What is tax imposition?
Tax assessment is the fact that a taxpayer is assessed by the tax authority of the payable tax amount due to failure to declare or to fully declare tax bases.
Enterprises need to manage the following 12 well to avoid tax imposition
1. Make tax registration according to regulations.
2. To fully and accurately declare tax according to the provisions of the Tax Administration Law.
3. To submit additional tax dossiers at the request of tax administration agencies.
4. To fully and accurately reflect data arising on accounting books to determine tax obligations.
5. To present accounting books, invoices, vouchers and necessary documents related to the determination of the factors serving as a basis for tax calculation; determine the payable tax amount within the prescribed time limit.
6. To comply with a tax examination decision within 10 working days from the date of its signing, unless the inspection time is postponed according to regulations.
7. To comply with the tax inspection decision within 15 days from the date of its signing, unless the inspection time is delayed according to regulations.
8. To promulgate regulations on the sale and purchase and control the purchase, sale and exchange of goods and services not according to normal transaction values on the market.
9. Receive only legal invoices when buying goods or services.
10. Failure to flee or distribute property in order not to fulfill tax obligations.
11. Promulgate regulations to ensure that businesses always carry out transactions in accordance with the economic nature and the reality that arises.
12. To comply with regulations on the obligation to declare and determine associated transaction prices and provide information according to regulations on tax administration applicable to enterprises having associated transactions.
Cases subject to tax assessment
As prescribed at Decree 126/2020 / ND-CP guiding the Law on Tax Administration 2019, NTaxpayers shall be determined by tax authorities in the following cases:
Article 33. Time limit for first tax registration
1. If taxpayers register tax together with enterprise registration, cooperative registration, business registration, the time limit for tax registration is the time limit for enterprise registration, cooperative registration, business registration according to provisions of law.
2. If taxpayers register tax directly with tax offices, the tax registration time limit is 10 working days from the following date:
a) To be granted a certificate of business household registration, license of establishment and operation, certificate of investment registration, and decision of establishment;
b) Starting business operations for organizations that are not subject to business registration, or business households, business individuals that are subject to business registration but have not been granted a business registration certificate;
c) The responsibility arises to withhold tax and pay tax on behalf of; organizations submitting on behalf of individuals under business cooperation contracts, documents;
d) Sign a contract with the foreign contractor, subcontractor to declare and pay tax directly with the tax authority; contract, oil and gas agreement;
dd) A personal income tax liability arises;
e) A request for tax refund arises;
g) Obligations other than the state budget arise.
3. Income-paying organizations and individuals shall have to register tax on behalf of income-earning individuals within 10 working days from the date of arising of tax obligations in cases where individuals do not have tax identification numbers; Tax registration on behalf of a taxpayer's dependents within 10 working days from the date the taxpayer registers family deduction as prescribed by law in case the dependent does not have a tax identification number.
2. Failure to declare tax or to declare tax inadequately, truthfully and accurately according to the provisions of Article 42 of the Law on Tax Administration.
Article 42. Principles of tax declaration and tax calculation
1. Taxpayers must accurately, truthfully and fully declare their tax returns according to the form set by the Finance Minister and submit all vouchers and documents specified in their tax declaration dossiers to the authorities. tax administration.
2. Taxpayers shall calculate by themselves the payable tax amount, unless the tax calculation is conducted by tax administration agencies according to the Government's regulations.
3. Taxpayers shall declare and calculate taxes at competent local tax offices where their head offices are located. If the taxpayer does concentrated accounting at the head office and has a dependent unit at another provincial administrative unit where the head office is headquartered, the taxpayer shall declare tax at the head office and calculate and allocate the obligations. Taxes are payable according to each locality where state budget revenues are enjoyed. The Minister of Finance shall detail this Clause.
4. For e-commerce business, digital-based business and other services provided by an overseas supplier without a permanent establishment in Vietnam, the domestic supplier apart from the obligation to directly or authorize tax registration, declaration and payment in Vietnam according to regulations of the Minister of Finance.
5. The principles of declaration and determination of tax calculation prices for related transactions are prescribed as follows:
a) Declare and determine associated transaction prices according to the principles of analysis and comparison with independent transactions and the principle of operational nature, the transaction for determining tax obligations to determine payable tax obligations such as in transaction terms between independent parties;
b) Transfer price is adjusted according to an independent transaction to declare and determine the amount of tax payable on the principle of not reducing taxable income;
c) Taxpayers with small scale and low tax risks are exempt from the provisions of Points a and b of this Clause and are allowed to apply the simplified mechanism in declaration and determination of transfer pricing.
6. The tax declaration principles for the mechanism of prior agreement on the method of determining tax calculation prices are specified as follows:
a) The application of the pre-agreement mechanism on the method of determining the taxable price is based on the request of the taxpayer and the agreement between the tax authority and the taxpayer under a unilateral or bilateral agreement. and multilateralism between tax authorities, taxpayers and foreign tax authorities and relevant territories;
b) The application of the pre-agreed mechanism on the method of determining the taxable price must be based on the taxpayer's information, the commercial database with the legal verification;
c) The application of the mechanism of prior agreement on the method of determining taxable prices must be approved by the Minister of Finance before implementation; Bilateral and multilateral agreements involving foreign tax authorities shall comply with the provisions of law on international treaties and international agreements.
3. Failing to submit additional tax dossiers at the request of tax administration agencies or having supplemented tax dossiers but are inadequate, truthful or accurate for tax calculation bases to determine payable tax amounts.
4. Failure to reflect or reflect incompletely, truthfully and accurately data on accounting books to determine tax obligations.
5. Failure to present accounting books, invoices, vouchers and necessary documents related to the determination of the factors serving as a basis for tax calculation; determine the payable tax amount within the prescribed time limit or when the time limit for tax examination or inspection expires at the taxpayer's office has expired.
6. Failing to comply with the tax examination decision within 10 working days from the date of its signing, unless the inspection time is postponed as prescribed.
7. Failure to comply with the tax inspection decision within 15 days from the date of its signing, unless the inspection time is postponed as prescribed.
8. Buying, selling, exchanging and recording the value of goods or services not according to the normal transaction values on the market.
9. Purchase and exchange of goods or services using illegal invoices or illegally using invoices of which goods or services are real according to the determination of agencies with investigation and inspection functions, check and have declared tax revenue and expenses.
10. There are signs of fleeing or dispersing the property in order not to fulfill tax obligations.
11. Conducting transactions which are not in accordance with the economic nature or the actual arising in order to reduce the taxpayer's tax liability.
12. Failure to comply with regulations on the obligation to declare and determine associated transaction prices or to provide information under regulations on tax administration for enterprises with associated transactions.
How to fix and bases for tax assessment
There are 2 ways of assessing taxes, each with different bases:
Assignment method 1: Assign each of the factors involved in determining payable tax amounts.
This means not fixing the total amount of tax payable, but assigning each factor relevant to the determination of the amount of tax payable.
a) Organizations and individuals are assigned each factor relevant to the determination of payable tax amounts in one of the following cases:
a.1) Through inspection of tax declaration documents, the tax authority has grounds to believe that the taxpayer has declared incompletely or incorrectly the factors that serve as a basis for determining the payable tax amount, and has requested the taxpayer additional tax declaration but the taxpayer does not make additional declarations or makes additional declarations inaccurately and truthfully at the request of tax authorities.
a.2) Through examination of accounting books, invoices and documents related to the determination of the payable tax amount by the taxpayer or through inspection, comparison, verification, accounting books, invoices and documents. from relevant organizations and individuals, the tax authority has grounds to prove that the taxpayer does inaccurate and untruthful accounting of the factors related to the determination of the payable tax amount.
a.3) Accounting of selling prices of goods or services inconsistently with actual payment prices that reduce taxable revenue or account purchase prices of goods and raw materials serving production and business not at real prices market-appropriate payments increase costs, increase creditable value-added taxes, and reduce tax liability.
a.4) Taxpayers submit tax declaration dossiers but cannot identify the factors that serve as the basis for determining the tax bases or determine the factors that serve as the basis for determining the tax bases but cannot calculate the tax bases themselves. tax payable.
a.5) Fall into one of the cases specified in Clauses 10, 11, 12, Article 14 of this Decree (10. There are signs of fleeing or distributing assets in order to not fulfill tax obligations; 11. Conducting transactions which are not in accordance with the economic nature, incorrectly arising in order to reduce tax obligations of Taxpayers; 12. Failure to comply with provisions on the obligation to declare and determine associated transaction prices or to provide information under regulations on tax administration applicable to enterprises having associated transactions.)
b) Bases for tax assessment
b.1) For corporate taxpayers
Based on databases of tax administration agencies and commercial database; valid documents and inspection results; verification results; the average minimum payable tax amount of 03 business establishments of the same goods, lines, trades and sizes in the locality; In cases where local business establishments do not have or have but not enough information on items, industries, trades and sizes of business establishments, information of business establishments in other localities may be used for printing. according to each factor.
b.2) For individuals transferring, receiving inheritance or gifts being real estate
The tax authority shall determine the taxable price in case the individual declares and pays tax at a taxable price lower than the normal transaction price on the market. The taxable price determined by the tax authority must be consistent with the normal transaction price on the market but not lower than the price set by the People's Committee of the province or city at the time of tax calculation.
c) On the basis of each fixed element, the tax authority shall determine the payable tax amount in accordance with current tax laws.
Fixing method 2: Fix the amount of tax to be paid in proportion to the turnover.
Taxpayers are assessed the payable tax amount as a proportion of their turnover according to the provisions of law, as follows:
a) Organizations that pay value-added tax according to the direct method, and individuals that pay tax by the method of declaration may have their payable tax amount assessed as a proportion of their turnover when falling into one of the prescribed cases. Clauses 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 and 11, Article 14 of this Decree.
b) Bases for tax assessment
Based on databases of tax administration agencies and commercial database; valid documents and inspection results; verification results; minimum turnover of 03 business establishments of the same goods, industries, trades and sizes in the locality; In cases where a local business establishment does not have, or does not have, but does not have, information on, items, trades, or the size of the business establishment, information from another local business establishment with the same conditions natural and economic development to fix taxable revenue.
c) On the basis of the fixed revenue, the tax authority shall determine the payable tax amount in accordance with current tax laws.
Assign corporate income tax on sales
The assessment of corporate income tax on revenue is a highly probable case due to violations such as: Failure to produce accounting books as a basis for CIT calculation, leading to CIT assessment on sales.
The imposition of corporate income tax on revenue can also occur when an enterprise performs transactions that are incompatible with the economic nature, and the fact that the CIT payable is no longer true. economic transactions, resulting in the assessment of CIT on sales.