Conditions for quarterly declaration of VAT and personal income tax in Vietnam

Conditions for quarterly declaration of VAT and personal income tax in Vietnam (Internet image)

Regarding this issue, LawNet would like to answer as follows:

1. Rules for tax declaration and tax calculation in Vietnam

According to Article 42 of the Law on Tax Administration 2019, the rules for tax declaration and tax calculation in Vietnam are as follows:

- Taxpayers shall fully and accurately provide information on the tax return provided by the Minister of Finance and submit adequate documents to the tax authority.

- Taxpayers shall calculate the tax payable themselves, except for the cases in which tax has to be calculated by the tax authority as specified by the Government.

- Taxpayers shall declare tax at the local tax authority in charge of the area in which their headquarters are based. A taxpayer that does accounting mainly at the headquarters and has dependant units in other provinces shall declare tax in the province in which the headquarters are based and distribute tax incurred in each province. The Minister of Finance shall elaborate this Clause.

- Regarding electronic commerce, digital business and other services provided by overseas providers without permanent establishments in Vietnam, the overseas providers shall directly or authorize representatives to apply for taxpayer registration, declare and pay tax in Vietnam in accordance with regulations of the Minister of Finance.

- Rules for declaring and calculating taxable prices in related-party transactions:

+ Values of related-party transactions shall be determined and declared by analyzing and comparing with independent transactions, the nature of operation and nature of the transaction, in order to determine tax liability in the same manner as that of transactions between independent parties;

+ Values of related-party transactions shall be adjusted according to independent transactions to declare tax in order that in taxable income is not decreased;

+ Taxpayers whose businesses are small in scale and pose low tax risk are exempt from compliance to provisions of Point a and Point b of Clause 5 Article 42 of the Law on Tax Administration 2019 and may apply simplified related-party transaction declaration procedures.

- Rules for declaring tax with predetermined taxable price calculation method:

+ Predetermined taxable price calculation methods shall be applied on the basis of request of the taxpayers, consensus between the tax authorities and the taxpayer under unilateral, bilateral and multilateral agreements between tax authorities, taxpayers and tax authorities of relevant countries or territories;

+ Predetermined taxable price calculation methods shall be applied according to information provided by the taxpayers and legally verified commercial database;

+ Application of predetermined taxable price calculation methods is subject to approval by the Minister of Finance.

Regulations of law on international treaties and international agreements shall apply to bilateral and multilateral agreements participated in by foreign tax authorities.

2. Conditions for quarterly declaration of VAT and personal income tax in Vietnam

Conditions for quarterly declaration of VAT and personal income tax in Vietnam according to Article 9 of Decree 126/2020/ND-CP are as follows:

(1) Conditions for quarterly declaration

- The following taxpayers may declare VAT quarterly:

+ Any taxpayer that declares VAT monthly as prescribed in Point a Clause 1 Article 8 of Decree 126/2020/ND-CP and has a total revenue from sale of goods and services in the previous year of up to 50 billion VND. The total revenue shall be determined according to the VAT returns during the calendar year.

In case the taxpayer declares tax for all dependent units and business locations at the headquarters, the total revenue shall also include that of the dependent units and business locations.

+ The taxpayer’s business is recently inaugurated. From the calendar year succeeding the first 12 months, the revenue generated in the preceding calendar year (full 12 months) shall be the basis for deciding whether the taxpayer has to declare tax monthly or quarterly.

- Quarterly declaration of personal income tax:

+ A taxpayer who has to declare personal income tax monthly as prescribed in Point a Clause 1 Article 8 of Decree 126/2020/ND-CP may declare personal income tax quarterly if all requirements for quarterly declaration are fulfilled.

+ Quarterly declaration shall be applied from the first month in which tax is incurred and remain unchanged throughout the calendar year.

(2) Taxpayers shall determine their eligibility to declare tax quarterly themselves.

- Taxpayers that fulfill all requirements for quarterly declaration may choose between monthly or quarterly declaration throughout the calendar year.

- In case a taxpayer who is declaring tax monthly fulfills the requirements for quarterly declaration and wishes to declare tax quarterly, the taxpayer shall submit a written request (Appendix I of Decree 126/2020/ND-CP) to the supervisory tax authority by January 31 of the year in which quarterly declaration is applied.

If such a written request is not submitted by this deadline, the taxpayer shall keep declaring tax monthly throughout the calendar year.

- In case a taxpayer finds that the requirements for quarterly declaration are not fulfilled, the taxpayer shall declare tax monthly from the first month of the next quarter. In this case, the taxpayer is not required to submit tax declaration dossiers of the previous quarters.

However, the taxpayer shall submit a document specifying the difference between monthly declared tax and quarterly declared tax (Appendix I hereof) and pay the late payment interest as per regulations.

- In case the tax authority finds that a taxpayer is not eligible to declare tax quarterly, the tax authority shall determine the difference between monthly declared tax and quarterly declared tax and charge late payment interest (if any) as per regulations and the taxpayer shall declare tax monthly from the receipt of the tax authority’s notice.

Quoc Dat

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