Recently, the National Assembly officially passed the Tax Administration Law 2019 at the 7th session of the 14th National Assembly. Thu Ky Luat would like to send to our esteemed Clients and Members a summary of the prominent new points stipulated in this Law.
Article table of contents
Consolidated Legal Instruments in the Field of Taxation - Accounting for 2019
Accounting Document Templates for Work with Tax Authorities
1. From July 1, 2022, the use of electronic invoices is officially mandatory
This is one of the significant contents in the Law on Tax Administration 2019. Specifically, the regulations on electronic invoices and documents in this Law will officially take effect from July 1, 2022; however, the Law also encourages agencies, organizations, and individuals to apply the regulations on electronic invoices and documents before July 1, 2022.
When selling goods or providing services, the seller must issue an electronic invoice to the buyer in the data format prescribed by the tax authority and must fully record the contents as stipulated by tax and accounting laws, regardless of the value of each sale or service provision.
Enterprises and economic organizations using electronic invoices with tax authority codes when selling goods or providing services are unaffected by the value of each transaction.
Household businesses and individual business persons paying tax according to a lump-sum method and cases where revenue can be determined during the sale of goods and services must use electronic invoices with tax authority codes when selling goods or providing services.
Note: In cases where household businesses or individual business persons do not meet the conditions for using electronic invoices with tax authority codes but require invoices for customers or cases where enterprises, economic organizations, and other organizations are approved by the tax authorities to issue electronic invoices for customers, the tax authorities will issue electronic invoices with codes for each occurrence, and they must declare and pay taxes before the tax authorities issue electronic invoices for each occurrence.
2. Supplementing cases eligible for tax and penalty debt write-offs
According to Article 85 of the Law on Tax Administration 2019, four cases will be eligible for tax, penalty, and late payment debt write-offs from July 1, 2020, specifically:
- Enterprises and cooperatives declared bankrupt have executed payments as prescribed by bankruptcy laws and no longer have assets to pay tax, late payment, and penalties. (Additional entities include cooperatives compared to current regulations).
- Individuals who have died or have been declared dead by the court, lost civil act capacity, and have no assets, including inherited assets, to pay outstanding tax, late payment, and penalties.
- Tax and penalty debts that tax authorities have applied enforcement measures to revoke business registration certificates; these debts have been overdue for more than 10 years from the tax payment deadline but are uncollectible. (This is a new addition to current regulations).
- Taxes, late payments, and penalties affecting those suffering from natural disasters, catastrophes, and widespread diseases who have been considered for late payment exemptions and tax deferrals but still face damages, are unable to recover their production and business, and cannot pay taxes, late payments, and penalties. (This is a new addition to current regulations).
3. Supplementing regulations on tax declaration and calculation for linked transactions
Specifically, compared to the current regulations, Article 42 of the Law on Tax Administration 2019 supplements rules on the principles of declaring and determining tax prices for linked transactions as follows:
- Declare and determine the price of linked transactions based on analysis, comparison with independent transactions, and the principle that the nature of operations and transactions determines tax obligations to identify taxable commitments under conditions of transactions between independent parties.
- Adjust prices of linked transactions to match independent transactions to declare and determine tax amounts based on the principle of not reducing taxable income.
Note: Small-scale taxpayers with low tax risks are exempt from implementing the above declaration and determination rules and may apply simplified mechanisms in declaring and determining the value of linked transactions.
4. Extending the deadline for individuals to self-finalize personal income tax (PIT)
Specifically, according to Article 44 of the Law on Tax Administration 2019, the deadline for submitting tax declaration dossiers for yearly tax types is as follows:
"a) No later than the last day of the third month following the end of the calendar year or fiscal year for annual tax finalization dossiers; no later than the last day of the first month following the end of the calendar year or fiscal year for annual tax declaration dossiers;
"b) No later than the last day of the fourth month following the end of the calendar year for personal income tax finalization dossiers of individuals directly finalizing taxes;
..."
Thus, from July 1, 2020, the personal income tax finalization deadline for individuals directly finalizing their taxes will be extended (current regulations specify no later than the 90th day from the end of the calendar year or fiscal year).
5. Expanding taxpayers' rights
Specifically, the Law on Tax Administration 2019 adds several new rights for taxpayers alongside the rights stipulated in the current Law on Tax Administration. Specifically:
- The right to know the timeline for tax refund processing, the amount not refunded, and the legal basis for the non-refunded tax amount.
- The right to query, view, and print all electronic documents submitted to the tax authority's electronic information portal under this Law and e-transaction regulations.
- The right to use electronic documents in transactions with tax authorities and related agencies and organizations.
- Being exempt from tax violation penalties and late payment charges for following written guidance and decisions of tax authorities and state agencies on determining tax obligations.
6. Regulations on tax management for e-commerce activities
Specifically, according to Clause 4, Article 42 of the Law on Tax Administration 2019, the tax declaration and calculation for e-commerce activities are as follows:
"For e-commerce business activities, digital platform-based business, and other services provided by foreign suppliers without a permanent establishment in Vietnam, the foreign supplier must directly or authorize taxpayer registration, tax declaration, and tax payment in Vietnam per the regulations of the Minister of Finance."
This is an entirely new content first regulated in tax administration law.
7. Supplementing accounting service provision functions for tax agencies
Specifically, under Point c, Clause 1, Article 104 of the Law on Tax Administration 2019, from July 1, 2019, in addition to providing current tax agency services, business organizations offering tax procedure services can also provide accounting services for micro-enterprises.
Organizations providing tax procedure services may offer accounting services to micro-enterprises if they have at least one certified accountant.
Note: Micro-enterprises are identified under the regulations on supporting small and medium-sized enterprises.
8. Adding new prohibited acts in tax management
Besides the prohibited acts under current regulations, the Law on Tax Administration 2019 adds several prohibited acts in tax management, specifically:
- Collusion, connivance, and shielding between taxpayers and tax officials or tax authorities to commit transfer pricing and tax evasion.
- Selling goods and providing services without issuing invoices as required by law, using illegal invoices, and illegally using invoices.
- Obstructing tax officials in performing their duties.
- Deliberately underreporting or inaccurately, incompletely, and promptly declaring taxes payable.
Nguyen Trinh
