Can the use of fraudulent documents for accounting purposes lead to criminal liability? Latest legal regulations

In the context of increasingly stringent tax administration, the trading of invoices and the use of fraudulent documents for accounting purposes continue to occur in various enterprises. Such conduct is commonly intended to legitimize expenses, reduce tax liabilities, and poses significant legal risks relating to taxation and accounting compliance.

I. The current situation of invoice trading for the purpose of legitimizing expenses

In current business practice, the trading of invoices and the use of fraudulent documents for accounting purposes remain prevalent to varying degrees, particularly among small and medium-sized enterprises or entities with inadequate internal control systems. The primary purpose of such conduct is to legitimize input expenses, reduce taxable profits, thereby lowering corporate income tax obligations, or to present a more favorable financial position in financial statements. In some cases, enterprises utilize documents unsupported by actual transactions or invoices issued by “shell companies” to justify fund movements.

Although tax authorities and competent State agencies have strengthened the application of technology, data reconciliation, inspections, and audits, these practices have become increasingly sophisticated through methods such as splitting transactions, using multiple intermediary entities, or legitimizing transactions through complex corporate structures.

Such situations not only cause losses to the State budget but also expose enterprises to substantial legal risks, including tax reassessments, administrative sanctions, and even criminal prosecution where organized fraudulent activities are identified.

II. Concept of using fraudulent documents for accounting purposes

1. What constitutes the use of fraudulent documents for accounting purposes?

The use of fraudulent documents for accounting purposes refers to an act whereby an enterprise or accounting personnel utilize illegal, forged, or fictitious documents that do not reflect actual economic transactions for recording in accounting books and records.

Under accounting regulations, documents may only be used for accounting purposes when they accurately reflect actual economic transactions and satisfy the requirements of legality, validity, and reasonableness. However, if fraudulent documents are used, these requirements are not met, resulting in inaccurate recognition of revenue, expenses, or tax obligations.

Such conduct is typically intended to legitimize expenses, reduce taxable income, or manipulate business performance contrary to reality, and may lead to serious legal consequences under accounting and tax legislation.

2. What types of documents are commonly forged for accounting purposes?

In accounting and tax practice, fraudulent documents used for accounting purposes generally involve supporting documents directly related to expense recognition and tax determination. Common examples include:

• Value-added tax invoices (VAT invoices): It is often forged or illegally purchased to legitimize input expenses.
• Sales invoices and service invoices: It is used to record expenses for transactions that never occurred.
• Internal receipts and payment vouchers: It is fabricated to create fictitious cash flows in accounting records.
• Commercial contracts: It is forged or sham contracts to serve as a basis for recording expenses.
• Acceptance certificates and contract liquidation minutes: It is falsified to legitimize the completion of services or the sale and purchase of goods.
• Payment documents: Such as payment orders and bank statements that are altered or used inconsistently with actual transactions.

3. What are the indicators of fraudulent accounting documents?

In practice, fraudulent accounting documents are often identified through a comparison of supporting documents, cash flows, and the actual business activities of an enterprise. Common indicators include:

• The content of the documents is inconsistent with the enterprise’s business operations or registered business lines;
• Inconsistencies in invoice or contract information (incorrect tax identification numbers, addresses, signatures, seals, issuance dates, etc.);
• Absence of actual payment records or failure of large-value transactions to be conducted through banking channels;
• Lack of evidence regarding the delivery, acceptance, or existence of goods and services;
• Abnormal transaction values significantly deviating from prevailing market prices;
• Suppliers issuing the documents have no actual business operations, personnel, identifiable business premises, or are classified as high-risk entities concerning invoice issuance.

III. Legal regulations governing the use of fraudulent documents for accounting purposes

1. What acts are prohibited in the accounting sector?

Pursuant to Article 13 of the Accounting Law 2015, the following acts are strictly prohibited to ensure the integrity and transparency of financial information:

• Forging, making false declarations in, or deleting accounting documents or records;
• Providing or certifying false accounting information or data;
• Omitting assets or liabilities from accounting books;
• Destroying or damaging accounting documents before the expiration of the statutory retention period;
• Maintaining two or more inconsistent accounting book systems or financial statements;
• Bribing, threatening, or coercing accountants to commit violations;
• Leasing, borrowing, or lending accountant certificates or accounting service practice certificates;
• Appointing individuals who fail to satisfy statutory qualifications and standards as accountants;
• Providing accounting services without satisfying legal conditions or using unauthorized business titles;
• Colluding with others to provide inaccurate accounting information;
• Other prohibited acts as prescribed by anti-corruption legislation applicable to accounting activities.

2. What administrative sanctions apply to the use of fraudulent documents for accounting purposes?

Pursuant to Clause 3, Article 8 of Decree No. 41/2018/ND-CP, an act of forging or making false declarations in accounting documents for accounting purposes, where the conduct does not yet warrant criminal prosecution, is subject to a fine ranging from 20,000,000 VND to 30,000,000 VND. In addition, under Clause 4, Article 8 of the same Decree, the violator is required to destroy all forged or falsified accounting documents as a remedial measure.

In case the use of fraudulent documents results in a reduction of tax payable or an increase in tax refunds, exemptions, or reductions, administrative sanctions may also be imposed under Clause 1, Article 16 of Decree No. 125/2020/ND-CP, including a fine equal to 20% of the under-declared tax amount, together with an obligation to pay the outstanding tax and late-payment interest under Clause 2, Article 16 of the Decree.

3. In which cases can the use of fraudulent documents for accounting purposes result in criminal liability?

Pursuant to Article 221 of the Criminal Code 2015 (as amended by Clause 1 and Clause 3, Article 2 of the Law Amending the Criminal Code 2017) concerning the offense of violating State regulations on accounting causing serious consequences, the use of fraudulent documents for accounting purposes may result in criminal prosecution if serious violations and statutory levels of damage are established.

Typical circumstances include:

• Forging, making false declarations in, or deleting accounting documents or records;
• Agreeing with or coercing another person to provide or certify false accounting information;
• Keeping assets, funding sources, or funds of an accounting entity outside the accounting books;
• Destroying or damaging accounting records before the statutory retention period expires;
• Maintaining two or more accounting book systems to conceal assets or funding sources.

Applicable sanctions include:

• Causing damage ranging from 100 million VND to under 300 million VND, or causing damage below 100 million VND but repeating the violation after disciplinary sanctions: Applying for non-custodial reform for up to three years or imprisonment from one to five years.
• Causing damage ranging from 300 VND million to under 1 billion VND, or involving aggravating circumstances such as organized crime, profit-driven motives, or sophisticated methods: Applying imprisonment from three to twelve years.
• Causing damage of 1 billion VND or more: Applying imprisonment from ten to twenty years.

In addition, offenders may be prohibited from holding positions or practicing in the accounting profession for a period of one to five years and may be subject to asset confiscation.

4. Which authority has jurisdiction to investigate the use of fraudulent documents for accounting purposes?

Pursuant to Article 163 of the Criminal Procedure Code 2015 (as amended and supplemented in 2025), investigative jurisdiction over acts involving the use of fraudulent documents for accounting purposes, where criminal elements are present, is determined as follows:

• The Investigation Agencies of the People’s Public Security Forces have jurisdiction to investigate most criminal offenses, including accounting, taxation, and economic crimes such as the use of fraudulent documents for accounting purposes.
• Military Investigation Agencies have jurisdiction only if the case falls within military or national defense sectors.
• The Investigation Agency of the Supreme People’s Procuracy has jurisdiction only over offenses infringing judicial activities and certain corruption or position-related offenses occurring within judicial proceedings.

Furthermore, under Clause 5, Article 163, investigative jurisdiction may be allocated among district-level, provincial-level, or ministerial-level investigation agencies depending on the seriousness, scope, complexity, organizational nature, or inter-provincial/international elements of the case.

IV. Questions regarding the use of fraudulent supporting documents for accounting purposes

1. Is the use of purchased invoices considered the use of fraudulent documents?

The use of purchased invoices by an enterprise is not automatically deemed the use of fraudulent documents for accounting purposes. A purchased invoice is only considered a fraudulent document if it does not reflect an actual economic transaction or is issued in violation of legal regulations.

Specifically, a purchased invoice may be regarded as a fraudulent document in the following circumstances:

• The sale and purchase transaction did not actually occur;
• The invoice was issued by a “shell company” that does not conduct actual business operations;
• Goods or services were never supplied, yet an invoice was issued to record expenses;
• Information on the invoice was falsified for the purpose of legitimizing expenses.

Conversely, if a purchased invoice accurately reflects an actual transaction and is supported by complete documents, valid payment records, and proper acceptance documents, it remains a lawful accounting document in accordance with accounting and tax regulations.

2. Can an accountant be held liable for using fraudulent documents under the instruction of a superior?

An accountant may still take legal responsibility for using fraudulent documents for accounting purposes, even if such actions were carried out under the instruction of a superior. Specifically:

• Regarding administrative sanctions, Clause 3, Article 8 of Decree No. 41/2018/ND-CP provides that forging or making false declarations in accounting documents, where the conduct does not yet warrant criminal prosecution, is subject to a fine ranging from 20,000,000 VND to 30,000,000 VND. In addition, Clause 3 of the same Article stipulates that any person who agrees with or compels another person to forge or falsify accounting documents shall be subject to equivalent sanctions. 
• If the conduct results in serious consequences, the accountant may be subject to criminal prosecution under Article 221 of the Criminal Code 2015 (as supplemented by Clause 1 and Clause 3, Article 2 of the Law Amending the Criminal Code 2017) concerning the offense of violating accounting regulations causing serious consequences.

However, when determining liability, competent authorities will also consider factors such as:

• The accountant’s role and level of involvement;
• Whether the accountant was coerced into committing the act;
• Whether the accountant was fully aware of the fraudulent nature of the documents.

3. Does the use of fraudulent documents affect financial statements?

The use of fraudulent documents for accounting purposes directly and significantly affects the accuracy and reliability of financial statements. Specifically, it may:

• Distort revenue, expenses, and profits, causing business results to fail to reflect actual performance;
• Affect the balance sheet through the inaccurate recognition of assets, liabilities, or equity;
• Reduce the transparency and credibility of financial statements, creating risks during audits or tax inspections;
• Result in accounting adjustments, tax reassessments, and administrative sanctions if discovered by competent authorities.

Furthermore, where the use of fraudulent documents is systematic in nature or causes serious consequences, the enterprise may also face legal risks under accounting and tax regulations, including potential criminal liability.

4. How can the legality of invoices and accounting documents be verified?

To mitigate the risks associated with the use of fraudulent documents, enterprises should verify the legality of invoices and accounting documents based on legal requirements and actual transaction records, including:

• Verifying the seller’s legal information, including tax identification number, enterprise name, and operational status on the tax authority’s system;
• Comparing invoice details with the actual transaction to confirm that goods or services were genuinely provided and supported by contracts and acceptance records;
• Verifying the validity of electronic invoices through the tax authority’s e-invoice portal to ensure that the invoice was lawfully issued;
• Reviewing payment documents, with priority given to bank transfers for high-value transactions to ensure transparency of cash flows;
• Examining the consistency of the supporting documents, including invoices, contracts, goods receipt and delivery notes, and handover records, to ensure consistency in content, timing, and value;
• Assessing risk indicators relating to business partners, such as unusually newly established enterprises, entities lacking actual business operations, or those with a history of invoice-related violations.

V. Why should you seek legal advice from NPLaw regarding issues involving the use of fraudulent documents for accounting purposes?

In matters involving the use of fraudulent documents for accounting purposes, legal risks often extend beyond administrative sanctions and may include tax reassessments, criminal prosecution, and direct impacts on business operations.

Accordingly, engaging legal counsel from NPLaw enables enterprises to:

• Accurately assess the legal risks associated with each specific act and distinguish accounting errors from violations carrying criminal implications;
• Conduct a comprehensive review of accounting records, supporting documents, and bookkeeping systems to identify violations and implement timely corrective measures;
• Obtain advice on appropriate remedial solutions aimed at minimizing tax exposure and administrative sanctions;
• Receive assistance in dealing with tax authorities, inspection bodies, and investigative agencies during audits, inspections, or investigations;
• Establish stronger internal control systems and accounting procedures to reduce the likelihood of future violations.

The information provided above is for reference purposes only. Should you require detailed advice regarding a specific case, please contact NPLaw for prompt legal assistance.