New tax inspections and how they affect businesses
A series of important domestic tax policies with wide coverage are being urgently consulted by the Ministry of Finance. However, many regulations, when promulgated, are expected to cause difficulties for businesses. Even businesses do not wish to be approved because they are negligent and will receive “fines”…
1. Emerging Domestic Tax Policies and Business Concerns
On November 9, a tax dialogue with the topic: “Seizing trends to change” attracted a lot of market attention. This is an annual event co-organized by EY Vietnam Consulting Joint Stock Company (EY Consulting Vietnam) and Vietnam Chief Financial Officers Club (CFO Vietnam), to update and help businesses grasp on the latest trends and changes in the domestic and international tax policy environment, providing perspective and in-depth analysis on opportunities and potential impacts on businesses.
1.1 Insights from the Tax Dialogue Event
Sharing at the event, Ms. Trang Pham, Deputy General Director, Tax Consulting, Ernst & Young Vietnam Joint Stock Company, assessed that this year’s state budget collection is quite stressful, currently reaching about 95% with period last year. In the context of an unstable global economy due to overlapping negative shocks, it is difficult for Vietnam’s economy to avoid a difficult situation. According to forecasts of many international organizations, this year’s GDP growth rate is more modest, about 5.8-6% after a surprising growth of 8.02% after the Covid-19 period.
1.2 Data Analytics from EY shows that tax debt is increasing
Because the economic context is not bright and the pressure on budget spending is heavy, businesses have to welcome many inspection delegations, which is not pleasant at all. “Therefore, understanding the changing regulations and tax policies in practice will help businesses be better prepared,” EY leaders emphasized. According to data from EY, to date, tax inspectors have conducted 42,002 inspections, a slight decrease of nearly 7% over the same period. However, the estimated tax debt collected increased by 24%, reaching VND 34,610 billion.
Many new tax regulations, if passed, will cause businesses to incur additional costs.
2. The Future of Tax Policies and Business Implications
More specifically, in the coming time, a series of domestic tax policies with a wide scope of adjustment, great impacts on socio-economic development, businesses and people’s lives are being consulted by the Ministry of Finance. published and expected to be submitted to the National Assembly and passed during the 8th and 9th sessions of the 15th National Assembly, notably the Law on Value Added Tax, the Law on Special Consumption Tax, the Law on Corporate Income Tax, Personal income tax Law.
3. International Tax Policy Changes and Business Management Concerns
However, many new regulations amended and supplemented in the draft Law on Corporate Income Tax cause many concerns for businesses.
3.1 Proposing regulations to Ministry of Finance
Ms. Huong Nguyen said that the Ministry of Finance is proposing regulations on the value of purchased goods and services to be reduced from 20 million VND to 5 million VND. Actually, this number will cause many difficulties for businesses. One regulation that the EY Vietnam representative mentioned in the hope that it will not be passed is the additional principle of deductible expenses when determining taxable income. Specifically, businesses are allowed to deduct all actual expenses incurred for production and business activities, with complete documents.
3.2 Difficulties for business on these tax policies
However, the Ministry of Finance is adding a point that causes concern for businesses, that is, in case the business incurs costs that are not in accordance with specialized management regulations, the costs cannot be deducted. “At first it sounds reasonable, but in reality we see many problems,” Ms. Huong Nguyen expressed. According to Ms. Huong Nguyen, businesses when operating are clearly subject to many regulations, on environment, investment, construction or labor. In this case, if you are just a little negligent and do not comply with the regulations, whether small or large, the business is completely at risk of incurring related and non-deductible costs.
For example, to meet demand, especially during peak seasons, businesses cannot recruit thousands of additional workers but often require employees to work overtime, sometimes exceeding the provisions of the Labor Code. If the regulation is passed, it will cause businesses to incur more costs, which is a very worrying thing.
Representatives of management agencies and EY Consulting Vietnam answer questions from businesses
>>>The basic difference between tax examination and tax inspection
Therefore, EY Vietnam leaders believe that businesses should comment on this regulation to policymakers. In addition, value-added tax policies have also had many changes to meet the needs of businesses and the management capacity of tax authorities, especially with electronic transactions.
With the amendment and supplementation of Decree No. 123/2020/ND-CP dated October 19, 2020 on invoices and documents, according to experts from EY Vietnam, there are still many regulations that cause difficulties for businesses such as : fine for administrative violations on invoices when adding information about the buyer’s identification number to the content; Time of invoice issuance within 24 hours from confirmation of completion of customs procedures for exported goods; Issue invoices for returned goods…
4. Enterprises express worries to manage their business when international tax policy changes
In addition, investment expansion and investment shifting abroad by multinational corporations is taking place enthusiastically and the emergence of new types of economic transactions such as business based on digital platforms and cross-border business. Therefore, in addition to amending domestic tax policies, Vietnam is also forced to develop new policies, including tax policies. Due to new compliance requirements, businesses may incur additional tax costs.
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