What are Responsibilities of Organizations and Individuals Declaring and Paying Taxes on Behalf of Taxpayers in Vietnam?

What are Responsibilities of Organizations and Individuals Declaring and Paying Taxes on Behalf of Taxpayers in Vietnam?

Based on Clause 5, Article 7 of Decree 126/2020/ND-CP, organizations and individuals that file and pay taxes on behalf of taxpayers must comply fully with the tax declaration and payment regulations as stipulated for taxpayers in Decree 126/2020/ND-CP, including:

- Organizations and individuals that file and pay taxes on behalf of taxpayers in accordance with tax laws.

- Credit institutions or third parties authorized by credit institutions to exploit secured assets perform tax declaration and payment of value-added tax, corporate income tax, and personal income tax on secured asset exploitation activities during the processing period on behalf of the taxpayer with secured assets.

- Organizations cooperating in business with individuals where the individual does not directly declare taxes.

Organizations are responsible for declaring value-added tax on all revenue from business cooperation activities according to tax and tax administration laws, without differentiating the forms of business cooperation result sharing, and declare and pay personal income tax on behalf of individuals in business cooperation.

In cases where an organization cooperates in business with an individual being a business household or individual business per Clause 5, Article 51 of the Law on Tax Administration 2019, and the individual has business activities in conjunction with the organization's business activities, the organization and the individual must declare taxes corresponding to the actual business cooperation results as stipulated.

- Organizations declare and pay taxes on behalf of individuals receiving dividends in securities; individuals who are existing shareholders receiving bonuses in securities; individuals credited with increased capital due to earnings credited to capital; individuals contributing capital with real estate, capital contributions, or securities.

The timing for declaring and paying taxes on behalf of individuals is when the individual generates transfers of the same type of securities, capital transfers, or withdrawals. Specifically:

+ For individuals receiving dividends in securities; individuals who are existing shareholders receiving bonuses in securities, the organization is responsible for declaring and paying taxes on behalf of individuals concerning income from capital investment when the individual transfers the same type of securities as follows:

++ For securities through the trading system at the Stock Exchange, the organization declaring and paying taxes on behalf of the individual is the securities company, the commercial bank where the individual opens the depository account, or the fund management company where the individual authorizes the investment portfolio.

++ For securities not through the trading system at the Stock Exchange, the organization declares and pays taxes on behalf of the individual as follows:

(i) For securities of public companies registered for centralized securities at the Securities Depository Center, the organization declaring and paying taxes on behalf of the individual is the securities company or the commercial bank where the individual opens the securities depository account;

(ii) For securities of joint-stock companies that are not yet public companies but the issuing organization authorizes a securities company to manage the shareholder list, the organization declaring and paying taxes on behalf of the individual is the authorized securities company;

(iii) For securities not falling within the above cases, the organization declaring and paying taxes on behalf of the individual is the issuing organization.

+ For individuals credited with increased capital due to earnings credited to capital, the organization where the individual has capital contribution is responsible for declaring and paying taxes on behalf of the individual concerning income from capital investment during capital transfers or withdrawals.

+ For individuals contributing capital with real estate, capital contributions, or securities, the organization where the individual contributes capital is responsible for declaring and paying taxes on behalf of the individual concerning income from real estate transfers, capital transfers, or securities transfers.

+ In cases where the organization responsible for declaring and paying taxes per Points d.1, d.2, d.3 Clause 5, Article 7 of Decree 126/2020/ND-CP has dissolved or gone bankrupt without fulfilling its tax declaration and payment responsibilities on behalf of the individual, the individual shall then declare and pay the taxes as required.

- Organizations that pay, support for achieving sales targets, promotions, commercial discounts, payment discounts, financial support in cash or in kind to individuals being business households or individual businesses paying taxes via the fixed rate method, must declare and pay taxes on behalf of these individuals as required.

- Organizations leasing assets from individuals in which the lease agreement specifies that the organization is to pay taxes on behalf of individuals shall declare and pay taxes on behalf of these individuals as required.

- Buyers of real estate in real estate transfer agreements where the buyer agrees to pay taxes on behalf of the seller (except cases exempt from tax, not required to pay tax, or temporarily not required to pay tax); third parties related to the sale of an individual's assets per legal regulations, the buyer or the third party shall declare and pay taxes on behalf of the individual as required.

- Issuing organizations handling the procedures for changing the list of capital-contributing members or shareholders in the case of capital transfers without proof that the individual transferring capital has fulfilled tax obligations, the issuing organization shall declare and pay taxes on behalf of the individual transferring capital as required.

- Organizations assigned to organize the collection of fees and charges by law must declare the collected amount with the tax authority (except customs fees; charges for transit goods, luggage, and vehicles).

What are Responsibilities of Organizations and Individuals Declaring and Paying Taxes on Behalf of Taxpayers in Vietnam? (Image from the Internet)

What are Principles for Tax Declaration and Calculation in Vietnam?

Based on Article 42 of the Law on Tax Administration 2019, the principles for tax declaration and calculation are as follows:

- Taxpayers must accurately, honestly, and fully declare the information in the tax declaration forms according to the templates issued by the Minister of Finance and submit all required documents and materials in the tax dossier to the tax authorities.

- Taxpayers self-calculate the amount of tax they must pay, except in cases where tax calculation is performed by the tax administration authority as prescribed by the Government of Vietnam.

- Taxpayers must declare and calculate taxes at the local tax authority where their headquarters are located.

If taxpayers centralize accounting at the head office and have dependent entities in different administrative units at the provincial level other than the headquarters, taxpayers must declare taxes at the head office and calculate and allocate tax obligations to each local unit benefiting from the state budget revenue. The Minister of Finance specifies Clause 3, Article 42 of the Law on Tax Administration 2019.

- For e-commerce business activities, digital platform business, and other services provided by foreign suppliers without a permanent establishment in Vietnam, foreign suppliers must directly or authorize the implementation of taxpayer registration, tax declaration, and tax payment in Vietnam as prescribed by the Minister of Finance.

- Principles for declaring and determining taxable prices for related party transactions are prescribed as follows:

+ Declare and determine the prices of related party transactions based on the principle of analyzing and comparing them with independent transactions and the principle where the substance of the operations and transactions dictates the tax obligations, to determine the tax obligations to be paid as in transactions between independent parties;

+ Related party transaction prices are adjusted according to independent transactions to declare and determine the payable tax amount based on the principle of not reducing taxable income;

+ Taxpayers of small scale and low tax risk are exempt from the provisions at Points a, b, Clause 5, Article 42 of the Law on Tax Administration 2019 and are permitted to apply simplified mechanisms for declaring and determining the prices of related party transactions.

- Principles for tax declaration under the advance pricing agreement mechanism are stipulated as follows:

+ The application of the advance pricing agreement mechanism is based on the taxpayer's proposal and the consensus between tax authorities and taxpayers through unilateral, bilateral, and multilateral agreements involving tax authorities, taxpayers, and foreign tax authorities or relevant territories;

+ The application of the advance pricing agreement mechanism must be based on verified legal information from the taxpayer and commercial databases;

+ The application of the advance pricing agreement mechanism must be approved by the Minister of Finance before implementation; for bilateral and multilateral agreements involving foreign tax authorities, they follow international treaties and agreements.

What are Taxes and Other Revenues Managed by Tax Authorities under Monthly Declaration in Vietnam?

Based on Clause 1, Article 8 of Decree 126/2020/ND-CP, the types of taxes and other revenues managed by tax authorities under the monthly declaration include:

- Value-added tax and personal income tax. If taxpayers satisfy the criteria under Article 9 of Decree 126/2020/ND-CP, they may choose the quarterly declaration.

- Special consumption tax.

- Environmental protection tax.

- Resource tax, except the resource tax specified at Point e, Clause 1, Article 8 of Decree 126/2020/ND-CP.

- Fees and charges managed by tax authorities, except fees and charges collected by the representative offices of the Socialist Republic of Vietnam abroad as specified in Article 12 of Decree 126/2020/ND-CP; customs fees; fees for goods, luggage, and vehicles in transit.

- For the activities of exploiting, selling natural gas: Resource tax; corporate income tax; special tax of the Vietnam-Russia Joint Venture “Vietsovpetro” at Block 09.1 per the agreement between the Government of the Socialist Republic of Vietnam and the Government of the Russian Federation signed on December 27, 2010, on continuing cooperation in the geological exploration and exploitation of oil and gas on the continental shelf of the Socialist Republic of Vietnam within the framework of the Vietnam-Russia Joint Venture “Vietsovpetro”; divided earnings from the host country's share of gas.