The initial Law on Tax Administration was approved by the National Assembly on November 29, 2006 and took effect from July 1, 2007. Since then, the Law on Tax Administration has been amended and supplemented three times in 2012, 2014 and 2016. After more than 10 years of implementation, the Law on Tax Administration achieved certain results, making an important contribution to Vietnam’s financial modernization.
On June 13, 2019, the National Assembly passed the Law on Tax Administration No. 38/2019/QH14 (Amendment Law). Announced on June 27, 2019 and taking effect in stages from July 1, 2020, the Law Includes 17 Chapters and 152 Articles.
Significant changes arising from the new Law include:
Prohibited activities in implementing taxation administration
Article 6: Addition of 4 points for prohibited activities in tax administration:
i. Collusion, connection, cover-up between taxpayers and tax officials, tax authorities for transfer pricing and/or tax evasion. (Clause 1)
ii. Deliberate avoidance of declaration or inadequate, late, inaccurate declaration of tax liabilities. (Clause 4)
iii. Obstructing operations of tax officials. (Clause 5)
iv. Selling goods and providing services without issuance of invoices as prescribed by law, using illegal invoices, and using invoices illegally. (Clause 7)
Rights of taxpayers
Article 16: Addition of 4 rights of taxpayers:
i. Receive documents related to tax liabilities from competent authorities upon inspection, review and/or audit. (Clause 2)
ii. Receive exemptions from penalties for administrative tax offences, and exemption from late payment interest for cases where taxpayers comply with guidelines and handling decisions iii. from tax authorities and/or state authorities on determination of their tax liabilities. (Clause 11)
iv. Access to and printing of all electronic records that taxpayers have sent to web portals of the tax authorities as prescribed in this Law and law on e-transactions. (Clause 13)
Using electronic records in transactions with tax authorities and relevant organizations and/or individuals. (Clause 14)
Tax declarations, tax imposition, tax payment and tax refunds
1. Tax declarations
Article 42: Additions for declaration at the head office, local allocation
Taxpayers shall declare tax at the local tax authority in charge of the area in which their headquarters are based. A taxpayer that does accounting mainly at its headquarters, but has dependent units in other provinces, is to declare tax in the Province in which the headquarters is based, and is distribute tax accordingly to each Province. The Minister of Finance is to provide further guidelines.
At Article 44: Revision for deadlines for submission of tax declaration dossiers:
At Clause 3, Article 47: Tax dossier supplementation:
i. Where a tax declaration dossier submitted to the tax authority is erroneous or inadequate, supplementary documents may be provided within 10 years from the deadline for submission of the erroneous or inadequate tax declaration dossier but before the tax authority, or another competent authority, announces a decision on tax document examination.
ii. After the tax authority, or competent authority, issues a conclusion or tax decision when the inspection is done:
- The taxpayer may provide supplementary tax documents if they increase the tax payable or reduce the deductible tax, exempted tax or refundable tax, and can face administrative penalties for the violations specified in Article 142 and Article 143 of the Law;
- If the supplementation leads to a decrease in the tax payable or an increase in the deductible tax, exempted tax or refundable tax, the taxpayer is to follow procedures for filing tax-related complaints.
Download our updated Vietnam Compliance Calendar 2021-2022, which helps companies understand and plan for their accounting, taxation, payroll and statistical lodgement obligations here.
2. Tax imposition
At Clause 5, Article 51: Flat tax payable by household businesses and individual businesses
Household businesses and individual businesses whose revenues and employees reach the upper limit for extra-small enterprises prescribed by regulations of law on small and medium enterprises are to undertake accounting and declare tax.
3. Tax payments
Article 57, concerning the order for payment of taxes, late payment interest and fines:
i. Tax, late payment interest and fines are to be paid in chronological order and in the order specified in Clause 2 of the Article.
ii. The order for payment of tax, late payment interest and fines:
- Overdue tax, fines and late payment interest subject to enforcement;
- Overdue tax, fines and late payment interest that are yet to subject to enforcement;
- Recently incurred tax, late payment interest and fines.
Clause 2, Article 61, regarding paying tax during the settlement of complaints and lawsuits
i. If the tax paid, late payment interest or fine is greater than that determined by a court decision, judgment or complaint settlement decision issued by a competent authority, the overpaid amount will be refunded.
ii. The taxpayer is entitled to request the tax authority to pay an interest at 0.03% per day on the overpaid amount. The interest is to be paid from the central government budget.
4. Tax refunds
i. Tax return classifications abolishes regulations on the classification of tax refund dossiers under international treaties subject to pre-payment inspection (Clause 2, Article 73)
ii. The time limit for processing tax refund dossiers provides additional regulations on the payment of 0.03% interest per day if the refund is delayed (Clause 3, Article 75)
iii. Tax authorities can inspect claims eligible for refund before inspection according to tax-related risk management within 5 years from the issuance of the tax refund decisions (Article 77).
Article 83: Cases of tax cessation
i. If a taxpayer dies or is declared dead, missing or incapacitated by the court. The charge-off date is the issuance date of the death certificate or an equivalent document as prescribed by civil registration laws, or the court’s declaration that the taxpayer is dead, missing or incapacitated.
ii. The taxpayer submits a dissolution decision to the tax authority or business registration authority, the business registration authority has posted a notice on the national business registration portal but the taxpayer has not completed the dissolution procedures. The cessation date is the day on which the business registration authority posts the afore mentioned notice on the national business registration portal.
Article 84: Heads of supervisory tax authorities of taxpayers are to determine cessation cases.
Article 79: Addition for cases of tax exemption
Individuals whose annual personal income tax payable on salary or wage is VND 50.000 or less.
Tax inspection and examination
Article 110: Revision for duration of an inspection
The duration of an inspection is not to exceed 10 working days and is to be specified in the inspection decision. The inspection begins when the decision is announced. Where ab inspection is complicated, the issuer of the decision may extend the duration for up to 10 more days.
Tax management for enterprises with associated transactions
Clause 5, Article 42: Rules for declaring and calculating taxable prices involving related-party transactions:
i. Values of related-party transactions are to be determined and declared by analyzing and comparing with independent transactions, the nature of operation and nature of the transaction, in order to determine tax liability in the same manner as that of transactions between independent parties;
ii. Values of related-party transactions shall be adjusted according to independent transactions to declare tax in order that in taxable income is not decreased;
iii. Taxpayers whose businesses are small in scale and pose low tax risk are exempt from compliance to provisions of Point a and Point b of this Clause and may apply simplified related-party transaction declaration procedures.
Our comprehensive Vietnam Tax Guide 2021 covers taxation in Vietnam – for both corporate taxpayers and individuals. This update includes changes arising during the 2021 year due to Covid-19 stimulus incentives from the government and other material changes arising for taxpayers in 2021.
Tax administration for e-commerce
Clause 4, Article 42: Rules for tax declaration and tax calculation for e-commerce
For electronic commerce, digital business and other services provided by foreign providers without permanent establishments in Vietnam, the overseas providers are to directly, or authorize representatives to, apply for taxpayer registration, declare and pay tax in Vietnam in accordance with regulations of the Minister of Finance.
Responsibilities of Ministries, Ministry-level agencies, Governmental agencies for e-commerce
i. The Ministry of Industry and Trade: Directing and providing guidelines to authorities on sharing and providing related information so as to cooperate with the Ministry of Finance in tax administration of enterprises and individuals involved in activities of e-commerce, commercial rights transfer and related activities (Clause 3, Article 15);
ii. The State Bank of Vietnam: Building and developing systems for national e-commerce payment, integrated electronic payment utilities so as to widely implement e-commerce models; Establishing managing and supervising mechanism for payment transactions, assisting tax administration for cross-border service provision in e-commerce (Clause 5, Article 15);
iii. Commercial banks: Deduct and pay tax in compliance with provisions on taxation of overseas organizations and individuals whose e-commerce activities generate income in Vietnam (Clause 3, Article 27).
Please peruse our comprehensive article covering digital service providers and the compliance requirements for foreign entities operation in Vietnam here.
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