What are the cases where organization or individual shall declare and pay tax on behalf of another individual in Vietnam?

Hello, Lawnet would like to answer as follows:

1. Cases where organization or individual shall declare and pay tax on behalf of another individual

According to the provisions of Clause 1, Article 8 of Circular 40/2021/TT-BTC and Clause 2, Article 1 of Circular 100/2021/TT-BTC, an organization or individual shall declare and pay tax on behalf of another individual in the following cases:

- The organization leases property from the individual under a lease contract which prescribes that the lessee is the taxpayer;

- The organization has business cooperation with the individual;

- The organization pays bonuses, sales compensation, promotions, commercial discounts, payment discounts, assistance in cash or not in cash, compensations for breach of contract, other compensations for fixed tax payers;

- The organization in Vietnam is a partner of an overseas digital platform provider (without permanent establishment in Vietnam) and pays the individual for digital information products and/or services under agreement with the overseas digital platform provider;

- Organizations including owners of e-commerce platforms declare and pay tax on behalf of individuals under authorization according to the regulations of civil laws;

- Individuals declare and pay tax on behalf of others who are taxpayers under authorization according to regulations of civil laws.

Thus, an individual who declares tax on behalf of an individual or pays tax on behalf of an individual can agree that the lessee is the taxpayer on the basis of authorization under the provisions of civil law.

2. Tax calculation in case organizations and individuals declaring and paying tax on behalf of other individuals in Vietnam

According to the provisions of Article 16 of Circular 40/2021/TT-BTC on tax calculation in case organizations and individuals declaring and paying tax on behalf of other individuals, as follows:

2.1. Tax declaration dossier

- Regulations of Point 8.4 of Appendix I of Decree 126/2020/ND-CP shall apply to monthly and quarterly tax declaration dossiers prepared by an organization on behalf of an individual in case the individual has business cooperation with the organization; the organization pays the individual who reaches the sales target; the organization is the owner of an e-commerce platform; the organization in Vietnam is a partner of the overseas digital platform provider (without permanent establishment in Vietnam). To be specific:

+ The tax return form No. 01/CNKD;

Form 01/CNKD: Download

+ Form No. 01-1/BK-CNKD enclosed herewith (for organizations and individuals declaring tax on behalf of other individuals; individuals having business cooperation with organizations; organizations paying individuals who achieve sales targets; organizations that Article owner of e-commerce platforms; organizations in Vietnam that are partners of overseas digital platform provider;

Form 01-1/BK-CNKD: Download

+ Copy of the business cooperation contract and its appendices (for the first declaration of the contract). The tax authority is entitled to request the taxpayer to present original copies for comparison with the copies.

- The tax declaration dossier prepared by the organization that declares and pays tax on behalf of the lessor shall contain the documents specified in Point 8.5 of Appendix I of the Decree 126/2020/ND-CP. To be specific:

+ The tax form No. 01/TTS (for lessors who directly declare tax with tax authorities and organizations declaring tax on behalf of individuals);

Form 01/TTS: Download

+ Form No. 01-2/BK-TTS (for organizations declaring tax on behalf of);

Form 01-2/BK-TTS: Download

+ Copy of the lease contract and its appendices (for the first declaration). The tax authority is entitled to request the taxpayer to present original copies for comparison with the copies.

- Tax declaration dossiers prepared by organizations and individuals on behalf of other individuals under civil laws shall comply with regulations applied to individuals declaring tax directly.

- When an enterprise or business organization declares tax on behalf of the lessor, choose “Doanh nghiệp, tổ chức kinh tế khai thuế thay, nộp thuế thay theo pháp luật thuế” on the declaration form. The declarant shall sign and write his/her full name. The organization shall also append its seal or digital signature as per regulations. The taxpayer on the tax documents and receipt documents shall be the organization that declares and pays tax on behalf of the individual.

2.2. Receiving authorities

- Tax declaration dossiers prepared by organizations on behalf of individuals as prescribed in Clause 1 Article 45 of the Law on Tax Administration shall be submitted to the supervisory tax authorities of the organizations.

In case an organization or individual declares tax on behalf of an individual who earns income from lease of real estate in Vietnam, the tax declaration dossier shall be submitted to the supervisory tax authority of the area where the real estate is located.

- Individuals who declare tax on behalf of other individuals under authorization shall submit tax declaration dossiers as if they are submitted by the authorizing individuals.

2.3. Deadlines for submission of tax declaration dossiers

Tax declaration dossiers shall be submitted by the deadlines specified in Point a Clause 1 and Clause 3 Article 44 of the Law on Tax Administration. To be specific:

- Deadlines for submission of monthly or and quarterly tax declaration dossiers:

+ The monthly tax declaration dossier shall be submitted by the 20th of the month succeeding the month in which tax is incurred.

+ The quarterly tax declaration dossier shall be submitted by the last day of the first month of the quarter succeeding the quarter in which tax is incurred.

- Deadlines for submission of tax declaration dossiers by organizations and individuals paying tax on behalf of lessors:

+ Monthly and quarterly tax declaration dossier shall be submitted by the deadlines specified in Point a of this Clause.

+ Separate declaration dossiers shall be within 10 days from the beginning date of the lease term.

+ Annual tax declaration dossiers shall be submitted by the last day of the first month of the succeeding calendar year.

2.4. Tax payment deadlines

The organizations and individuals mentioned in this Article shall pay tax by the deadline specified in Clause 1 Article 55 of the Law on Tax Administration, which is the deadline for submission of the tax declaration dossier. In case the tax declaration dossier has to be supplemented, tax shall be paid by the deadline for submission of the tax declaration dossier of the erroneous tax period.

Best regards!

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