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Starting July 1, 2025, Vietnam will integrate tax data with the national population database by replacing personal tax codes with citizen identification numbers. This transition, mandated under Circular 86/2024/TT-BTC (“Circular 86”), represents a significant shift in Vietnam’s personal income tax (PIT) administration.
Key Amendments Introduced by Circular 86
Vietnam’s Ministry of Finance issued Circular 86 to revise tax registration regulations in alignment with Article 35 of the Law on Tax Management. Effective February 6, 2025, Circular 86 supersedes Circular 105/2020/TT-BTC, introducing several key changes:
Replacement of Tax Codes with ID Numbers
- A Vietnamese citizen’s personal identification (ID) number, consisting of 12 digits, will serve as their tax identification number (TIN).
- This applies to all individuals with taxable income (excluding business individuals), dependents under the PIT Law, and entities with state budget obligations.
- Household and business household representatives’ ID numbers will serve as the tax codes for their respective entities.
Tax authorities will ensure accurate taxation by verifying that the national database includes complete taxpayer information, specifically full name, date of birth, and ID number.
Additional Changes to Tax Registration
Apart from ID number-based tax codes, Circular 86 introduces:
- A mandatory tax registration requirement for foreign entities engaged in e-commerce and digital business in Vietnam.
- New regulations for taxpayers operating outside their registered address.
- A structured framework for tax registration, suspension, termination, and reactivation for business households and individual enterprises.
Integration with National Population Database and E-Authentication
- Tax authorities will utilize personal data from the National Population Database to streamline tax registration.
- Electronic identification accounts, created via Vietnam’s Electronic Identification and Authentication System (e-ID), will facilitate tax registration.
- Where national database information is available, taxpayers will not need to resubmit details.
Backup Tax Registration Procedures
Article 37 of Circular 86 establishes a backup process for tax registration in cases of:
- Technical issues with tax registration systems, the National Business Registration Information System, or the National Population Database.
- Other force majeure circumstances.
Implementation Phases and Transitional Measures
To ensure a smooth transition, Circular 86 will be implemented in two phases:
- Phase 1 (Effective February 6, 2025): General provisions of Circular 86 come into effect.
- Phase 2 (Effective July 1, 2025): Tax codes are fully replaced by ID numbers.
During this transition, the General Department of Taxation has been standardizing personal tax codes since 2023, achieving over 90% matching accuracy by January 20, 2025.
Implications of the New Tax Code System
The shift to ID number-based tax codes will:
- Eliminate duplicate tax codes, improving tax settlements and refunds.
- Reduce administrative burdens by integrating tax, identification into a unified system.
- Enhance governmental data synchronization, improving efficiency in e-commerce regulation and network security.
- Benefit businesses by reducing compliance costs and minimizing risks related to employee tax code updates.
The move under Circular 86 represents a crucial step toward modernizing Vietnam’s tax administration, reinforcing transparency, and enhancing state oversight of tax compliance.
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