Recently, the Government of Vietnam has issued the Decree No. 126/2020/NĐ-CP on elaboration of the Law on Tax Administration. This Decree has specified conditions for quarterly declaration of VAT and personal income tax.
Article table of contents
Specifically, according to Article 9 of the Decree No. 126/2020/NĐ-CP of Vietnam’s Government (effective from December 05, 2020), conditions for quarterly declaration of VAT and personal income tax are as follows:
1. Quarterly declaration of VAT and personal income tax
Any taxpayer that declares VAT monthly 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.
In comparison with Decree No. 83/2013/NĐ-CP amended by Decree No. 91/2014/NĐ-CP, Decree No. 126/2020/NĐ-CP of Vietnam’s Government still remains the condition of having as a total revenue from sale of goods and services in the previous year of up to 50 billion VND for quarterly declaration of VAT and personal income tax. However, Decree No. 126/2020/NĐ-CP of Vietnam’s Government has amended that the taxpayer’s business is recently inaugurated may choose to make quarterly declaration of VAT instead of having to make monthly declaration of VAT as previously stipulated.
2. Quarterly declaration of personal income tax
A taxpayer who has to declare personal income tax monthly (having as a total revenue from sale of goods and services in the previous year of up to 50 billion VND) 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.
In comparison with Decree No. 83/2013/NĐ-CP guided by Circular No. 156/2013/TT-BTC, Decree No. 126/2020/NĐ-CP of Vietnam’s Government has amended provisions on quarterly declaration of personal income tax. Previously, the eligibility to declare tax quarterly shall be determined in the month in which tax is deducted, and kept unchanged throughout the year. In particular:
- If at least 50 million VND in personal income tax is incurred in the month, the income payer shall declare tax monthly, unless the taxpayer is eligible to declare tax quarterly.
- The income payers that do not fall into the case above shall declare tax quarterly.
However, according to Decree No. 126/2020/NĐ-CP of Vietnam’s Government, quarterly declaration shall be applied from the first month in which tax is incurred and taxpayers subject to monthly declaration of personal income tax eligible to declare value added tax quarterly may choose to declare personal income tax quarterly, instead of organizations and individuals that pay incomes not subject to monthly tax declaration according to the above guidance shall make quarterly tax declarations according to the previous regulations.
Thus, it can be seen that Decree No. 126/2020/NĐ-CP of Vietnam’s Government has changes to provisions on conditions for quarterly declaration of VAT and personal income tax compared to previous regulation. This new regulation makes it easier for taxpayers to choose to declare VAT and personal income tax quarterly and fulfill tax obligations in accordance with the law.
Besides, Decree No. 126/2020/NĐ-CP of Vietnam’s Government also specified that taxpayers shall determine their eligibility to declare tax quarterly themselves, specifically as follows:
- 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 hereof) 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.
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- Decree No. 126/2020/NĐ-CP
