Vietnam: What does the tax reduction dossier for taxpayers facing difficulties due to accidents include?

What types of taxes can be reduced for taxpayers facing difficulties due to accidents affecting their tax payment ability in Vietnam?

- Based on point b, clause 1, Article 52 of Circular 80/2021/TT-BTC, tax authorities are authorized to decide on tax reductions for individuals, business households, and individual entrepreneurs facing difficulties due to accidents affecting their ability to pay taxes.

- As stipulated in Article 5 of the Personal Income Tax Law 2007, reductions in personal income tax are detailed as follows:

Taxpayers facing difficulties due to natural disasters, fires, accidents, or severe illness affecting their ability to pay taxes can have their taxes reduced in proportion to the damage level, but not exceeding the payable tax amount.

- In accordance with Article 9 of the Special Consumption Tax Law 2008, special consumption tax reductions are prescribed as follows:

Taxpayers producing goods subject to special consumption tax facing difficulties due to natural disasters or unexpected accidents can have their taxes reduced.

The reduction is based on actual losses caused by natural disasters or unexpected accidents but not exceeding 30% of the payable tax amount for the year in which the loss occurred and not exceeding the value of the damaged assets after compensation (if any).

- As stated in clause 1, Article 9 of the Resource Tax Law 2009, exemptions and reductions in resource tax are defined as follows:

Taxpayers on resources encountering natural disasters, fires, or unexpected accidents resulting in resource losses that have been declared and paid can have their tax reduced or exempted for the lost resources; in cases where the tax has been paid, the amount paid will be refunded or deducted from the subsequent period's resource tax.

From the above regulations, it is clear that taxpayers facing difficulties due to accidents could have reductions on personal income tax, special consumption tax, and resource tax.

Vietnam: What does the tax reduction dossier for taxpayers facing difficulties due to accidents include? (Image from the Internet)

Vietnam: What does the tax reduction dossier for taxpayers facing difficulties due to accidents include?

According to clause 2, Article 54 of Circular 80/2021/TT-BTC, the tax reduction dossier for taxpayers facing difficulties due to accidents affecting their ability to pay tax is regulated as follows:

- A proposal document in accordance with Form No. 01/MGTH issued with Annex I of Circular 80/2021/TT-BTC;

- An official document or minutes confirming the accident with confirmation from the police authority or certification of the injury level from a medical entity;

- Documentation determining compensation by the insurance agency or compensation agreement by the person causing the accident (if any);

- Receipts related directly to the remediation of the accident;

- A personal income tax finalization declaration according to Form No. 02/QTT-TNCN issued with Annex II of Circular 80/2021/TT-BTC if the taxpayer requests a personal income tax reduction for income from salary or wages.

What is the time limit for returning results and processing the tax reduction dossier in Vietnam?

According to the provisions in Article 64 of Circular 80/2021/TT-BTC, the time limit for returning results and processing the tax reduction dossier is stipulated as follows:

(1) Time frame for tax reduction processing

- Within 30 days from receiving a complete dossier, the tax authority shall issue a decision on tax reduction; notify taxpayers in writing of reasons for ineligibility; notify whether taxpayers fall into categories eligible for tax reduction per tax agreements or other international treaties.

- If an on-site inspection is necessary to have sufficient basis for processing the tax reduction dossier, then within 40 days from receiving a complete dossier, the tax authority shall issue a tax reduction decision; notify taxpayers in writing of reasons for ineligibility; inform whether taxpayers fall into eligible segments per tax agreements or other international treaties.

- Specifically, in cases where the tax authority receives the tax reduction dossier along with the tax declaration dossier through the one-stop-shop mechanism, within 5 working days from receiving a lawful, full, and correctly formatted tax reduction dossier as forwarded by the receiving agency via the one-stop-shop mechanism, the tax authority shall determine the amount to be reduced or notify taxpayers in writing of reasons for ineligibility.

(2) returny of tax reduction dossier results

- When the tax authority directly receives the tax reduction dossier from taxpayers:

+ Issue a Tax Reduction Decision in accordance with Form No. 03/MGTH issued with Annex I of Circular 80/2021/TT-BTC for eligible cases;

+ Issue a Notice of tax exemption or reduction denial in accordance with Form No. 04/MGTH issued alongside Annex I of Circular 80/2021/TT-BTC and specify the reasons for ineligibility;

+ Issue a Notification based on Form No. 03-1/MGTH included in Annex I of Circular 80/2021/TT-BTC on whether taxpayers are eligible for tax exemption or reduction under tax agreements and other international instruments;

+ During the tax reduction dossier processing, if information is insufficient, requiring explanation, or document supplementation, the tax authority sends an Explanation and Document Supplementation Notice (according to Form No. 01/TB-BSTT-NNT issued with Decree 126/2020/ND-CP) to taxpayers demanding explanation and documentation supplementation.

- If the tax authority processes the tax reduction dossier along with the tax declaration dossier through the one-stop-shop mechanism:

+ The tax authority determines the tax-exempt or reduced amount and records it in the Tax Notice issued with Annex II of Decree 126/2020/ND-CP for cases eligible for tax reduction.

+ Issue a Notice of ineligibility for reduction according to Form No. 04/MGTH included with Annex I of Circular 80/2021/TT-BTC and specify reasons for ineligibility. During processing, if further explanation or document supplementation is required, the tax authority sends an Explanation and Document Supplementation Notice (according to Form No. 01/TB-BSTT-NNT issued with Decree 126/2020/ND-CP) to the receiving authority via one-stop-shop for the taxpayer to be asked for explanation and document supplementation.

+ For tax exemption stipulated at point a, clause 2, Article 79 of the Tax Administration Law 2019: The tax authority issues a Decision listing households and individuals eligible for tax exemption as framed in Form No. 05/MGTH included in Annex I of Circular 80/2021/TT-BTC.