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Vietnam’s tax system plays a crucial role in maintaining state budget revenue, supporting socio-economic development, and ensuring social equity. Mastering the principles of tax declaration and calculation is essential for both businesses and individuals to comply with legal regulations, avoid legal risks, and optimize financial obligations. In this article, we will explore the basic principles of tax declaration and calculation in Vietnam. This not only helps you better understand the tax system in Vietnam but also equips you with the necessary knowledge to apply it in business and life.
Principles of Tax Declaration and Calculation
- Accurate, Honest, and Complete Declarations: Taxpayers must accurately, honestly, and fully declare the contents in the tax declaration form as prescribed by the Minister of Finance and submit all required documents and evidence in the tax declaration dossier to the tax authorities.
- Self-Assessment: Taxpayers are responsible for calculating the payable tax amount, except in cases where the tax calculation is performed by the tax authorities as per Government regulations.
- Local Tax Declaration: Taxpayers must declare and calculate tax at the local tax office where their headquarters are located. If the taxpayer consolidates accounts at the head office and has dependent units in different provincial administrative units, tax declaration is made at the head office, and tax obligations are allocated to each local unit benefiting from the state budget revenue.
- E-Commerce and Digital Business: For e-commerce, digital platform businesses, and other services provided by foreign suppliers without a permanent establishment in Vietnam, the foreign supplier must directly or authorize the registration, declaration, and payment of tax in Vietnam as regulated by the Minister of Finance.
- Transfer Pricing Transactions:
- Declarations and transfer pricing must be analyzed and compared with independent transactions, and the nature of the activities and transactions should determine the tax obligations to be declared and calculated as if the transactions were between independent parties.
- Transfer prices must be adjusted to reflect independent transactions to determine the payable tax amount without reducing taxable income.
- Small-scale, low-tax-risk taxpayers are exempt from the provisions of points (a) and (b) and may apply simplified procedures in declaring and determining transfer prices.
- Advance Pricing Agreements (APAs):
- The application of APAs is based on the taxpayer’s request and mutual agreement between the tax authorities and the taxpayer through unilateral, bilateral, and multilateral agreements involving foreign tax authorities.
- APA applications must be based on verified information from the taxpayer and commercial databases.
- APA applications require approval from the Minister of Finance before implementation; bilateral and multilateral agreements involving foreign tax authorities follow international treaties and agreements.
Tax Declaration Dossier
- Monthly Tax Declarations: The tax declaration dossier for monthly tax declarations.
- Quarterly Tax Declarations: The tax declaration dossier for quarterly tax declarations.
- Annual Tax Declarations: Includes the annual tax declaration form and other documents related to determining the payable tax amount; the annual finalization declaration form, annual financial statements, and transfer pricing declaration form, and other documents related to tax finalization.
- Ad-Hoc Tax Declarations: Includes the tax declaration form, invoices, contracts, and other documents related to tax obligations as prescribed by law.
- Import and Export Goods: The customs dossier as prescribed by the Customs Law is used as the tax declaration dossier.
- Cessation or Reorganization: Includes the tax finalization declaration form, financial statements up to the cessation or reorganization date, and other documents related to tax finalization.
Tax Declaration Deadlines
- Monthly and Quarterly Declarations:
- By the 20th day of the following month for monthly declarations.
- By the last day of the first month of the following quarter for quarterly declarations.
- Annual Declarations:
- By the last day of the third month after the end of the calendar or fiscal year for annual tax finalization; by the last day of the first month of the calendar or fiscal year for annual tax declarations.
- By the last day of the fourth month after the end of the calendar year for personal income tax finalization by individuals.
- By December 15 of the preceding year for business households and individuals paying tax by the presumptive method; for new business households and individuals, within 10 days from the start of business.
- Ad-Hoc Tax Declarations: By the 10th day from the occurrence of the tax obligation.
- Cessation or Reorganization: By the 45th day from the occurrence of the event.
- Government Regulations: Deadlines for agricultural land use tax, non-agricultural land use tax, land use fees, land rent, water surface rent, mineral resource extraction rights fees, water resource extraction rights fees, registration fees, business license fees, and other state budget collections are prescribed by law.
- Customs Law: Deadlines for import and export goods tax declarations are governed by the Customs Law.
- Electronic Declarations: If electronic filing systems experience issues on the last day of the deadline, taxpayers must submit electronic tax declarations and payment documents the next working day after the system resumes operation.
ASL Law is a leading full-service and independent Vietnamese law firm made up of experienced and talented lawyers. ASL Law is ranked as the top tier Law Firm in Vietnam by Legal500, Asia Law, WTR, and Asia Business Law Journal. Based in both Hanoi and Ho Chi Minh City in Vietnam, the firm’s main purpose is to provide the most practical, efficient and lawful advice to its domestic and international clients. If we can be of assistance, please email to [email protected].
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