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  1. Deadline for CIT finalization

CIT payers prepare and submit the tax finalization dossiers no later than the last day of the 3rd month from end of the calendar year or fiscal year;

In case of submission of dossiers for business dissolution, contract termination or reorganization, the deadline for submission of annual CIT dossiers is no later than the 45th day from the date of the event execution.

Note: In case there has issue with the e-portal of the tax authority on the last day of the deadline for tax return submission, the taxpayers shall submit tax return and e-tax payment documents on the next day after the web portal is active.

Extension of deadline for submission of tax return dossiers:

In case taxpayers are unable to submit their tax return on time due to natural disasters, disasters, epidemics, fires or unexpected accidents, the head of the managing tax agency shall extend the deadline for tax return submission.

The extension time limit does not exceed 60 days for tax finalization dossier from the deadline of tax return submission.

Taxpayers must send to tax authorities a proposal for extension of deadline for submission of tax return before the deadline, which clearly states the reason for the extension and such proposal should be certified by the competent authority according to the law.

  1. CIT calculation

The CIT payable is calculated as follows:

CIT payable

  =

Assessable income

   -

Amount transferred to science and

technology fund (if any)

   x     

Tax rate

In which, the assessable income is calculated as follows:

Assessable income

=

Taxable income

-

Tax-exempt income

 +

Loss carry forward

 And the taxable income is calculated as follows:

Taxable income

=

Revenue

-

Deductible expenses

+

   Other incomes


3. Deductible and non-deductible expenses

Pursuant to Article 4 Circular 96/2015/TT-BTC:

3.1. Deductible expenses

Every expense is deductible if all of these following conditions are satisfied:

- The actual expense incurred is related to the enterprise’s business operation;

- There are sufficient and valid invoices and supporting documents under the current regulations;

- There is non-cash payment evidence for any purchase of goods/ services of VND 20 million or over (including VAT).

3.2. Non-deductible expenses

- Expenditure on wages and bonuses to employees that have been included in operating costs but do not have proof of payment.

- Expenditure on employees’ clothing without invoices that exceeds VND 05 million/person/year.

- Payment for voluntary pension fund, life insurance premiums for employees that exceeds VND 03 million/person/month.

- Payment of interest on loan serving business operation which exceeds 150% of basic interest rate announced at the time of taking the loan.

- Depreciation of fixed assets that are not used for business operation, depreciation beyond the limit, depreciation without proof of ownership of the enterprise, depreciation that is not recorded in the accounting books.

- Expenditure of lease of assets from individuals without sufficient documents.

- Payment of fines for administrative violations (except for breach of contract).

- Provisions made and used against instructions of the Ministry of Finance.

- Expenditure on infrastructural development during investment phase to create fixed assets.

- Loss on exchange difference due to reassessment of foreign currency items at the end of the tax period

4. CIT finalization dossiers should include

- CIT declarations form (Form No. 03/TNDN issued under Circular 151/2014/TT-BTC);

- An annual financial statement includes:

  • Balance sheet (Form No. B01-DN issued under Circular 200/2014/TT-BTC);
  • Income Statement (Form No. B02-DNN issued under Circular 200/2014/TT-BTC);
  • Cash flow statement according to direct method and indirect method (issued under Circular 200/2014/TT-BTC);
  • The description of financial statement (Form No. B09-DN issued under Circular 200/2014/TT-BTC);

- Letter of authorization in case the preparer is not legal representative

-------------------------------------

Legal background:

- Law on Tax Administration 2019;

Circular 96/2015/TT-BTC;

Circular 151/2014/TT-BTC;

Circular 156/2013/TT-BTC.

 

Law on Enterprises 2020 has officially taken effect since Jan 1st ,2021. Accordingly, there are significant changes regarding regulations on Enterprise’s seal.

  1. Enterprises are allowed to self-determine their own seal

While the Law on Enterprises 2014 has limited the content displayed on the seal, the Law on Enterprises 2020 has abolished the mandatory regulations on information shown on the seal. According to Clause 2, Article 43, Law on Enterprises 2020, an enterprise is allowed to decide the type, quantity, form and content of their own seal.

This means that enterprises will have full discretion on the content of their seal without being bound by the law. In addition, enterprises are also fully empowered to decide the content displayed on the seal of branches, representative offices and other divisions of enterprises.

  1. Eliminate the regulation on prior notification of seal samples before using

From Jan 1st, 2021, enterprises are no longer required to carry out procedure for announcing the seal sample to the business registration office for public posting on the National Business Registration Portal.

This is considered as a new, progressive and suitable regulation in simplifying administrative procedures, which helps to save time and effort in the process of implementing business-related procedures.

  1. Changes related to the seal management, storage and usage

While Law on Enterprises 2014 stipulates that the seal must be managed in accordance with the company's charter, branches, representative offices and other divisions of enterprises now can self-promulgate regulations for using its own seal as per Clause 3, Article 43, Law on Enterprises 2020. However, it is only allowed to use the seal in transactions as prescribed by law.

In addition, according to Decree 130/2018/ND-CP, digital signature can be considered as a form of electronic signature that encrypts data and information of an enterprise and used to sign on types of digital documents of electronic transactions implemented via internet.

Accordingly, digital signature is recognized as seal of enterprises.

The inclusion of considering electronic signature as official seal of the enterprises encourage enterprises having more options in using seal instead of just using traditional engraved seal as currently.

 

To get into details for specific cases, please feel free to contact us as at:

Unit 602A, Tower A, Handi Resco Office Building

521 Kim Ma Street, Ba Dinh District, Hanoi

+ 84 24 3974 4181/ 4182

+ 84 24 3974 3090

This email address is being protected from spambots. You need JavaScript enabled to view it.

 

According to the Decree No. 114/2020/ND-CP dated Sep 25th, 2020 by the Vietnam Government, the settlement of underpaid/ overpaid CIT amount as applying the 30% reduction under the Resolution No. 116/2020/QH14 by the National Assembly shall be in accordance with the Law on Tax Administration and guiding documents. In case of finalizing and inspecting/ examining CIT, the underpayment or overpayment could be treated as below:

Case

Underpayment of CIT

Overpayment of CIT

CIT Finalization

To pay the arrears and late payment interest

in accordance with the current regulation.

The excess amount shall be handled in accordance with current regulation.

Inspection, tax audit

To pay the arrears and late payment interest

in accordance with the current regulation.

The 30% reduction specified in this Decree shall

apply to the increase in CIT.

In detail, there has specific regulation providing treatment to case of overpayment:

Pursuant to Article 33, Clause 1.a, Circular 156/2013/TT-BTC dated Nov 6th, 2013 by the Ministry of Finance, it is regulated that:

  1. An amount of tax, late payment penalties, or fines is considered overpaid when:

 “a) The tax, late payment interest, and fines paid by the taxpayer is higher than the amounts payable within 10 years from the day on which the amounts are paid to government budget. If terminal declarations must be made, the taxpayer may only determine overpaid tax when the paid tax is higher than the tax payable according to the terminal declaration.”

Accordingly, the CIT liability is considered overpaid when:

  • The tax amount paid by Taxpayers higher than payable tax amounts for each type of tax liability with the same sub-item within 10 years from the day on which the amounts are paid to government budget.
  • If terminal declarations must be made, the taxpayer may only determine overpaid tax when the paid tax is higher than the tax payable according to the terminal declaration.

Solution when overpaying provisional CIT Liability

Pursuant to Article 33, Clause 2, Circular 156/2013 / TT-BTC regulation about The taxpayer is entitled to settle the overpaid tax, late payment penalties, and fines in the following order:

“a) Offset the overpaid amount against the outstanding tax, late payment interest, or fines of the same tax according to Clause 1 Article 29 of this Circular (except for the case in Point b Clause 1 of this Article).

b) Offset the overpaid amount against the outstanding tax, late payment interest, or fines of the same tax according to Clause 1 Article 29 of this Circular (except for the case in Point b Clause 1 of this Article). If no liability is incurred after 06 months from the overpayment, instructions in Point c of this Clause shall be followed.

c) After following the instructions in Point a and Point b of this Clause, if the overpaid amount is not cleared, the taxpayer shall send a submit a claim for tax refund to the local tax authority in accordance with Chapter VII of this Circular.”

Accordingly, if the taxpayer has an overpaid tax amount, the tax offset or refund can be made as follows:

- Automatically offset against the payable amount of the next tax payment of each type of tax with the same economic content (sub-items) specified in the State budget index

- Overpaid CIT shall be refunded in the following cases:

+ If over 06 months from the time the overpaid tax arises but no further payable tax arises.

+ The taxpayer has overpaid tax, late payment interest, and fines, but still has tax, late payment interest, and fines.

- A tax refund dossier includes the following documents:

+ The application for tax refund, the procedures for refunding tax and offsetting refunded tax against government revenues are specified in form No. 01 / ĐNHT enclosed with Circular 156/2013 / TT-BTC.

 

To get into details for specific cases, please feel free to contact us as at:

Unit 602A, Tower A, Handi Resco Office Building

521 Kim Ma Street, Ba Dinh District, Hanoi

+ 84 24 3974 4181/ 4182

+ 84 24 3974 3090

This email address is being protected from spambots. You need JavaScript enabled to view it.

 

Decree 114/2020/ND-CP dated Sep 25th, 2020 by the Vietnam Government has elaborated the National Assembly’s Resolution No. 116/2020/QH14 on reduction in CIT payable in 2020 by enterprises, cooperatives, public service providers and other organizations.

According to the aforesaid Decree, it is regulated that:

  • CIT payable in the fiscal year 2020 by an enterprise whose total revenue in 2020 does not exceed 200 billion VND shall be reduced by 30%;
  • The total revenue in the fiscal year 2020 including revenue from sales of goods, processing and service provision, subsidies and extra charges to which the enterprise is entitled as prescribed by the Law on Corporate Income Tax and its guiding documents.
  • For enterprises operating for less than 12 months, the total revenue in 2020 will be the total revenue earned in the fiscal year 2020 divided by (:) the number of months of actual business operation multiplied by (x) 12.
  • The CIT reduction of the fiscal year 2020 shall apply to the total revenue of the enterprise, including the amounts specified in Clause 3 Article 18 of the Law on Corporate Income Tax.
  • The 30% reduction specified in this Decree shall apply to the enterprise’s CIT payable in the fiscal year 2020 minus the CIT eligible for incentives to which the enterprise is entitled according to the Law on Corporate Income Tax and its guiding documents.

The fiscal year as mentioned is understood as below:

  • The fiscal year will be the calendar year. In case that the enterprises do not apply calendar years, the fiscal year shall be determined in accordance with the Law on Corporate Income Tax and its guiding documents.
  • In case the first fiscal year of enterprises that are established in 2019 or the last fiscal year of enterprises that undergo conversion, ownership transfer, consolidation, merger, division, dissolution, bankruptcy in 2021 is shorter than 03 months, it will be combined with the fiscal year 2020, in which case CIT reduction will only apply to the revenue earned in the fiscal year 2020 (12 months).

According to the Decree No. 114/2020/ND-CP, the settlement of underpaid/ overpaid CIT amount in case of finalizing and inspecting/ examining CIT shall be in accordance with the Law on Tax Administration and guiding documents.

 

Items Underpaid CIT amount Overpaid CIT amount
CIT Finalization

To pay the arrears and late payment interest in accordance

with the current regulation.

 

The excess amount shall be handled in accordance with current regulation.

Inspection, tax audit

To pay the arrears and late payment interest in accordance

with the current regulation.

The 30% reduction specified in this Decree shall apply to the increase in CIT.

 

To get into details for specific cases, please feel free to contact us as at:

Unit 602A, Tower A, Handi Resco Office Building

521 Kim Ma Street, Ba Dinh District, Hanoi

+ 84 24 3974 4181/ 4182

+ 84 24 3974 3090

This email address is being protected from spambots. You need JavaScript enabled to view it.

 

The Vietnamese government issued Decree 125/2020/ND-CP (Decree 125) on October 19, 2020 listing several penalties and administrative fines for breaches in tax and invoicing regulations. The Decree has come into effect since December 5, 2020.

In accordance with the Decree 125, late submission of tax returns shall incur higher fine. To avoid the fine, the tax payer, accordingly, needs to strictly follow the DEADLINE FOR SUBMISSION OF TAX RETURNS as regulated at the Article 44 of the Law on Tax Administration 2019 by the Vietnam National Assembly.

The new sanction levels for violations against regulations on the deadline for submission of tax return dossiers under Article 13 of Decree 125/2020/ND-CP are as below:

 

No.  Types of violations   Level of fines
1 Filing tax returns from 01 to 05 days later than the regulated deadline under mitigating circumstances.   Warning from Tax Authority
2 Filing tax returns from 01 to 30 days later than the regulated deadline, except the case specified in item 1 as above  

A fine ranging from VND 2,000,000  to VND 5,000,000 

3 Filing tax returns from 31 to 60 days later than the regulated deadline   A fine ranging from VND 5,000,000 VND to VND 8,000,000 
  4    4.1/ Filing tax returns from 61 to 90 days later than the regulated deadline   A fine ranging from VND 8,000,000  to  VND 15,000,000 
4.2/ Filingtaxreturnsfrom91dayslaterthantheregulateddeadlineifnone of tax liability incurred  
4.3/ Failing to submit any tax returns and no incurring taxes  
4.4/Failing to submit the supplement dossiers under regulations on tax administration for enterprises having related party transactions enclosing with the corporate tax finalization dossier.  
 5

Filing tax returns more than 90 days later than the regulated deadline and such act results in additional taxes to be paid, and the taxpayer has fully paid taxes, deferred amounts into the state budget before the time of the tax authority’s announcement of the decision on tax inspection and examination, or before the time of the tax authority’s issuance of the report on the deferred submission of tax returns under the provisions of clause 11 of Article 143 in the Law on Tax Administration.

 

 

A fine ranging from VND 15,000,000 to VND 25,000,000

 

If the fine applied under this clause is greater than the amount of tax arising on the tax declaration dossier, the maximum fine amount is equal to the payable tax amount but not less than VND 11,500,000

 6

Remedies

- Compelling the full payment of deferred tax amounts into the state budget if the taxpayer delays filing their tax return, leading to the late payment of taxes;

- Compelling the submission of tax returns, enclosing with supplement dossier, for acts as stated at 4.3 and 4.4 above

 

Note: For a tax or invoice-related administrative violation, if an entity commits such violation, they must be fined two times as much as the amount of penalty imposed on persons. The above fines are applicable to organizations (Pursuant to Clause 5, Article 5 and Point a, Clause 4, Article 7 of Decree 125/2020 / ND-CP)

Time limits for imposition of tax-related administrative penalties

Pursuant to Point a, Clause 2, Article 8 of Decree 125/2020 / ND-CP, time limit for imposition of penalties for administrative violations against regulations on tax-related procedures shall be 02 years from the date of commission of these violations.

- For cases 1, 2, 3, 4.1, 4.2, the date of commission of any of these acts which is accepted as the start date of that time limit shall be the date on which taxpayers apply for tax registrations or notify tax authorities or file tax returns.

- For cases 4.3 and 4.4, the date of commission of these acts which is accepted as the start date of that time limit shall be the date on which competent law enforcement officers detect these acts.

----------------------------

Smart Solutions For Business Company Limited ('S4B'), a company established in 2007 specializing in providing professional accounting and tax compliance services to foreign invested companies in Vietnam, are pleased to assist customers to review their accounting records, prepare annual financial statements as well as conduct corporate income management with the aim of paying tax properly and sufficiently for tax administration agencies. The brief introduction of the services is attached herewith for your information.

In case you would like to have more details about our scope of work or need any supports/assistance from us, please do not hesitate to contact us directly at This email address is being protected from spambots. You need JavaScript enabled to view it. or +84 24 3974 4181.

Thank you and Best Regards,

 

 

Pursuant to Article 44 of the Law on Tax Administration 2019, the deadline for tax return submission is regulated as below:

No. Period The deadline for submission of tax returns
1 The deadline for submission of monthly/quarterly tax return

No later than the 20th of the following month for those who apply the monthly declaration and payment

No later than the 30th of the following quarter for those who apply the quarterly declaration and payment

2 The deadline for submission of annual tax return

No later than the last day of the 3rd month from the end of the calendar year or fiscal year, for annual tax finalization dossiers;
No later than the last day of the first month of the calendar year or fiscal year, for annual tax declaration dossiers.

No later than the last day of the 4th month from the end of the calendar year, for personal income tax finalization dossiers regarding the case of self-finalization with Tax Authority

No later than the December 15th of the preceding year, for business households or individuals who apply flat tax rate; In case of new business households or individuals, the deadline for submitting tax dossiers is within 10 days from the commencing date of businesses.

3

The deadline for submission of tax declaration per case is no later than the 10th day from the date of arising tax obligation.

4

In case of submission of dossiers for termination of business operation, contract termination or reorganization, the deadline return is no later than the 45th day from the date of the event execution.

5

The deadline for submission of tax declaration dossiers for agricultural land use tax; non-agricultural land use tax; land use fees; land rent, water surface rent; charges for granting mineral mining rights; fee for granting the right to exploit water resources; registration fee; license fees; payment to the state budget in
accordance with the law on management and use of public assets; Inter-country profit reports are detailed in Article 10 of Decree 126/2020 / ND-CP.

6

The deadline for submission of tax declaration dossiers for imported and exported goods is in accordance with the Law on Customs 2014.

 

In accordance with the Decree 125, in case that the Company fails to meet the set deadline for submission of tax returns under Law on Tax Administration 2019, the Company shall be subject to tax recollection and tax penalty as well. The amount of fines depends on the number of days you are late to submit the declaration and/or payment, ranging between VND 2,000,000 and VND 25,000,000.

---------------------------------------------------------------------------------------------------------------------------

Smart Solutions For Business Company Limited ('S4B'), a company established in 2007 specializing in providing professional accounting and tax compliance services to foreign invested companies in Vietnam, are pleased to assist customers to review their accounting records, prepare annual financial statements as well as conduct corporate income management with the aim of paying tax properly and sufficiently for tax administration agencies. The brief introduction of the services is attached herewith for your information.

In case you would like to have more details about our scope of work or need any supports/assistance from us, please do not hesitate to contact us directly at This email address is being protected from spambots. You need JavaScript enabled to view it. or +84 24 3974 4181.

Thank you and Best Regards,