Shall the late payment interest be charged pending the analysis result in Vietnam?

Is a letter of guarantee required in the application for tax payment by installments in Vietnam?

Based on the regulations in Clause 17, Article 3 of the Law on Tax Administration 2019, tax debt is explained as taxes and other revenues belonging to the state budget, collected by the tax managing authority, that the taxpayer has not paid to the state budget upon the expiration of the prescribed deadline.

Pursuant to the regulations in Clause 2, Article 66 of Circular 80/2021/TT-BTC on the application for tax payment by installments, which includes:

tax payment by installments

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2. application for tax payment by installments

a) Proposal document as per form No. 01/NDAN issued with Appendix I of this Circular;

b) Letter of guarantee according to the conformable of the law on guarantee, which must include a commitment that the guarantor will make the payment on behalf of the taxpayer in case the taxpayer fails to comply with the tax payment by installments deadline;

c) Decision on enforcement of the administrative decision on tax management (if any).

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According to the above regulations, it can be seen that in the application for tax payment by installments, there must be a letter of guarantee conformable to the law on guarantee. It must also include a commitment that the guarantor will make the payment on behalf of the taxpayer in case the taxpayer does not comply with the tax payment by installments deadline.

Shall the late payment interest be charged pending the analysis result in Vietnam? (Image from Internet)

Shall the late payment interest be charged pending the analysis result in Vietnam?

According to Clause 5, Article 59 of the Law on Tax Administration 2019, interest on late tax payment is not charged to taxpayers in the following two cases:

Handling of Late Tax Payment

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5. No interest on late payment in the following cases:

a) The taxpayer provides goods and services that are paid from state budget funds, including subcontractors specified in the contract signed with the investor and paid directly by the investor but have not been paid, then no interest on late payment is required.

The outstanding tax amount not subject to late payment interest is the total outstanding tax amount to the state budget of the taxpayer but does not exceed the unpaid amount from the state budget;

b) The cases specified at point b, clause 4, Article 55 of this Law shall be exempt from interest on late payment during the waiting time for analysis or assessment results; during the time when there is no official price; during the time when the actual payment amount, adjustments added to the customs value, have not been determined.

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No interest is charged on late payment during the waiting period for analysis and assessment results in the following situations:

- Goods requiring analysis or assessment to accurately determine the payable tax amount; goods without an official price at the time of customs declaration registration;

- Goods with an actual payment amount, goods with adjustments added to the customs value not determined at the time of customs declaration registration as regulated by the Minister of Finance.

What is the time limit for tax payment by installments in Vietnam?

Based on the regulations in Clause 5, Article 124 of the Law on Tax Administration 2019 regarding the cases eligible for tax payment by installments as follows:

Cases Subject to Enforcement of Administrative Decision on Tax Management

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5. Tax enforcement measures have not been applied in cases where the taxpayer's outstanding tax is earmarked within the earmarking period; no interest is charged according to this Law; taxpayers are allowed to pay their tax debt gradually within a period not exceeding 12 months from the start of the tax enforcement period.

The head of the managing tax authority directly supervising the taxpayer shall consider the tax payment by installments on the basis of the taxpayer's proposal, and there must be a guarantee from a credit institution. The Minister of Finance shall regulate the number of installments and the dossier, procedure for tax payment by installments.

At the same time, according to the regulations in Clause 3, Article 66 of Circular 80/2021/TT-BTC on the number and amount of tax payment by installmentss as follows:

Tax payment by installments

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3. Number and amount of tax payment by installmentss

a) The tax debt amount allowed for gradual payment is the tax debt calculated at the time the taxpayer requests gradual payment but does not exceed the tax debt guaranteed by a credit institution.

b) Taxpayers are allowed to pay their tax debt gradually within a period not exceeding 12 months and within the validity period of the letter of guarantee.

c) Taxpayers are allowed to pay the tax debt gradually on a monthly basis, ensuring that the amount of tax debt paid each time is not less than the average monthly gradual payment. Taxpayers must determine the interest on late payment that arises to pay together with the gradual tax debt amount.

4. Deadline for tax payment by installments

The deadline for tax payment by installments is no later than the last day of the month. If after the committed monthly deadline for tax payment by installments, the taxpayer does not pay or pays insufficiently, or the guarantor has not fulfilled the obligation to pay on behalf, then within 5 working days from the expiration date of the committed monthly tax payment by installments, the tax authority shall issue a document according to form No. 02/NDAN issued with Appendix I of this Circular, requesting the guarantor to fulfill their guarantee obligation according to the law and also send it to the taxpayer.

Thus, taxpayers are allowed to pay their tax debt gradually within a period not exceeding 12 months and within the validity period of the letter of guarantee.