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

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

* 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.

* 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 of Decree 126/2020/ND-CP) 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.

2. Responsibilities of taxpayers in Vietnam

Responsibilities of taxpayers in Vietnam under Article 17 of the Law on Tax Administration 2019 are as follows:

- Apply for taxpayer registration and use TINs as prescribed by law.

- Declare tax accurately, honestly and adequately and submitting tax dossiers on time; take legal responsibility for the accuracy, honesty and adequacy of tax dossiers.

- Pay tax, late payment interest and/or penalties fully, on schedule and at the right location.

- Conform to regulations on accounting, statistics and management, use of invoices and records as prescribed by law.

- Truthfully and fully record the taxable activities and transactions.

- Issue and deliver invoices and records to buyers with the correct quantity, type and actual payment amount when selling goods and/or providing services as prescribed by law.

- Provide information and/or materials related to the determination of tax liabilities accurately, fully and promptly, including information on investment value; transaction IDs and contents of accounts opened at commercial banks and/or other credit institutions; explain declared tax and/or tax payment as requested by tax authorities.

- Comply with decisions, notifications and requests of tax authorities, tax officials as prescribed by law.

- Take responsibility for the fulfillment of tax liabilities as prescribed by law in case the taxpayer’s legal representative or authorized representative fails to follow tax procedures.

- Taxpayers operating businesses in areas with available information technology infrastructure must declare and pay tax and carry out transactions with tax authorities electronically as prescribed by law.

- Based on the availability of information technology equipment, the Government shall specify the documents that regulatory authorities already have and thus can be excluded from tax declarations, applications for tax refund and other tax dossiers.

- Develop, manage and operate systems of technical infrastructure so as to ensure e-transactions with tax authorities; sharing information related to the fulfillment of tax liabilities with tax authorities

- Taxpayers who have entered into related-party transactions have the responsibility to create, retain, declare and provide documents on taxpayers and their related parties, including information on related parties residing in foreign countries or territories according to the Government's regulations.

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