Question 1: Due to the prolonged epidemic situation, in 2020 and 2021, our business recorded loss and incurred a lot of payable including late payment interest for tax payable. We understand that the National Assembly Standing Committee (“NASC”) issued Resolution 406 to support businesses and people affected by Covid-19 including support for exemption from fines for late tax payment. So, what are the detailed regulations on the conditions for exemption from fines for late tax payment?
According to Clause 4, Article 1 of Resolution 406/UBTVQH15 of the NASC, stipulating that enterprises and organizations (including dependent units and business locations) that incurred losses in 2020 will be exempted from late payment interest incurring in 2020 and 2021 of taxes, land using fees, and land rents.
Question 2: Law on tax administration 38/2019/QH13 and Decree 126/2020/ND-CP stipulate the exemption of additional personal income tax for individuals whose additional tax payable after the annual finalization is no more than VND 50,000. According to the above guidance, individuals who had authorized company for finalization, after the finalization process, if the remaining PIT payable is no more than VND 50,000, will they also be exempted?
According to the provision b, Clause 2, Article 79 of the Law on tax administration 38/2020/QH14 on tax exemption and tax reduction and provision d.3, Clause 6, Article 8 of Decree 126/2020/ND-CP, if the individual who has authorized the organization to conduct finalization on their behalf, and after the finalization process, still has the outstanding tax payable of no more than VND 50,000, they will be eligible for exemption of the outstanding tax payable amount.
The organization declares the information of the individuals of this case in the organization’s personal income tax finalization dossiers, but not include the tax payable amount of individuals who have the remaining payable amount of no more than VND 50,000 in the organization’s outstanding payable.
Question 3: During the extension period for tax payment, will the fines and late payment interest be applied to the taxpayer?
According to Clause 4, Article 62 of Law on Tax Administration 38/2019/QH14 dated June 13, 2019, the fines and late payment interest will not be applied to the taxpayer, during the extension period for tax payment.
Question 4: If the taxpayer is deemed tax payable by the tax authority, will they also be subjected to administrative penalties and late payment interest?
According to provision b, Clause 2, Article 16 of Decree 126/2020/ND-CP dated 19 October 2020:
Article 16. Authority, procedures and decision for deeming tax
2. Procedure for deeming tax
c) In case tax liability is imposed for the taxpayer following the prevailing regulation, the tax authority shall impose administrative penalties and calculate late payment interest as prescribed by law.”
Question 5: We have 2 investment projects located in 2 different provinces. The branch and the head office have similar activities. The only exception is that all of the brand’s products after being processed by the branch would be transferred back to the head office for sale (export). The branch doesn’t have revenue.
We have registered 3 industry codes in the enterprise registration certificate, but so far only operated in 1 industry. Currently, we conduct centralized tax declaration at the head office, and entitle to VAT refund, since over 90% of our revenue is from export.
From 15 December 2020, when Decree 126/2020/ND-CP took effect, where should we declare VAT and CIT? At the head office or based on investment project?
According to Decree 126/2020/ND-CP dated 19 October 2020:
Clause 2, Article 11:
“2. Locations for submitting tax declaration dossiers for taxpayers operating and doing business in more than 1 provinces where the taxpayer is headquartered as prescribed at Point b, Clause 4, Article 45 of the Law on Tax Administration, shall perform centralized accounting record at the head office (except for the cases specified in Clauses 1, 3, 4, 5 and 6 of this Article) at the supervisory tax authority of the headquarter. At the same time, taxpayers must submit a table of allocation of payable tax amounts (if any) according to each province where state budget revenues are received (including dependent units, business locations) to the same tax authority.”
Clause 3, article 43:
“3. The Ministry of Finance shall provide guidance on the cases specified in Clause 2 and Clause 4 Article 11 of this Decree, which will apply to the first fiscal year after the Law on Tax Administration No. 38/2019/QH14 and its elaborating documents come into force.”
According to the above guidance, in case the Company, which conducts centralized accounting, has a branch in another province from where the head office is located, the Company should declare taxes at the head office and also submit to the tax authority managing the headquarter the allocation table of the tax payable amounts (if any) for the province where the branch is located.
Tax declaration process under the guidance of Clause 2, Article 11 of Decree 126/2020/ND-CP mentioned above, will follow the Ministry of Finance’s instructions and be applied first time for the next budget period from the effective date of Law on Tax Administration 38/2019/QH14 and its guiding documents.
Question 6: When the tax authority examines the enterprise’s tax finalization: if the enterprise made incorrectly declaration, they will be subjected to additional tax collection and fines.
In case during the tax finalization examination, the enterprise discovers the incorrect declaration, which led to overstated taxable income and overpaid CIT, is it acceptable for the enterprise to request the tax authority make adjustment in the examination minute of the correct amount?
If on the examination minute of the previous tax examination, there are errors leading to disadvantages for the enterprise. The enterprise only discovered these errors during the next examination, can the enterprise request the current examination team to correct the errors of the previous minutes in the current examination minute?
In Clauses 2 and 3, Article 47 of the Law on Tax Administration 38/2019/QH14 providing for additional declaration of tax declaration dossiers:
“2. When the tax authority or a competent authority has announced the decision on tax inspection or tax audit on the taxpayer’s premises, the taxpayer is still allowed to provide supplementary documents; the tax authority shall impose administrative penalties for the violations specified in Article 142 and 143 of this Law.
3. After the tax authority or competent authority issues a conclusion or tax decision when the inspection is done:
a) The taxpayer may provide supplementary tax documents if they increase the tax payable or reduce the deductible tax, exempted tax or refundable tax, and shall face administrative penalties for the violations specified in Article 142 and Article 143 of this Law.
b) If the supplementation leads to a decrease in the tax payable or an increase in the deductible tax, exempted tax or refundable tax, the taxpayer shall follow procedures for filing tax-related complaints.”
Based on the above guidance, after Law 38/2019/QH14 comes into effect, when the tax authority or the competent authority has announced tax inspection / examination decision at the taxpayer's office, taxpayer still can submit additional tax declaration dossiers. On the other hand, the taxpayer would be sanctioned for violations of tax administration as specified in Articles 142 and 143 of this Law.
At Point a, Clause 2, Article 112 of the Law on Tax Administration, stipulating the tasks and powers of the tax administration agency leader issuing tax examination decision and tax officials participating in tax examination:
“2. Tax officials have the following duties and rights during the examination:
a) Comply with the time and content specified in tax examination decision”
Thus, tax official must comply with the time specified in the tax examination decision (examination content, examination period).
In case the tax authority has issued a conclusion or decision on tax handling after examination, and the taxpayer discovers that the submitted tax declaration dossiers still had errors, the taxpayer may make additional declarations, adjustments, and will be handled according to regulations.
Question 7: How is the tax extension, exemption and reduction policy applied in case of force majeure events?
The tax payment extension, tax exemption and reduction policies applied to the taxpayers affected by force majeure events are prescribed as follows:
- Taxpayers who must pay late payment interest are exempted from late payment interest in case of force majeure (Clause 8, Article 59 of the Law on Tax Administration).
- The tax payment extension is considered at the request of the taxpayer who suffers material damage and directly affects production and business due to force majeure (point a, clause 1, Article 62 of the Law on Tax Administration).
- Taxpayers who are fined for administrative violations and suffer damage in case of force majeure shall be exempted from fines. The maximum total amount of fines shall not exceed the value of the damaged property or goods (Clause 1, Article 140 of the Law on Tax Administration).