Is it allowed to submit a VAT dossier supplementation after the submission deadline in Vietnam?
Is it allowed to submit a VAT dossier supplementation after the submission deadline in Vietnam?
Based on Article 47 of the Law on Tax Administration 2019, which stipulates the tax dossier supplementation as follows:
Tax dossier supplementation
- Taxpayers who discover errors or omissions in tax returns already submitted to tax authorities are allowed to file supplementary tax returns within 10 years from the expiration of the submission deadline of the tax period with errors, but before the tax authority or competent authority announces the decision to inspect or audit.
- When the tax authority or competent authority has announced the decision to inspect or audit taxes at the taxpayer’s premises, the taxpayer can still file supplementary tax returns; the tax authority will impose administrative penalties regarding tax administration violations according to the provisions of Articles 142 and 143 of this Law.
- After the tax authority or competent authority has issued conclusions and decisions on tax treatment following the inspection or audit at the taxpayer's premises, the supplementary tax declaration is regulated as follows:
a) Taxpayers are allowed to file supplementary tax returns if they result in an increase in tax payable, a reduction in deductible tax, or a reduction in tax exemption, reduction, or refund, and are subject to administrative penalties for tax administration violations according to Articles 142 and 143 of this Law;
b) In cases where the taxpayer discovers errors or omissions in tax filings, if supplementary declarations reduce tax payable or increase deductible tax, exempted, or refundable tax, it follows the complaint resolution procedures regarding taxes.
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From the above regulations, it can be seen that even though the deadline for filing tax returns has passed, if a business discovers that its initial value-added tax (VAT) return contains errors, it can still file a supplementary VAT return within 10 years from the deadline of the filing period with errors, as long as this is done before the tax authority or competent authority announces an inspection or audit decision.
Is it allowed to submit a VAT dossier supplementation after the submission deadline in Vietnam? (Image from the Internet)
How to submit a VAT dossier supplementation in Vietnam?
According to Clause 4 Article 7 of Decree 126/2020/ND-CP, which stipulates the tax dossier supplementation, as follows:
Taxpayers can submit supplementary declarations for each tax return with errors or omissions based on Article 47 of the Law on Tax Administration and according to the form prescribed by the Minister of Finance. Taxpayers shall file supplementary returns as follows:
- If the supplementary declaration does not alter the tax liability, only the Explanatory Note for the supplementary declaration and related documents are required, and no supplementary tax return is required.
+ If the annual tax finalization return has not been submitted, the taxpayer files a supplementary tax return for the month or quarter with errors and includes the data from the supplementary declaration in the annual tax finalization return.
+ If the annual tax finalization return has been submitted, only the annual tax finalization return needs to be supplemented; in case of a supplementary declaration for personal income tax finalization for income recipients from salaries or wages, the month or quarter with corresponding errors must also be supplemented.
- If the supplementary declaration results in an increase in the payable tax or a decrease in the refunded tax amount previously credited by the state budget, the taxpayer must fully pay the additional tax amount or the excess refunded tax and any late payment charge into the state budget (if any).
+ If the supplementary declaration only alters the VAT to be carried forward to the next period, it must be declared in the current tax period. Taxpayers are only allowed to file a supplementary request to increase the refundable VAT when they have not submitted the tax return for the subsequent tax period and have not submitted a refund request.
What is the penalty for filing incorrect tax returns leading to insufficient tax payment in Vietnam?
According to Article 16 of Decree 125/2020/ND-CP, which stipulates the penalty for incorrect tax declaration leading to insufficient tax payment, as follows:
Penalty for incorrect tax declaration leading to insufficient tax payment or increased exempted, reduced, refunded tax
- A penalty of 20% of the underpaid tax or the tax amount previously exempted, reduced, or refunded higher than the regulation shall apply to the following acts:
a) Incorrect declaration of tax calculation bases or deductible tax amounts or incorrect determination of tax exemption, reduction, refund cases leading to insufficient tax payment or increased exempted, reduced, refunded tax amount, but the economic transactions have been fully recorded on the legitimate accounting system, invoices, and vouchers;
b) Incorrect declaration leading to a reduction in the tax amount payable or an increase in the refund tax amount, or a higher exempted, reduced tax amount not falling within the scope of point a of this clause but the taxpayer has proactively filed a supplementary declaration and fully paid the missing tax into the state budget before the tax authority concludes its inspection or audit at the taxpayer's premises;
c) Incorrect declaration leading to a reduction in the tax amount payable or an increase in the refund tax amount, or higher exempted, reduced tax amount recorded by competent authorities in tax inspection, audit records as tax evasion, but the taxpayer commits the first-time administrative violation related to tax evasion, has filed a supplementary declaration and fully paid the tax into the state budget before the competent agency issues a penalty decision and the tax authority records it as incorrect declaration leading to insufficient tax;
d) Incorrect declaration leading to insufficient tax payment or increased exempted, reduced, refunded tax amount concerning transfer pricing transactions but the taxpayer has filed a market price determination dossier or has filed and sent the tax authority appendices as per regulations on tax management concerning businesses with transfer pricing transactions;
đ) Using illegal invoices or vouchers to account for the value of purchased goods, services, leading to a reduction in the payable tax amount or an increase in the refund tax amount, or higher exempted, reduced tax amount, but upon tax inspection or audit, it is discovered that the usage of illegal invoices or vouchers is attributed to the seller while the buyer has fully accounted as per regulations.
- Remedial measures:
a) Obligated to fully pay the missing tax amount, the tax amount previously refunded, exempted, reduced higher than regulations, and any late payment interest to the state budget for the acts specified in clause 1 of this Article.
If the statute of limitations for sanctioning violations has expired, the taxpayer is not subject to penalties under clause 1 of this Article, but must still pay the missing tax amount, the tax amount previously refunded, exempted, reduced higher than regulations, and any late payment interest to the state budget as per the deadlines prescribed in clause 6 Article 8 of this Decree;
b) Must adjust back the loss amount, deductible input VAT amount carried forward to the next period (if any) for acts specified in clause 1 of this Article.
- In cases where taxpayers have committed acts of incorrect declaration as specified in points a, b, d of clause 1 of this Article without leading to insufficient tax payment, or increase in exempted, reduced tax, or not yet refunded tax, they are not subject to penalty according to this Article but are sanctioned under clause 3 Article 12 of this Decree.
From the above regulations, it can be observed that if a business wrongly files a tax return leading to insufficient tax payment, there will be a penalty of 20% on the underpaid tax amount. Additionally, remedial measures must be implemented, which include fully paying the missing tax amount and adjusting back any losses, or VAT credit carried forward to subsequent periods (if applicable).
