Guidance on tax declaration, exemption, and reduction for foreign transport companies in Vietnam

Guidance on tax declaration, exemption, and reduction for foreign transport companies in Vietnam (Internet image)

Guidance on tax declaration, exemption, and reduction for foreign transport companies in Vietnam

On October 11, 2024, the General Department of Taxation issued Official Dispatch 4551/TCT-KK concerning tax declaration, exemption, and reduction for foreign transport companies in Vietnam.

The General Department of Taxation provides guidance on tax declaration, exemption, and reduction for foreign transport companies as follows:

Based on Point g, Clause 6, Article 8 of Decree 126/2020/ND-CP, dated September 19, 2020, by the Government of Vietnam (amended and supplemented at Clause 5, Article 1 of Decree 91/2022/ND-CP, dated October 30, 2022), which prescribes quarterly provisional payment and annual corporate income tax finalization declaration by foreign transport companies:

Article 8. Types of taxes declared monthly, quarterly, annually, declared per occurrence of tax obligations, and declared for tax finalization

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6. Types of taxes, fees declared for year-end reconciliation and reconciling at the time of dissolution, bankruptcy, cessation of activities, contract termination, or organizational restructuring. In the case of conversion of enterprise type (excluding the equitization of state-owned enterprises), where the converted enterprise inherits all tax obligations of the former enterprise, tax reconciliation declaration is not required until there is a decision on the enterprise conversion, and reconciliation is done at year-end. Specifically: as follows:

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g) Corporate income tax for foreign transport companies is provisionally paid quarterly and declared annually. The total amount of corporate income tax provisionally paid for 4 quarters must not be less than 80% of the corporate income tax payable according to the annual finalization. If the taxpayer underpays the provisional tax of 4 quarters, a late payment interest calculated on the underpaid amount since the day after the last deadline for the provisional corporate income tax payment of the 4th quarter until the day preceding the date of full payment to the state budget.

Based on Point b.3, Clause 1, Article 62 of Circular 80/2021/TT-BTC, dated September 29, 2021, by the Ministry of Finance, which regulates the procedures and application for tax exemption and reduction under the Double Taxation Avoidance Agreement (Tax Agreement);

Article 62. Procedures for tax exemption and reduction dossiers under the Double Taxation Avoidance Agreement (Tax Agreement)

1. For foreign contractors:

Besides the tax declaration dossier, foreign contractors must additionally complete a dossier for tax exemption or reduction under the Tax Agreement.

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b) For the direct method:

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b.3) For foreign transport companies:

b.3.1) When finalizing tax, foreign transport companies or agents of foreign transport companies must submit to the tax authority a dossier requesting tax exemption or reduction under the Tax Agreement. The dossier includes:

b.3.1.1) Request form according to Form No. 01/HTQT issued together with Appendix I of this Circular;

b.3.1.2) Original (or certified copy) Certificate of Residence issued by the tax authority of the country or territory where the foreign transport company resides in the tax year immediately preceding the year of the tax exemption or reduction request under the Tax Agreement, which has been consularly legalized.

b.3.2) The agent of the foreign transport company in Vietnam or the representative office of the foreign transport company is responsible for storing records, documents, and vouchers under the Accounting Law, the Decree guiding the Accounting Law, and the Maritime Code, and presenting them when required by the tax authority.

b.3.3) In case the foreign transport company or agent of the foreign transport company authorizes a legal representative to carry out procedures for applying the Tax Agreement, an original power of attorney must be submitted.

b.3.4) At the end of the year, foreign transport companies or agents of foreign transport companies send the tax authority a consularly legalized Certificate of Residence of the shipping company for that year.

b.3.5) If in the previous year there was a dossier requesting tax exemption or reduction under the Tax Agreement, for subsequent years, foreign transport companies or agents of foreign transport companies only need to notify any changes in information requested in the previous year's Form No. 01/HTQT and provide documents corresponding to the changes.

b.3.6) If foreign transport companies have agents in multiple localities in Vietnam or the agents of foreign transport companies have branches or representative offices (hereinafter referred to as branches) in multiple localities in Vietnam, then foreign transport companies or agents of foreign transport companies submit the original (or certified copy) of the consularly legalized Certificate of Residence to the local Tax Department where the main headquarters of the foreign transport company's agent is located; send a copy of the consularly legalized Certificate of Residence to the local Tax Departments where the foreign transport company has branches and clearly state the place where the original (or certified copy) was submitted in the Request for Tax Exemption or Reduction under the Tax Agreement.

Based on Clause XI of Appendix II issued with Circular 80/2021/TT-BTC, dated September 29, 2021, by the Ministry of Finance, which regulates the annual tax finalization dossier for foreign transport companies;

Based on Decision 1462/QD-BTC, dated July 22, 2022, by the Ministry of Finance regarding the announcement of newly issued, amended, replaced, and abolished administrative procedures in the fields of tax and customs under the management scope of the Ministry of Finance.

Pursuant to the above-mentioned provisions, in the case where S&A Maritime Corporation is the agent of Chinaland Shipping PTE.LTD (hereinafter referred to as the foreign transport company Agent or FT Agent), authorized by the foreign transport company (FT) to declare, pay taxes, and perform procedures for tax exemption and reduction under the Double Taxation Avoidance Agreement on behalf of FT, the tax declaration, exemption, and reduction for FT shall be carried out as follows:

- Tax Declaration for FT

The FT Agent is responsible for declaring and paying taxes and submitting the tax declaration dossier to the tax authority directly managing the FT Agent on behalf of FT in accordance with Point g, Clause 6, Article 8 of Decree 126/2020/ND-CP, dated September 19, 2020, by the Government of Vietnam.

- Submission of Dossiers Requesting Tax Exemption or Reduction under the Agreement:

In the case where FT is eligible for tax exemption or reduction due to the application of the Double Taxation Avoidance Agreement between Vietnam and Singapore, the FT Agent submits the tax exemption or reduction dossier to the tax authority in accordance with Point b.3, Clause 1, Article 62 of Circular 80/2021/TT-BTC, dated September 29, 2021, by the Ministry of Finance of Vietnam.

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