What are regulations on tax declaration and payment in convertible foreign currencies in Vietnam?

What are regulations on tax declaration and payment in convertible foreign currencies in Vietnam?

According to guidance in Article 4 of Circular 06/2021/TT-BTC, tax declaration and payment in convertible foreign currencies are carried out as follows:

- In the case of tax declaration and payment for export taxes in convertible foreign currencies for crude oil and natural gas export goods, it is conducted according to the provisions in Circular 36/2016/TT-BTC of the Ministry of Finance guiding the implementation of tax regulations for organizations and individuals engaged in oil and gas exploration and exploitation under the Law on Petroleum.

- In the case of fee declaration and payment of customs fees in convertible foreign currencies for foreign flights arriving at Vietnamese airports, it is carried out according to the provisions in Circular 194/2016/TT-BTC stipulating the rates, fee policies and the collection and payment of customs fees and airport charges for foreign flights arriving at Vietnamese airports.

Note: When taxpayers have obligations to declare and pay taxes in convertible foreign currencies but are allowed to pay taxes in Vietnamese Dong, the exchange rate conversion from convertible foreign currencies to Vietnamese Dong is executed according to the provisions in Article 86 of the Customs Law 2014, Clause 3 Article 21 of Decree 08/2015/ND-CP as amended and supplemented in Clause 9 Article 1 of Decree 59/2018/ND-CP, and Article 35 of Circular 38/2015/TT-BTC.

- The currency for tax declaration, tax payment, and other collections for exported, imported, and transit goods, as well as for vehicles exiting, entering, and transiting is the Vietnamese Dong.

What are regulations on tax declaration and payment in convertible foreign currencies in Vietnam? (Image from the Internet)

What are cases where tax is declared and paid in convertible foreign currencies in Vietnam?

Based on Clause 1 Article 4 of Circular 80/2021/TT-BTC, cases of tax declaration and payment in convertible foreign currencies include:

- Activities in searching, exploration, and exploitation of oil and gas (excluding crude oil, condensate, and natural gas sold in Vietnam's market or otherwise regulated by the Government of Vietnam) include: resource tax, corporate income tax; additional charges on profit oil shares when crude oil prices fluctuate; profit earned from oil and gas shared with the host country; signature bonuses; commercial discovery bonuses; production bonuses; fees for reading and using oil, gas data; compensation for not fulfilling minimum commitments; corporate income tax on income from the transfer of rights to involve in oil and gas contracts; special taxes, surcharges, and corporate income tax from the remaining oil reserves of Vietsovpetro Joint Venture's oil and gas activities at Block 09.1 are declared and paid into the state budget in convertible foreign currencies used in transaction payments.

- Fees, charges and other collections implemented by Vietnamese Socialist Republic's representative agencies abroad:

Declared and paid into the state budget in the convertible foreign currencies stipulated in documents regulating the rates of fees, charges, and other collections.

- Fees, charges collected by agencies, organizations in Vietnam that are permitted to collect fees, charges in foreign currency:

Declared and paid into the state budget in the convertible foreign currencies stipulated in documents regulating the rates of fees, charges.

- E-commerce business activities, businesses based on digital platforms, and other services by foreign suppliers without permanent establishments in Vietnam:

Declared and paid into the state budget in convertible foreign currencies.

What are principles of tax declaration and calculation in Vietnam?

Principles of tax declaration and calculation according to Article 42 of the Law on Tax Administration 2019 are as follows:

- Taxpayers must declare precisely, truthfully, and fully all details in the tax declaration form according to the template stipulated by the Minister of Finance and submit all documents, materials required in the tax declaration dossier to the tax management agency.

- Taxpayers self-calculate the tax amounts to be paid, except in cases where the tax calculation is performed by the tax administration agency in accordance with the Government's regulations.

- Taxpayers declare tax, calculate tax at the local tax department with jurisdiction where their headquarters are located. In cases where taxpayers centralize accounting at the main headquarters and have dependent units at the provincial level different from the main headquarters, taxpayers declare tax at the main headquarters and calculate tax, allocating the tax obligations to be paid to each locality where the state budget revenue source is to be received. The Minister of Finance stipulates details in Clause 3 Article 42 of the Law on Tax Administration 2019.

- For e-commerce business activities, businesses based on digital platforms, and other services performed by foreign suppliers without permanent establishments in Vietnam, foreign suppliers have the obligation to directly or authorize the execution of taxpayer registration, tax declaration, and tax payment in Vietnam according to the stipulations of the Minister of Finance.

- Principles of declaration, determination of taxable prices concerning affiliated transactions are regulated as follows:

+ Declare and determine affiliated transaction prices based on the principles of analysis, comparison with independent transactions, and the principle that the nature of activities, transactions determines tax obligations to identify payable tax obligations as in conditions of transactions between independent parties;

+ Adjust affiliated transaction prices according to independent transactions to declare, identify the tax amounts payable based on the principle of not reducing taxable income;

+ Small-scale taxpayers with low tax risk are exempted from implementing the provisions in point a, b Clause 5 Article 42 Law on Tax Administration 2019 and are allowed to apply a simplified mechanism in declaring, determining affiliated transaction prices.

- Principles of tax declaration for advance agreement mechanisms regarding pricing methods are regulated as follows:

+ The application of advance agreement mechanisms regarding pricing methods is executed based on taxpayers' proposals, the agreement between the tax authority and taxpayers through unilateral, bilateral, and multilateral agreements between tax authorities, taxpayers, and related foreign tax authorities and territories;

+ The application of advance agreement mechanisms regarding pricing methods must be based on taxpayers' information and commercial databases with verifiable legal assurance;

+ The application of advance agreement mechanisms regarding pricing methods must be approved by the Minister of Finance before implementation; for bilateral and multilateral agreements involving foreign tax authorities, they are implemented according to laws on international treaties and agreements.