Are taxpayers encountering force majeure situations in Vietnam eligible for tax payment extension?

What are regulations on determination of tax payment date in Vietnam?

Based on Article 58 of the Law on Tax Administration 2019, the determination of the tax payment date is stipulated as follows:

Determining the tax payment date

1. In the case of non-cash tax payments, the tax payment date is the date the State Treasury, commercial bank, other credit institution, or service organization deducts the amount from the tax payer's or the substitute payer's account and is recorded on the tax payment document.

2. In the case of direct cash tax payments, the tax payment date is the date the State Treasury, tax administration agency, or authorized tax collection organization issues the tax collection receipt.

Thus, the tax payment date is determined through non-cash tax payment and direct cash payment as follows:

- For non-cash tax payments, the tax payment date is the date the State Treasury, bank, or service organization deducts the amount from the tax payer's or substitute payer's account.

- For direct cash tax payments, the tax payment date is the date the tax administration agency issues the tax collection receipt.

Are taxpayers encountering force majeure situations in Vietnam eligible for tax deferral?​ (Image from the Internet)

Are taxpayers encountering force majeure situations in Vietnam eligible for tax deferral?

According to Article 62 of the Law on Tax Administration 2019, tax deferrals are stipulated as follows:

tax deferrals

1. tax deferrals are considered based on the tax payer's request in one of the following cases:

a) Suffering physical damage directly affecting production and business due to force majeure situations specified in Clause 27, Article 3 of this Law;

b) Forced to cease operations due to relocation of production and business facilities as required by competent authorities, affecting production and business results.

2. Taxpayers who fall under the cases eligible for tax deferrals as specified in Clause 1 of this Article are granted an extension for part or all of the payable tax amount.

3. The extension period is stipulated as follows:

a) Not more than 2 years from the tax payment deadline for the case specified in point a, Clause 1 of this Article;

b) Not more than 1 year from the tax payment deadline for the case specified in point b, Clause 1 of this Article.

4. Taxpayers are not fined and are not required to pay late payment interest on the outstanding tax amount during the extension period.

5. The head of the directly managing tax administration agency bases on the tax deferral application to decide the extended tax amount and the extension period.

Referring to Clause 27, Article 3 of the Law on Tax Administration 2019, force majeure situations are defined as follows:

Terminology explanation

In this Law, the following terms are understood as follows:

...

24. The independent transaction principle is applied in the tax declaration and determination of tax prices for taxpayers with related-party transactions to reflect the conditions of related-party transactions equivalent to independent transaction conditions.

25. The principle of the substance of activities and transactions determining tax obligations is applied in tax administration to analyze taxpayers' transactions and production and business activities to determine tax obligations corresponding to the value created from the substance of those transactions and production and business activities.

26. The ultimate parent company of a group is the legal entity that owns shares directly or indirectly in other entities of a multinational group, is not owned by any other entity, and the consolidated financial statements of the ultimate parent company of the group are not consolidated into any other legal entity's financial statements globally.

27. Force majeure cases include:

a) Taxpayers suffering physical damage due to natural disasters, catastrophes, epidemics, fires, unexpected accidents;

b) Other force majeure cases as prescribed by the Government of Vietnam.

Therefore, taxpayers encountering force majeure situations as stipulated in Clause 27, Article 3 of the Law on Tax Administration 2019 will be considered for tax deferral upon request.

What are regulations on receipt and processing of application for tax deferral in Vietnam?

Based on Article 65 of the Law on Tax Administration 2019, regulations on receipt and processing of application for tax deferral in Vietnam are stipulated as follows:

- The tax administration agency receives application for tax deferral from taxpayers through the following methods:

+ Direct receipt at the tax administration agency;

+ Receipt of applications sent via postal service;

+ Electronic receipt through the electronic transaction portal of the tax administration agency.

- The tax administration agency processes application for tax deferral according to the following regulations:

+ If the application is legal, complete, and in the correct format, a written notification of the tax deferral is sent to the taxpayer within 10 working days from the date of receiving the complete application;

+ If the application is incomplete as prescribed, a written notification is sent to the taxpayer within 3 working days from the date of receiving the application.