Guidance on tax calculation in case organizations and individuals declaring and paying tax on behalf of other individuals in Vietnam

Guidance on tax calculation in case organizations and individuals declaring and paying tax on behalf of other individuals in Vietnam (Internet image)

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

1. Guidance on tax calculation in case organizations and individuals declaring and paying tax on behalf of other individuals in Vietnam

According to Article 16 of Circular 40/2021/TT-BTC, tax calculation in case organizations and individuals declaring and paying tax on behalf of other individuals is guided as follows:

* Tax declaration dossier

- Regulations of Point 8.4 of Appendix I of Decree 126/2020/ND-CP shall apply to monthly and quarterly tax declaration dossiers prepared by an organization on behalf of an individual in case the individual has business cooperation with the organization; the organization pays the individual who reaches the sales target; the organization is the owner of an e-commerce platform; the organization in Vietnam is a partner of the overseas digital platform provider (without permanent establishment in Vietnam). To be specific:

+ The tax return form No. 01/CNKD enclosed with Circular 40/2021/TT-BTC;

+ Form No. 01-1/BK-CNKD enclosed with Circular 40/2021/TT-BTC (for organizations and individuals declaring tax on behalf of other individuals; individuals having business cooperation with organizations; organizations paying individuals who achieve sales targets; organizations that Article owner of e-commerce platforms; organizations in Vietnam that are partners of overseas digital platform provider;

+ Copy of the business cooperation contract and its appendices (for the first declaration of the contract). The tax authority is entitled to request the taxpayer to present original copies for comparison with the copies.

- The tax declaration dossier prepared by the organization that declares and pays tax on behalf of the lessor shall contain the documents specified in Point 8.5 of Appendix I of the Decree 126/2020/ND-CP. To be specific:

+ The tax form No. 01/TTS enclosed with Circular 40/2021/TT-BTC (for lessors who directly declare tax with tax authorities and organizations declaring tax on behalf of individuals);

+ Form No. 01-2/BK-TTS enclosed with Circular 40/2021/TT-BTC (for organizations declaring tax on behalf of);

+ Copy of the lease contract and its appendices (for the first declaration). The tax authority is entitled to request the taxpayer to present original copies for comparison with the copies.

- Tax declaration dossiers prepared by organizations and individuals on behalf of other individuals under civil laws shall comply with regulations applied to individuals declaring tax directly.

- When an enterprise or business organization declares tax on behalf of the lessor, choose “Doanh nghiệp, tổ chức kinh tế khai thuế thay, nộp thuế thay theo pháp luật thuế” on the declaration form. The declarant shall sign and write his/her full name.

The organization shall also append its seal or digital signature as per regulations. The taxpayer on the tax documents and receipt documents shall be the organization that declares and pays tax on behalf of the individual.

* Receiving authorities

- Tax declaration dossiers prepared by organizations on behalf of individuals as prescribed in Clause 1 Article 45 of the Law on Tax Administration shall be submitted to the supervisory tax authorities of the organizations.

In case an organization or individual declares tax on behalf of an individual who earns income from lease of real estate in Vietnam, the tax declaration dossier shall be submitted to the supervisory tax authority of the area where the real estate is located.

- Individuals who declare tax on behalf of other individuals under authorization shall submit tax declaration dossiers as if they are submitted by the authorizing individuals.

* Deadlines for submission of tax declaration dossiers

Tax declaration dossiers shall be submitted by the deadlines specified in Point a Clause 1 and Clause 3 Article 44 of the Law on Tax Administration. To be specific:

- Deadlines for submission of monthly or and quarterly tax declaration dossiers:

+ The monthly tax declaration dossier shall be submitted by the 20th of the month succeeding the month in which tax is incurred.

+ The quarterly tax declaration dossier shall be submitted by the last day of the first month of the quarter succeeding the quarter in which tax is incurred.

- Deadlines for submission of tax declaration dossiers by organizations and individuals paying tax on behalf of lessors:

+ Monthly and quarterly tax declaration dossier shall be submitted by the deadlines specified in Point a of this Clause.

+ Separate declaration dossiers shall be within 10 days from the beginning date of the lease term.

+ Annual tax declaration dossiers shall be submitted by the last day of the first month of the succeeding calendar year.

* Tax payment deadlines

The organizations and individuals mentioned in this Article shall pay tax by the deadline specified in Clause 1 Article 55 of the Law on Tax Administration, which is the deadline for submission of the tax declaration dossier. In case the tax declaration dossier has to be supplemented, tax shall be paid by the deadline for submission of the tax declaration dossier of the erroneous tax period.

2. Rules for tax administration in Vietnam

Rules for tax administration in Vietnam according to Article 5 of the Law on Tax Administration 2019 are as follows:

- All organizations, households, household businesses, individuals shall pay their taxes in compliance with the law.

- Tax authorities and other State agencies tasked with revenue administration shall implement tax administration as prescribed in this Law and other relevant provisions, ensuring publicity, transparency, equality and ensuring legitimate rights and benefits of taxpayers.

- Agencies, organizations, individuals are responsible for participating in tax administration as prescribed by law.

- Implement reform of administrative procedures and application of modern information technology to tax administration; apply tax administration rules in accordance with international practice, including regulations of tax liabilities determined by nature of activities and transactions, regulations of risk management in tax administration and other regulations suitable with Vietnamese conditions.

- Take priority measures when carrying out tax-related procedures for imported and exported goods in compliance with provisions on customs and Governmental provisions.

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