04 new points on tax administration in Vietnam from December 05 that everyone should know

1. Banks must provide information for tax authorities about transactions of customers

According to Clause 2 Article 26 of the Decree No. 126/2020/NĐ-CP of Vietnam’s Government, State Bank of Vietnam (SBV) shall cooperate with the Ministry of Finance in instructing commercial banks, credit institutions, payment service providers licensed by SBV to connect to and provide information for tax authorities about transactions of organizations and individuals; cooperate with tax authorities in tax enforcement.

Besides, according to Clause 2 Article 30 of the Decree No. 126/2020/NĐ-CP of Vietnam’s Government, commercial banks shall provide information about taxpayers’ checking accounts opened at the banks for tax authorities as follows:

- At the request of tax authorities, commercial banks shall provide information about checking accounts of each taxpayer, including: account holder's name, account number according to TIN issued by the tax authority, account opening date, account closing date.

- The information shall be provided within 90 days from December 05, 2020. Update to this information shall be monthly updated within 10 days of the next month.

- Commercial banks shall provide information about account transactions, account balance, transaction data at the request of the head of the tax authority for the purposes of tax inspection and tax enforcement.

- Tax authorities shall protect and be responsible for the confidentiality of the information provided as prescribed by the Law on Tax Administration and relevant laws.

Thus, from December 05, 2020, banks must provide information about checking accounts of each taxpayer opened at the banks for tax authorities. However, in order to avoid revealing personal information to the outside, tax authorities shall protect and be responsible for the confidentiality of the information provided as prescribed by law.

2. 05 cases that a taxpayer is not required to declare tax

Specifically, according to Clause 3 Article 7 of the Decree No. 126/2020/NĐ-CP of Vietnam’s Government, a taxpayer is not required to declare tax in the following 05 cases:

- The taxpayer only has business operations that are not subject to any tax.

- Individuals whose annual personal income tax payable on salary or wage is VND 50.000 or smaller, except individuals that receive real estate as inheritance or gift and individuals that transfer real estate.

- An enterprise that only exports is not required to declare VAT.

- The taxpayer’s business suspension is suspended as prescribed by law.

- The taxpayer applies for TIN invalidation, except termination of business operation, contract or business rearrangement as prescribed by law.

Thus, above are 05 cases that a taxpayer is not required to declare tax from December 05, 2020.

3. Household businesses and individual businesses are not required to submit licensing fee declarations

According to Clause 1 Article 10 of the Decree No. 126/2020/NĐ-CP of Vietnam’s Government, household businesses and individual businesses are not required to submit licensing fee declarations. Tax authorities shall determine the licensing fees payable according to their tax declaration dossiers and tax administration database and inform them to pay tax according to the declaration method. Concurrently, new businesses (except household businesses and individual businesses), including medium and small enterprises converted from household businesses) and existing businesses that establish new dependent units or business locations shall submit the licensing fee declaration by January 30 of the year preceding the establishment or inauguration year.

Previously, according to Clause 7 Article 2 and Article 5 of the Decree No. 139/2016/NĐ-CP of Vietnam’s Government, all licensing fee payers must declare the fee once when starting their operation, including household businesses and individual businesses. 

Thus, from December 05, 2020, household businesses and individual businesses are not required to submit licensing fee declarations compared to previous regulations.

Moreover, new businesses (except household businesses and individual businesses) submit the licensing fee declaration by January 30 of the year preceding the establishment instead of by the last day of the month of starting production and business activities as before.

4. In case of business cooperation between an organization and an individual, tax shall not be directly declared by the individual

According to Clause 5 Article 7 of the Decree No. 126/2020/NĐ-CP of Vietnam’s Government, the organization or individual that declares or pays tax on behalf of another taxpayer shall comply with the same regulations on tax declaration and payment. However, in case of business cooperation between an organization and an individual, tax shall not be directly declared by the individual.

The organization shall declare VAT on the whole revenue that is the result of the business cooperation regardless of how the revenue is distributed between the parties, and declare and pay personal income tax on behalf of the individual.

In case of business cooperation between an organization and a household business or individual business whose revenues and employees reach the upper limit for extra-small enterprises prescribed by regulations of law on small and medium enterprises, who has the same business lines as the organization, both the late payment interest and the individual shall declare tax as per regulations.

Thus, from December 05, 2020, in case of business cooperation between an organization and an individual, tax shall not be directly declared by the individual. Concurrently, the organization shall declare VAT on the whole revenue that is the result of the business cooperation regardless of how the revenue is distributed between the parties.

Ty Na

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