of funds.

II. REFUND OF COMPENSATION FUNDS BY TAX AND CUSTOMS OFFICIALS

PUBLIC OFFICIALS OF TAX AND CUSTOMS

1. The tax management agency responsible for compensation shall have the duty to request tax and customs officials to refund the amount that the tax management agency has compensated to the person suffering damage when committing any of the acts of violating the law causing damage as stipulated in Clause 3, Section I of this Circular. In cases where the person suffering damage had warned about the violation and the potential for damage, but the tax and customs officials still intentionally carried out such acts, they must refund the entire amount that the tax management agency has compensated to the person suffering damage.

2. Determining the responsibility for refunding the compensation fund:

a) The determination of the responsibility for refunding the compensation fund must be based on the amount of compensation provided by the tax management agency, the degree of fault of the violation, and the economic capacity of the tax and customs officials.

In cases where multiple persons commit violations of the law causing damage together, each violator must jointly refund the compensation fund provided by the tax management agency. The responsibility for refunding of each individual is determined in proportion to their respective degree of fault; if the degree of fault of each individual cannot be determined, each individual must refund equally.

b) Tax and customs officials causing damage have the obligation to refund the amounts that the tax management agency has compensated to the person suffering damage as follows:

- For monetary damage, the specific amounts to be refunded among the compensation amounts provided by the tax management agency as stipulated in Point a, Clause 5, Section I of this Circular shall be determined according to the circumstances, including: interest on confiscated funds, administrative fines, interest on incorrectly assessed taxes, or interest on delayed tax refunds.

- For asset damage, the specific amounts to be refunded among the compensation amounts provided by the tax management agency as stipulated in Point b, Clause 5, Section I of this Circular shall be determined according to the circumstances, including: repair costs for the asset; or the value of the lost asset; or the difference between the asset's value and the actual amount received from selling the asset at auction or liquidation.

c) Tax and customs officials causing damage may be considered for reduced responsibility for refunding in the following cases:

- First-time violation; or actively applying measures to prevent or reduce the consequences of damage.

- Violation causing damage under duress or dependency, either material or mental.

- Limited conditions for performing official duties (if there is sufficient evidence to prove).

- Damage occurring so large that the immediate and long-term economic capacity of the person causing damage is unable to fully or largely repay the damage. Tax and customs officials requesting a reduction in the amount to be refunded must provide evidence proving their immediate and long-term economic capacity is insufficient to fully or largely repay the damage.

3. Procedures and formalities for refunding the compensation fund

a) Within thirty days from the date of the Compensation Decision, the Head of the tax management agency or the Head of the directly superior agency (in cases where the person causing damage is the Head of the responsible agency) shall have the duty to request the Compensation Resolution Council to work and consider the refund of the compensation fund of the tax and customs officials. To protect the rights of the officials, the Council shall supplement the Chairman of the Trade Union or a member of the Trade Union Committee of the tax management agency (if the Head of the agency is the Chairman of the Trade Union) to participate in the Council. During the process of the Council considering the refund of the compensation fund, the Council shall create conditions for the tax and customs officials causing damage to attend the Council meetings to explain the specific incident as the basis for considering the obligation to refund the compensation fund.

The Council shall have the duty to assess the nature of the act causing damage, determine the specific responsibility of each tax and customs official involved in causing damage; consider mitigating circumstances; evaluate the economic capacity of the tax and customs officials causing damage; and on this basis, recommend the amount and method of refund.

Within ten days (fifteen days for complex cases) from the date of the Compensation Resolution Council meeting, the Council shall have the duty to submit a recommendation to the competent authority regarding the amount and method of refund (along with the Minutes of the Compensation Resolution Council meeting).

b) Within ten days from the date of receiving the Minutes of the Damage Compensation Resolution Board meeting and the document recommending the amount and method of returning the damage compensation payment, the head of the tax management agency or the head of the directly superior agency (in case the person causing damage is the head of the responsible compensation agency) shall be responsible for signing the Decision on Returning the Damage Compensation Payment.

The Decision on Returning the Damage Compensation Payment must specify: the amount to be returned; the method and deadline for returning. The return may be made in one lump sum with personal assets (within forty-five days from the date of signing the decision on returning) or deducted gradually from the monthly income of tax officials and customs officers who caused the damage, but not exceeding twenty percent of total income from salary and allowances (if any); reduction in the obligation to return (if applicable).

c) Implementing the Decision on Returning the Damage Compensation Payment

- Tax officials and customs officers who caused damage shall be responsible for fulfilling the obligation to return as recorded in the Decision on Returning the Damage Compensation Payment to the tax management agency that directly compensated the damaged party.

- During the implementation of the Decision on Returning the Damage Compensation Payment, the person obligated to return may be considered for a temporary suspension of the return in cases where they are undergoing treatment at hospitals, women during pregnancy or nursing children under one year old; families experiencing particularly difficult economic circumstances confirmed by the People's Committee of the commune (ward) where they reside. The maximum period for suspending the return is six months. In cases where tax officials and customs officers obligated to return cannot fulfill their obligation due to force majeure events (accidents, natural disasters, fires, death), they may be considered for a reduction or exemption from the obligation to return.

The head of the tax management agency issuing the Decision on Returning the Damage Compensation Payment shall be responsible for considering and deciding on temporary suspension; reduction or exemption from the obligation to return.

- The returned money must be collected and tracked in detail for each payment (if paid in multiple installments) and used to return to the same source of funds previously used for damage compensation.

d) Measures to ensure the implementation of the return

- The head of the tax management agency shall be responsible for supervising and urging the implementation of the return.

- If a person has not fulfilled the obligation to return and requests a job transfer, resignation, or retirement, the head of the tax management agency issuing the Decision on Returning the Damage Compensation Payment shall be responsible for requiring the person to return the outstanding amount before transferring jobs, resigning, or retiring. In cases where the person implementing the return does not have the immediate conditions to pay the outstanding amount, the head of the tax management agency issuing the Decision on Returning the Damage Compensation Payment must coordinate with the agency or organization accepting the job transfer or local authorities where the person resides to require them to continue the implementation of the return.

- In cases where the person obligated to return deliberately delays or avoids the return, the head of the tax management agency shall be responsible for coordinating with the local authorities where the person obligated to return resides to take measures to ensure the implementation of the return in accordance with the law.

e) In cases where tax officials and customs officers who caused damage disagree with the head of the tax management agency's decision on returning the damage compensation payment, they have the right to appeal to the directly superior agency or request the court to resolve the matter.

III. IMPLEMENTATION

This Circular takes effect fifteen days from the date of publication in the Official Gazette.

The General Department of Taxation and the General Department of Customs are responsible for organizing the implementation of this Circular. During the implementation process, if there are difficulties, they are advised to report to the Ministry of Finance for study and resolution./.