On 13 June 2019, the National Assembly had passed the new Law on Tax Administration No. 38/2019/QH14. The new Law will take effect from 01 July 2020, except for the provision on E-invoices and E-documents, which shall be effective from 01 July 2022.
In comparison with the current laws, the new Law on Tax Administration contains some notable changes as follows:
Supplementing regulations to enhance control on enterprises engaged in related party transactions (“RPTs”)
- Some specific guidelines in Decree 20/2017/ND-CP on tax administration for enterprises engaged in RPTs are included in Law on Tax Administration 2019 such as arm’s length principle, principle of comparative analysis with arm’s length transactions and emphasis on “substance over form” rules. Besides, any adjustments of RPTs’ price are not allowed to reduce the taxable income.
- The act of wrongly declaring RPTs information, which leads to under-declaration and payment of tax or over-declaration of the exempted and refundable tax, is also regarded as administrative violation and is subject to tax administrative penalties.
Supplementing provisions to enhance control on E-commerce activities
- Regarding E-Commerce activities, business activities based on digital platforms and other services conducted by an overseas supplier without permanent establishments in Vietnam, the overseas supplier must register a tax code, declare and pay tax in Vietnam, either directly or by authorization.
- When making payment to an overseas entity who conducted cross-border business activities based on digital platforms, with no presence in Vietnam, the Vietnamese entity must withhold, declare and make tax payments under the overseas entity’ registered tax code.
- In addition, commercial banks are responsible for withholding and making tax payments on behalf of overseas parties conducting E-Commerce activities and deriving income from Vietnam.
Supplementing provisions to increase transparency and ensure benefits for taxpayers
- Taxpayers have the right to know the deadline for settling tax refunds, non-refundable amounts and legal basis for non-refundable amounts.
- Taxpayers will not be subject to administrative penalties and late payment interest if they declare and pay taxes following the guidance and instruction of tax authorities.
- Supplementing regulations on the deadline for processing tax refund of tax authority. Accordingly, the tax authority must process the tax refund within 06 working days in case the tax refund dossier is eligible for tax refund before examination and 40 days in case the tax refund dossier is subject to examination first. The deadline shall be counted from the acceptance date of the dossier.
- Taxpayers have the right to request tax authorities to pay interest with the rate of 0.03% per day on overpaid taxes, late payment interests and penalties in case of dispute settlement in which the paid amount is refunded to taxpayers in accordance with the tax authority’s administrative penalty decision and in case of late issuance of tax refund decision.
Deadline for tax declaration and supplementary declaration
Deadline for tax declaration submission is adjusted for more convenience as follows:
- For quarterly tax declaration and payment, the deadline shall be the last day of the first (1st) month of the next quarter;
- For annual tax finalization, the deadline shall be the last day of the third (3rd) month from the end of calendar year or fiscal year;
- For annual tax declaration, the deadline shall be the last day of the first month (1st) of the calendar year or fiscal year;
- For personal income tax finalization of individuals submitting directly, the deadline shall be the last day of the fourth (4th) month from the end of the calendar year.
In addition, enterprises are allowed to submit supplementary declaration forms in the following cases:
- After tax authorities have announced the decision for tax inspection at the enterprise. Of note, the enterprise is still subject to tax administrative penalties;
- In case the supplementary declaration leads to reduction in taxes payable or increases in taxes creditable, tax exemption, reduction or refund, the enterprise must follow the process for settlement of tax dispute.
Personal tax code
Upon completion of the new personal identification numbers to the entire population, the new personal identification numbers will be used as tax codes instead of issuing separate individual tax codes.
E-invoices and E-documents
Provisions related to E-invoices and E-documents are similar to the guidelines in Decree 119/2018 / ND-CP, compulsorily effective from 1 July 2022. The application of E-invoices and E-documents before this date is promoted.
Some other notable regulations
- Legal representatives of taxpayers must fulfill the tax payable liabilities of enterprises subjected to tax enforcement following administrative decisions before leaving Vietnam and the exit from Vietnam might be suspended in accordance with the regulations on immigration.
- Business households and individuals with size of revenue and labor higher than or equal to the highest criteria of micro enterprises, as stipulated in the Law on assistance for small and medium enterprises, must apply Vietnamese Accounting Standard, declare and pay taxes under the declaration method.
We do trust the above points are notable and sufficient, but should you have any question or need a deeper discussion on this issue, please do not hesitate to contact us.
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