On July 9, 2021, the Vietnam Social Security and the General Department of Taxation (Ministry of Finance) held a signing ceremony for the Regulations on Data Sharing and Coordination between the two sectors. These regulations aim to serve the management of social insurance (BHXH), health insurance (BHYT) collection, and tax management.
This article will cover:
- Data integration between Social Insurance (BHXH) and Tax Authorities.
- This regulation aims to facilitate the management of social insurance (BHXH), health insurance (BHYT) contributions, and tax administration.
1. What data is exchanged between the Tax Authority and the Social Security Administration?
1.1. Information provided by the Social Insurance agency includes:
- Number of income-paying organizations participating in social insurance, number of employees participating in social insurance;
- Amount of social insurance contributions;
- Amount of social insurance debt;
- Organizations that pay income owed to social insurance;
- Further information as requested by the Tax authorities.
1.2. Information provided by the Tax Authority includes:
- Information about the income-paying organization: Business registration information, business license information, tax registration information; the operational status of the income-paying organization; newly established, dissolved, bankrupt, revoked business registration certificate, ceased operations, temporarily suspended operations, abandoned business address.
- The number of employees in the organization that pays the income.
- Mandatory social insurance contributions that the income-paying organization includes as expenses for tax purposes.
- "List of employees in the organization that pays income."
1.3. New features of the regulations on data sharing and coordination between Vietnam Social Security and the General Department of Taxation.
- During inspection and audit activities, the two agencies will share information on inspection and audit results. If necessary, the two agencies will cooperate to conduct thematic inspections of organizations paying income.
- Regarding the method of data sharing between the two connected sectors, data will be shared through intermediary systems that are compatible with Vietnam's e-Government architecture framework. Data must be digitally signed before being sent.
- Regarding reconciliation, correction, and troubleshooting of information technology systems: In cases where taxpayer information is still inconsistent, the Social Insurance agency will send the erroneous data to the Tax authority to notify the taxpayer to correct the information in accordance with the law on tax administration.
2. How should business managers change their management mindset?
2.1. Potential risks arising from asynchronous behavior
The wages of businesses are governed by a system of regulations concerning labor, wages, insurance, personal income tax, corporate income tax, payroll accounting, and other employee-related matters. Due to the numerous binding regulations, small and medium-sized enterprises (SMEs) face difficulties in ensuring the consistency and legality of their wage systems. Any inconsistency can lead to risks for businesses, such as:
- Businesses are being charged back taxes and fined for late insurance payments due to inconsistencies in the information they provide to the Social Insurance agency and the Tax agency regarding the number of employees and insurance contributions.
- The company was ordered to pay back personal income tax and salary expenses deducted from corporate income tax due to inappropriate, unreasonable, or invalid data.
- The company was ordered to pay back corporate income tax and late payment penalties for salary expenses due to inaccurate or incorrect employee numbers, resulting in unacceptable salary expenses.
- It is difficult or impossible to explain why employee data does not match tax and insurance records during tax settlement.
2.2. What solutions are available for businesses?
Below are some solutions for businesses to organize their payroll system effectively and avoid risks related to consistency and compliance with regulations on Labor, Wages, Insurance, Personal Income Tax, Corporate Income Tax, and Payroll Accounting:
1. Establish clear procedures: Clearly define the processes and responsibilities related to updating information, calculating salaries, paying taxes, and insurance to ensure that information on the number of employees, wages, and insurance is fully and accurately updated.
2. Using software:
Use payroll and human resources management software or integrated software to synchronize information between areas such as payroll, taxes, and insurance to avoid errors and data duplication.
3. Training and knowledge enhancement for employees:
Ensure that payroll and accounting staff are trained in regulations related to salaries, taxes, and insurance.
4. Continuous updates:
Stay up-to-date on new changes in legislation to ensure you are always current on-time and aware of regulations related to wages, taxes, and insurance.
5. Regular internal audits:
Conduct internal audits of payroll, tax, and insurance processes to detect errors and make timely adjustments. If inconsistencies are found between pieces of information, verify and resolve them immediately to avoid future problems.
Remember, complying with regulations regarding labor, wages, insurance, and taxes not only helps avoid potential risks but also lays a solid foundation for the sustainable growth of your business.
Implementing the above is not easy for businesses; the effective solution is to use professional services. Collaborating with payroll, tax, and accounting firms or professionals helps ensure accuracy and compliance.
See detailed information about our services in the article.