Tax exemption and reduction for taxpayers facing unexpected accidents in Vietnam (Proposal)

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1. Contents of the tax exemption and tax reduction procedures in Vietnam

Implementing the tasks and work programs on tax, the General Department of Taxation of Vietnam has drafted the Procedure for Tax Exemption and Reduction, replacing the Procedure for Tax Exemption and Reduction issued under Decision 479/QD-TCT concerning the reception and resolution of tax exemption and reduction applications for taxpayers encountering difficulties due to natural disasters, fires, accidents, and critical illnesses.

The draft also outlines the management procedures for tax exemption and reduction for taxpayers (hereinafter referred to as "the tax exemption and reduction procedures") facing difficulties due to natural disasters, unexpected accidents, or critical illnesses that affect their ability to pay taxes, including the following contents:

- Receiving applications for tax exemption and reduction in the following cases:

+ Applications for tax reduction for individuals, household businesses, and individual businesses facing difficulties due to natural disasters, fires, accidents, or critical illnesses impacting their ability to pay taxes as prescribed in Article 54 of Circular 80/2021/TT-BTC.

+ Applications for a special consumption tax reduction for taxpayers producing goods subject to special consumption tax facing difficulties due to natural disasters or unexpected accidents as prescribed in Article 55 of Circular 80/2021/TT-BTC.

+ Applications for natural resource tax exemption and reduction for taxpayers encountering natural disasters, fires, or unexpected accidents that cause damage to declared and taxed resources as prescribed in Article 56 of Circular 80/2021/TT-BTC.

- Resolving tax exemption and reduction applications as prescribed in Article 64 of Circular 80/2021/TT-BTC:

+ Resolving tax exemption and reduction applications without need of actual inspection.

+ Resolving tax exemption and reduction applications requiring actual inspection.

- Decision on tax exemption and reduction:

- Appraisal of applications subject to appraisal as prescribed in the Regulations on providing legal opinions on draft requests for the formulation of legal documents, draft legal documents, and appraisal of draft administrative documents issued by tax authorities at all levels attached to Decision 1033/QD-TCT and any replacement, amendment, or supplementation documents (if any).

- Issuance of a tax exemption and reduction decision; Notification of non-exemption, non-reduction in accordance with Article 64 of Circular 80/2021/TT-BTC.

Thus, according to the procedure in the draft, the tax authority may appraise applications for tax exemption and reduction. Afterwards, a written notification will be sent to the taxpayer indicating the reasons for non-exemption or non-reduction.

2. Methods of receiving and accepting explanation files, supplementary information in Vietnam

2.1 Receiving explanation files, supplementary information submitted online by Taxpayers

Step 1. Receiving explanation files, supplementary documents from taxpayers

The electronic portal of the General Department of Taxation of Vietnam will automatically receive and record the explanation files and supplementary information according to the code of the tax exemption and reduction application previously sent by the taxpayer to the tax authority.

In case the taxpayer's explanation files and supplementary documents do not have or do not match the application code for tax exemption and reduction, the electronic portal of the General Department of Taxation will not receive the explanation files and supplementary documents from the taxpayer.

Step 2. Transferring explanation files and supplementary documents from taxpayers to the department handling tax exemption and reduction applications

- The electronic portal of the General Department of Taxation transfers the explanation files and supplementary documents from the taxpayer to the QHS and tax exemption and reduction subsystems.

- The QHS subsystem and the tax exemption and reduction subsystem automatically record the information of the explanation files and supplementary documents according to the application code for tax exemption and reduction. The tax exemption and reduction subsystem updates the status of the tax exemption and reduction application to reflect that it has received the explanation and supplementary documents so that the department handling the tax exemption and reduction application can continue processing it.

2.2 Receiving explanation files, supplementary information submitted by mail or direct submission

Step 1. Receiving files from taxpayers

The department for receiving and returning results of the tax authority (receiving and returning results department) undertakes the reception of explanation files and supplementary documents from taxpayers in accordance with the receiving and returning results procedure.

Step 2. Transferring the received files to the department handling tax refund applications

- The receiving and returning results department, after receiving the explanation files and supplementary documents, updates the files according to the code for tax exemption and reduction applications, allowing the department handling the applications to know and continue processing the application.

- The tax exemption and reduction subsystem automatically records the taxpayer's explanation files and supplementary documents immediately after the receiving and returning results department updates the explanation files and supplementary documents into the QHS subsystem.

- Hard copy files received are transferred to the department handling tax exemption and reduction applications on the same business day or no later than the beginning of the next business day.

2.3 Receiving explanation and supplementary documents when taxpayers provide explanations directly at the tax authority

The department handling tax exemption and reduction applications drafts a Work Record according to form 02/KTT issued with Circular 80/2021/TT-BTC on the centralized tax management system (TMS), clarifying the content of the taxpayer's explanations and supplementary information.

At the same time, the tax exemption and reduction subsystem and the QHS subsystem automatically record the taxpayer's explanations and supplementary information according to the application code for tax exemption and reduction. The receiving and returning results department uses the information from the QHS subsystem to track the resolution deadlines and return the results to the taxpayer according to the new deadline.

Thus, according to the proposed draft, the tax authorities will receive explanation files and supplementary information from taxpayers through various forms such as electronic methods, postal mail, direct submission, and direct explanations at the tax authority.

More details can be found in Draft.

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