The Tax Administration Law regulates almost all aspects related to the management of tax collection from individuals and businesses in Vietnam in 2020.
Decree 126/2020/ND-CP guiding the Law on Tax Administration officially came into effect on December 5, 2020.
These changes include tax declaration procedures for businesses, effective from the December 2020 filing period for businesses filing monthly, and from the fourth quarter for businesses filing quarterly.
1. Businesses that do not incur monthly or quarterly personal income tax deductions are still required to file monthly/quarterly personal income tax returns.
From December 2020: Amendments to regulations: Organizations and individuals paying income without withholding personal income tax on a monthly or quarterly basis are still required to file tax returns (Clause 3, Point b, Article 7).
Previous regulations: According to point a.1, clause 1, Article 16 of Circular No. 156/2013/TT-BTC dated November 6, 2013, organizations and individuals paying income that does not incur personal income tax withholding on a monthly or quarterly basis are not required to file tax returns.
2. When filing supplementary or adjusted personal income tax returns, adjustments must be made for the entire month or quarter that was incorrectly declared.
From December 2020: Amendments to regulations on supplementary filing of personal income tax returns for organizations and individuals paying income from salaries and wages: They must also submit supplementary monthly and quarterly tax returns to correct any errors or omissions. (Point a, Clause 4, Article 7).
Previous regulations: Clause 5, Article 10 of Circular No. 156/2013/TT-BTC stipulates: If the annual tax return has already been submitted, only the annual tax return needs to be supplemented; it is not necessary to supplement the monthly or quarterly returns containing corresponding errors or omissions.
Consequence: Previously, most businesses included supplementary personal income tax declarations in their annual tax return. Now, with the regulation requiring adjustments to incorrectly declared quarters and months, this will lead to delayed payments for those incorrectly declared quarters and months.
The longer you delay filing the adjustment, the higher the late payment penalty will be.
3. Clearly define whether personal income tax declarations should be filed monthly or quarterly.
From December 2020: Amendments to regulations regarding organizations and individuals paying income from salaries and wages subject to personal income tax withholding: They are required to file personal income tax returns monthly. In cases where organizations and individuals pay income that meets the conditions for quarterly value-added tax filing, they may choose to file personal income tax returns quarterly (Point a, Clause 1, Article 8).
Previously: Point a.2, Clause 1, Article 16 of Circular No. 156/2013/TT-BTC stipulated that: Organizations and individuals paying income withholding tax of 50 million VND or more in a month for at least one type of personal income tax return must file tax returns monthly, except in cases where the organization or individual paying income files value-added tax returns quarterly.
Therefore: By default, personal income tax is filed monthly. If you meet the conditions for filing VAT quarterly, you can file personal income tax quarterly. The regulation that requires quarterly filing if the personal income tax payable is less than 50 million VND/month has been removed.
4. An amended declaration increasing the value-added tax refund requested is only permitted if the tax return for the next tax period has not yet been filed and the refund request has not yet been submitted.
From December 2020: The regulation is amended to stipulate that taxpayers are only allowed to file supplementary declarations to increase the value-added tax amount requested for refund when they have not yet submitted the tax return for the next tax period and have not yet submitted a tax refund request (Point b, Clause 4, Article 7).
Previous regulations: Based on the regulations in Circular No. 156/2013/TT-BTC dated November 6, 2013, of the Ministry of Finance, the General Department of Taxation has issued guidance: In cases where the deadline for filing the next tax period has not yet arrived, and the taxpayer has not yet submitted the tax return to transfer the remaining deductible VAT from the previous tax period to the "Tax deductible from the previous period carried over" item on the official tax return of the next tax period, and has not yet submitted the tax refund request to the tax authority, they may file an amended tax return to increase the refund request item on the amended tax return for that tax period.
5. Calculating quarterly provisional corporate income tax payments must be more accurate than before.
From December 2020: Amendments to regulations on quarterly provisional corporate income tax payments: Accordingly, the total amount of provisional corporate income tax paid for the first three quarters of the tax year must not be less than 75% of the corporate income tax payable according to the annual tax settlement, effective from the 2021 tax year. If a taxpayer underpays compared to the amount of provisional tax due for the first three quarters, they must pay late payment penalties calculated on the underpaid amount from the day following the last day of the deadline for provisional corporate income tax payment for the third quarter until the date the remaining amount is paid into the state budget (Point b, Clause 6, Article 8).
Previous regulations: According to Clause 6, Article 4 of Decree No. 91/2014/ND-CP and Article 17 of Circular 151/2014/TT-BTC, if the total amount of four provisional tax payments is 20% or more lower than the corporate income tax payable according to the final tax return, the enterprise must pay late payment interest on the difference of 20% or more between the provisional payments and the final tax return, calculated from the day following the last day of the deadline for paying the fourth quarter tax until the date of actual payment of the remaining tax amount.
Therefore: The total amount of corporate income tax provisionally paid for the first three quarters of the tax year must not be less than 75% of the corporate income tax payable according to the annual tax return.
6. For payments to individuals, including registered household businesses paying flat-rate taxes, the enterprise is responsible for declaring and paying the tax on their behalf.
From December 2020: The regulations are supplemented to stipulate that for businesses that pay bonuses, sales support, promotions, trade discounts, payment discounts, and other cash or non-cash support to individuals who are household businesses or individual business owners paying taxes under the lump-sum method, the organization is responsible for declaring and paying taxes on behalf of the individual as prescribed (Point d, Clause 5, Article 7).
Previous regulations: There are no specific regulations on this matter. To address the issue, based on Circular No. 219/2013/TT-BTC dated December 31, 2013, and Circular No. 92/2015/TT-BTC dated June 15, 2015, the General Department of Taxation has issued several temporary documents guiding organizations not to deduct tax, and not to declare or pay tax on behalf of individuals in cases of trade discounts.