What is the tax policy for socio-professional organizations generating tax obligations from scientific research activities in Vietnam?
- If a socio-professional organization has business activities, it must fulfill the responsibility of taxpayers like other business organizations?
- Do scientific research activities in Vietnam of socio-professional organizations have to declare and pay taxes?
- What are the rules for issuance of invoices applicable to socio-professional organizations?
If a socio-professional organization has business activities, it must fulfill the responsibility of taxpayers like other business organizations?
Pursuant to Article 17 of the 2019 Law on Tax Administration in Vietnam stipulating the responsibilities of taxpayers as follows:
Responsibilities of taxpayers
1. Apply for taxpayer registration and use TINs as prescribed by law.
2. Declare tax accurately, honestly and adequately and submitting tax dossiers on time; take legal responsibility for the accuracy, honesty and adequacy of tax dossiers.
In addition, according to the provisions of Article 30 of the 2019 Law on Tax Administration in Vietnam as follows:
Applying for taxpayer registration and TIN issuance
1. Taxpayers must apply for taxpayer registration and shall be issued with TINs by tax authorities before beginning their business operations or incurring amounts payable to the state budget. The following entities shall apply for taxpayer registration:
a) Enterprises, organizations and/or individuals shall apply for taxpayer registration through the interlinked single-window system together with enterprise, cooperative or business registration (hereinafter referred to as “business registration”) as prescribed in the Law on Enterprises and other relevant regulations;
b) Organizations and individuals beside those stipulated in Point a of this clause shall register directly with tax authorities as regulated by the Minister of Finance.
Thus, even if it is a socio-professional organization, when starting production and business activities or just having obligations to the state budget, taxpayers must register for tax and have a tax identification number issued by the tax authority before commencing operations.
What is the tax policy for socio-professional organizations generating tax obligations from scientific research activities in Vietnam?
Do scientific research activities in Vietnam of socio-professional organizations have to declare and pay taxes?
In this regard, socio-professional organizations engaged in production and business activities must pay taxes in accordance with law. However, the specific tax rate to be paid depends on whether the goods or services for which the business conducts business are subject to tax.
(1) VAT
For value-added tax, based on Article 3 of the 2008 Law on Value Added Tax in Vietnam, Article 4 of the 2008 Law on Value Added Tax in Vietnam.
- Goods and services used for production, trading or consumption in Vietnam are subject to value-added tax, except those specified in Article 5 of the 2008 Law on Value Added Tax in Vietnam.
- Taxpayers include organizations and individuals producing or trading in goods or services subject to value-added tax (below referred to as business establishments) and organizations and individuals importing goods subject to value-added tax (below referred to as importers).
Specifically, when goods and services are not subject to VAT as guided in Article 4 of Circular No. 219/2013/TT-BTC and Article 5 of Circular No. 219/2013/TT-BTC stipulating cases of exemption declaring and paying VAT.
- VAT rates for each type of goods and services are specified in Article 9, Article 10, and Article 11 of Circular No. 219/2013/TT-BTC.
(2) CIT:
Socio-professional organizations that have taxable incomes from the production and trading of goods and services are subject to CIT according to the provisions of Article 2 of the 2008 Law on Corporate Income Tax in Vietnam and Article 3 of the 2008 Law on Corporate Income Tax in Vietnam.
(3) Personal income tax:
Pursuant to Article 24 of the 2007 Law on Personal Income Tax in Vietnam (amended by Clause 6, Article 1 of the 2012 Law on Amendments to the Law on Personal Income Tax in Vietnam) stipulating the responsibilities of income-paying organizations and individuals and responsibilities of resident taxpayers as follows:
Responsibilities of income-paying organizations and individuals and responsibilities of resident taxpayers
1. Responsibility to make tax declaration, withholding, payment and finalization is specified as follows:
a) Income-paying organizations and individuals shall make tax declaration, withhold and remit tax into the state budget, and make tax finalization for all kinds of taxable income they pay to taxpayers;
b) Individuals who have taxable incomes shall make tax declaration, pay tax into the state budget and make tax finalization as prescribed by law.
2. Income-paying organizations and individuals shall supply information on incomes and dependants of taxpayers under their management as prescribed by law.
3. The Government shall specify tax withholding rates suitable to each kind of income specified at Point a, Clause 1 of this Article and the tax finalization specified in clause 1 of this Article.
Thus, socio-professional organizations engaged in production and business activities that pay salaries to employees shall make tax declaration, withhold and remit tax into the state budget, and make tax finalization for all kinds of taxable income they pay to taxpayers.
(4) Licensing fees:
Pursuant to Article 2 of Decree No. 139/2016/ND-CP stipulating licensing fees, licensing fee payers are as follows:
Licensing fee payers
The licensing fee payers are the organizations and individuals that operating their trade/production of goods and services except the cases specified in Article 3 of this Decree, including:
1. The enterprises which are established under the regulations of law.
2. The organizations which are established under the Law on Cooperatives.
3. The public service providers which are established under the regulations of law.
4. The business organizations of the political organizations, the social – political organizations, the occupational – social organizations and people's armed units.
5. Other organizations which have their trade/production activities.
6. The branches, the representative offices of organizations specified in Paragraphs 1, 2, 3, 4 and 5 of this Article (if any).
7. The individuals, groups of individuals and households that have their trade/production activities.
Thus, if a socio-professional organization has production and business activities, it still has to pay licensing fees as prescribed.
In addition, in Official Dispatch No. 5875/CTHN-TTHT in 2023, Hanoi Tax Department replied to the Vietnam Electricity Association's problems with the same content as follows:
In case the Vietnam Electricity Association has production and business activities or has obligations to the state budget, the Association must register for tax and be granted a tax identification number by the tax authority. When the Association sells goods, provides services or deducts personal income tax, the Association must use invoices and vouchers as prescribed by law.
It is proposed that the Vietnam Electricity Association specifically identify scientific research activities that the unit will carry out, compare with the above legal documents to determine the arising tax declaration and payment obligations (if any) according to regulations.
Thus, the socio-professional organizations need to specifically determine the scientific research activities that the unit carries out, then compare them with the above-mentioned legal documents to determine the obligation to declare, pay arising tax (if any) in accordance with regulations.
What are the rules for issuance of invoices applicable to socio-professional organizations?
Pursuant to Article 4 of Decree No. 123/2020/ND-CP stipulating the rules for issuance of invoices applicable to socio-professional organizations as follows:
- When selling goods or providing services, the seller shall issue and send invoices to buyers (including goods/services used for sales promotion, advertising or as samples, goods/services gifted, donated, exchanged or used as salary payment to employees and internal use (except goods which are internally rotated in production process), and goods rented, lent or returned). Such invoices shall have adequate contents written according to the provisions in Article 10 of Decree No. 123/2020/ND-CP, except e-invoices which must follow the standard format prescribed by tax authorities as prescribed.
- When deducting personal income tax or collecting taxes, fees or charges, the organization responsible for tax deduction or the tax, fee or charge collector shall make and give certificates of personal income tax withholding or receipts of taxes, fees or charges to persons whose income is deducted or payers. Such records/receipts must contain adequate information as prescribed in Article 32 of Decree No. 123/2020/ND-CP.
If electronic receipts are used, they must follow the standard format prescribed by tax authorities. If an individual authorizes tax declaration, no certificates of personal income tax withholding are issued.
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