Law No. 38/2019/QH14 on Tax Administration, promulgated on June 13, 2019, published in the Official Gazette on July 18, 2019, came into effect on July 1, 2020. However, the regulations on electronic invoices and documents came into effect on July 1, 2022.
The 2019 Tax Administration Law introduces many new provisions that directly affect taxpayers.
Here are nine key new points to know in the 2019 Tax Administration Law that are closely related to taxpayers, especially businesses.
1. Expanding taxpayer rights.
Compared to the old tax administration law, taxpayers' rights have been expanded as follows:
- Receive documents related to tax obligations from relevant authorities during inspections, examinations, and audits.
- The deadline for processing tax refunds, the amount of tax that will not be refunded, and the legal basis for that non-refundable amount are known.
- Having received tax assessment decisions, tax audit reports, and tax inspection reports, and having the right to request clarification of the content of tax assessment decisions;
- No administrative penalties for tax violations, and no late payment interest will be charged, in cases where the taxpayer acts in accordance with written guidance and decisions of the tax authorities or other competent state agencies regarding the determination of the taxpayer's tax obligations.
2. Regulations on tax management for e-commerce activities
Article 42 of the 2019 Law on Tax Administration stipulates:
"For e-commerce, digital platform-based businesses, and other services provided by foreign suppliers without a permanent establishment in Vietnam, the foreign supplier is obligated to directly or authorize the registration, declaration, and payment of taxes in Vietnam in accordance with the regulations of the Minister of Finance."
3. Tighten management of transfer pricing activities.
Article 42 of the 2019 Law on Tax Administration stipulates the principles for declaring and determining the taxable price for related-party transactions in order to tighten the management of transfer pricing activities as follows:
"Declaring and determining transfer pricing based on the principle of analysis and comparison with independent transactions and the principle that the nature of the activity and transaction determines the tax liability, in order to determine the tax liability payable as if the transaction were between independent parties;
The transfer pricing is adjusted according to the independent transaction for the purpose of declaring and determining the amount of tax payable, based on the principle of not reducing taxable income;
"Small-scale taxpayers with low tax risk are exempt from the provisions of points a and b of this clause and are subject to a simplified mechanism for declaring and determining transfer pricing."
4. Legalize regulations on electronic invoices and documents.
Article 89 of the 2019 Law on Tax Administration stipulates:
"An electronic invoice is an invoice, with or without a tax authority code, presented in electronic data format by organizations or individuals selling goods or providing services. It records information about the sale of goods or provision of services in accordance with accounting and tax laws, using electronic means, including cases where the invoice is generated from a cash register with an electronic data transfer connection to the tax authority."
Regarding the question of the mandatory timeframe for using electronic invoices, businesses should apply the following:
Clause 1, Article 4 of Government Decree No. 119/2018/ND-CP dated September 12, 2018, stipulates the principles for the creation, management, and use of electronic invoices:
“1. When selling goods or providing services, sellers (except for household and individual businesses as stipulated in Clause 6, Article 12 of this Decree) must issue electronic invoices with or without tax authority codes to buyers in the standard data format prescribed by the tax authority and must fully record the contents as prescribed in this Decree, regardless of the value of each sale of goods or provision of services.”
Clause 2, Article 35 of Government Decree No. 119/2018/ND-CP dated September 12, 2018, stipulates the effective date as follows:
2. The implementation of electronic invoices and electronic invoices with tax authority codes as prescribed in this Decree shall be completed for all businesses, economic organizations, other organizations, households, and individual business owners no later than November 1, 2020.
Therefore, from November 1st, 2020, the application of electronic invoices will be implemented according to Decree No. 119/2018/ND-CP and Circular No. 68/2019/TT-BTC:
The use of electronic invoices is mandatory from November 1, 2020.
Regarding the question of whether Decree 119/2018/ND-CP predates the 2019 Tax Administration Law, and why Chapter X of the Tax Administration Law contains provisions on electronic invoices, which regulation should be applied:
Clause 2 of Article 151 of the 2019 Tax Administration Law stipulates:
"Article 151. Enforcement
1. This Law shall come into effect on July 1, 2020, except as provided in Clause 2 of this Article.
2. The provisions on electronic invoices and documents of this Law shall take effect from July 1, 2022; agencies, organizations, and individuals are encouraged to apply the provisions on electronic invoices and documents of this Law before July 1, 2022.”
In official letter No. 2578/TCT-CS dated June 23, 2020, the following response was given to Vinh Duc General Hospital Joint Stock Company:
"To implement the Law on Tax Administration No. 38/QH14/2019, the Ministry of Finance is drafting a proposal to the Government to replace Decree No. 119/2018/ND-CP regulating electronic invoices and documents. Once the Government issues a Decree regulating electronic invoices and documents in accordance with Law on Tax Administration No. 38/QH14/2019, the provisions of that Decree on electronic invoices and documents will be followed."
Therefore, when a replacement decree is issued, that decree will be applied. Currently, Decree 119/2018/ND-CP regulating electronic invoices and documents is in effect.
5. Extend the deadline for filing personal income tax returns.
The old regulations stipulated the deadline for submitting tax return documents as follows:
The deadline for submitting tax returns is no later than the 90th day from the end of the calendar year, or the fiscal year for annual tax returns.
A new provision regarding the deadline for submitting tax return documents, Article 44 of the 2019 Tax Administration Law, allows for:
The deadline for submitting personal income tax returns for individuals who directly file their tax returns is the last day of the fourth month from the end of the calendar year.
Thus, the 2019 Tax Administration Law has extended the deadline for submitting personal income tax returns by one month compared to the 2006 Tax Administration Law.
Note: This regulation applies to individuals who directly file their tax returns.
6. Regarding the tax registration deadline
The old regulations stipulated the deadline for tax registration:
Tax-registered entities must register for tax within 10 working days from the date of: + Receiving a business registration certificate or establishment and operation license or investment certificate; + Commencing business operations for organizations not subject to business registration or households and individuals subject to business registration but not yet granted a business registration certificate.
New regulations regarding tax registration deadlines:
Article 30 of the 2019 Tax Administration Law stipulates that taxpayers must register for tax and be issued a Tax Identification Number (TIN) by the tax authority before commencing production or business activities or incurring any obligations to the state budget.
7. Additional information regarding tax authorities
Article 2 of the 2019 Tax Administration Law stipulates:
2. Tax authorities include:
a) Tax authorities include the General Department of Taxation, the Tax Department, the Tax Sub-department, and the Regional Tax Sub-department;
b) Customs agencies include the General Department of Customs, Customs Departments, Post-Clearance Inspection Departments, and Customs Sub-departments.
Thus, the Law has added regional tax offices to the list of tax administration agencies.
8. Supplementing tax management content.
Article 4 of the 2019 Tax Administration Law stipulates that it includes three new points in the management content as follows:
- Managing invoices and documents;
- International cooperation on taxation;
- Disseminating information and providing support to taxpayers.
9. Expanding responsibilities in international cooperation on taxation.
Article 12 stipulates international cooperation on taxation by tax authorities. It includes the additional responsibility of "Implementing measures to support tax collection in accordance with international treaties to which Vietnam is a signatory, including:
- We propose that foreign tax authorities and competent agencies provide assistance in collecting taxes abroad for tax debts owed in Vietnam that taxpayers are obligated to pay even when they are no longer in Vietnam.
- Provide tax collection support at the request of foreign tax authorities for tax debts payable abroad by taxpayers in Vietnam through debt collection enforcement measures.
See more: Law on Tax Administration 2019 (Law No. 38/2019/QH14)