TAXPAYERS SHALL BE BANNED FROM EXITING IF THEY DO NOT FULFILL THEIR TAX LIABILITY
The Law on tax administration 2019 was approved at the 7th session of the Fourteenth National Assembly on June 13rd, 2019 and it takes effect on July 01st, 2020. The law includes 17 chapters which contain 152 Articles. It provides administration of taxes, other amounts payable to the state budget, invoices, electronic records,...The Law on tax administration 2019 supplements new provisions and amends some important regulations. Some remarkably new points in the law on tax administration 2019 adjust according to the following directions:
1. The law expands the rights of taxpayers
To better protect the taxpayers’ rights, the Law on tax administration 2019 supplement some provisions of taxpayers’ rights beyond the ones mentioned in Law on tax administration 2006 and Law amending and supplementing a number of articles of the law on tax administration 2012 as follows:
- Receive documents related to tax liabilities from competent authorities upon inspections, reviews and/or audits.
- Be informed of tax refund schedule, non-refundable tax and legal bases of non-refundable tax.
- Receive tax decisions, tax audit/inspection records; request explanation for contents of tax handling decisions.
- Enjoy exemption from penalties for administrative tax offenses, exemption from late payment interest for cases where taxpayers comply with guidelines and handing decisions of tax authorities and/or state authorities on the determination of their tax liabilities.
2. The law changes the time limit for the tax registration
In provisions of the Law on tax administration 2006 and the amended Law 2012, taxpayers must make tax registration within ten working days since enterprises were granted business registration certificates and operation licenses or investment certificates or they commenced their business operation. The new provisions in the Law on tax administration 2019 stipulate that the taxpayers can be granted tax identification numbers before starting their business operation or incurring amounts payable to the state budget.
3. The law changes the time limit for the issuance of taxpayer registration certificate
Specifically, the Law on tax administration 2019 has shortened the time limit compared to the old provisions. Within three working days starting from the receipt of the adequate application, tax authorities must issue tax registration certificates to taxpayers. In case the taxpayer registration certificate or TIN notification is lost or damaged, tax authorities shall reissue it within 02 working days starting from the date of receipt of the satisfactory application from the taxpayer.
4. The law extends the time limit for applying annual personal income tax statements
For the annual personal income tax statements, the submission deadline is the last day of the 4th month from the end of the calendar year.
5. Provisions on the suspension of exit if taxpayers have not yet fulfilled their tax liability
Taxpayers are enforced to obey administration decisions, Vietnamese citizens exiting Vietnam to reside overseas, Vietnamese people residing overseas, foreigners exiting Vietnam shall fulfill their tax liability before the exit. Otherwise, they shall be suspended from exiting Vietnam in accordance with immigration laws.
6. Provisions on cases of cancellation of outstanding tax, late payment interest and fines
Besides provisions on cases of cancellation of outstanding tax, late payment interest and fines, the Law on tax administration 2019 supplement one case: tax, late payment interest and fines in cases of natural disasters, epidemics and the other force majeure events were considered exemption of late payment and extension of tax payment but the damage has still occurred and the taxpayer’s business is still irrecoverable and thus tax, late payment interest and fines cannot be paid even after that tax deferral is granted.
Moreover, the new law supplements provision as follows: An taxpayer that is individual, sole trader, householder, household business owner, sole proprietor or owner of a single-member limited liability company has had the outstanding tax, late payment interest and fines canceled before resuming the business operation or establishing a new business, thus, they must refund such debts to the state budget.
7. Legalization of electronic invoices
The electronic invoices are regulated in Decree No. 119/2018/ND-CP prescribing electronic invoices for sale goods and provision of services. In the Law on tax administration 2019, they are officially regulated in Chapter X. Although Law on tax administration 2019 comes into force since July 01st, 2020, however, provisions of electronic invoices will take effect on July 01st, 2022. During this period, individuals and organizations are recommended to apply regulation on electronic invoices in the Law before July 01st, 2022. From July 01st, 2022, the electronic invoice is compulsory for all taxpayers.
8. There are some concrete provisions of related-party transaction
To prevent price transfer and tax avoidance, the Law on tax administration 2019 bans collusion, connection, cover-up between taxpayers and tax officials, tax authorities for price transfer and/or tax evasion. It amends two principals which are regulations of independent transactions and regulations of tax liabilities determined by the nature of activities and transactions. Therefore, it helps tax authorities to prevent tax avoidance.
In order to strictly manage tax evasion through transfer pricing, the Law on tax administration 2019 gives three rules for declaring and calculating taxable prices in related-party transactions, as follows:
- Values of related-party transactions shall be determined and declared by analyzing and comparing with independent transactions, the nature of operation and nature of the transaction, in order to determine tax liability in the same manner as that of transactions between independent parties;
- Values of related-party transactions shall be adjusted according to independent transactions to declare tax in order that in taxable income is not decreased;
- Taxpayers whose businesses are small in scale and pose low tax risk are exempt from compliance to provisions and may apply simplified related-party transaction declaration procedures.
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