Question 1: Due to the prolonged pandemic, our business incurred losses in 2020 and 2021, resulting in debts, including penalties for late tax payments. I heard that the National Assembly Standing Committee (“NASC”) issued Resolution 406 to support businesses and individuals affected by Covid-19, including an exemption from late payment penalties. So, what are the detailed conditions for this exemption?
Answer:
Based on Clause 4, Article 1 of Resolution 406/UBTVQH15 of the NASC, enterprises and organizations (including dependent units and business locations) incurring losses in 2020 will be **exempt from late payment penalties** arising in 2020 and 2021 for tax arrears, land use fees, and land rent.
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Question 2: The Law on Tax Administration No. 38/2019/QH13 and Decree No. 126/2020/ND-CP stipulate an exemption from additional personal income tax (PIT) payable for individuals with an additional tax payable after annual finalization of **50,000 VND or less**. According to this guidance, are individuals who authorize their company to finalize tax, and whose additional PIT payable after finalization is 50,000 VND or less, eligible for this exemption?
Answer:
Based on point b, Clause 2, Article 79 of the Law on Tax Administration No. 38/2020/QH14 regarding tax exemption and reduction, and point d.3, Clause 6, Article 8 of Government Decree No. 126/2020/ND-CP, individuals who **authorize their company to finalize tax and have an additional tax payable of 50,000 VND or less after finalization** are eligible for tax exemption for the additional annual PIT payable from salaries and wages that is 50,000 VND or less after tax finalization.
The income-paying entity still declares the information of the individuals receiving income in the entity’s PIT finalization dossier and does not aggregate the additional tax payable of individuals with an additional tax payable of 50,000 VND or less after finalization.
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Question 3: During the tax payment extension period, will taxpayers be penalized and charged late payment interest?
Answer:
According to Clause 4, Article 62 of the Law on Tax Administration 38/2019/QH14 dated June 13, 2019, taxpayers **will not be penalized and will not be charged late payment interest** on the outstanding tax amount during the tax payment extension period.
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Question 4: Will taxpayers whose tax is assessed be subject to administrative penalties and late payment interest?
Answer:
Based on point c, Clause 2, Article 16 of Government Decree No. 126/2020/ND-CP dated October 19, 2020:
Article 16. Authority, procedures, and decisions on tax assessment
“…
_2. Procedures for tax assessment_
_c) If a taxpayer is subject to tax assessment as stipulated, the tax authority shall impose **administrative penalties and calculate late payment interest** on the tax amount as stipulated by law.”_
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Question 5: We have two investment projects in two different provinces. The activities at the branch and head office are similar, except that all processed products from the branch are brought back to the head office for sale (export). The branch has no revenue.
According to the Enterprise Registration Certificate, we registered three business lines, but so far, we have only operated one business line. Currently, we are centralizing tax declaration at the head office. We are currently eligible for VAT refunds as over 90% of our revenue is from exports.
From December 5, 2020, when Decree No. 126/2020/ND-CP took effect, where will we declare VAT and CIT? Centrally at the head office or at the investment projects?
Answer:
Based on the provisions of Government Decree No. 126/2020/ND-CP dated October 19, 2020:
**_Clause 2, Article 11:_**
_“2. The location for submitting tax declaration dossiers for taxpayers with activities and businesses in multiple provinces different from their head office, as stipulated in point b, Clause 4, Article 45 of the Law on Tax Administration, shall implement centralized accounting at the head office (except for cases stipulated in Clauses 1, 3, 4, 5, and 6 of this Article) at the tax authority managing the head office. At the same time, taxpayers must submit a **Table of tax allocation** (if any) by each province where the state budget revenue is enjoyed (including dependent units, business locations) to the tax authority managing the head office…”_
**_Clause 3, Article 43:_**
_“3… The Ministry of Finance is responsible for guiding cases subject to tax declaration as stipulated in Clause 2 and Clause 4 of Article 11 of this Decree, ensuring implementation for the first year of the next budget stabilization period from when the Law on Tax Administration No. 38/2019/QH14 and its guiding documents take effect.”_
Based on the above regulations, if the Company has a branch in a different province from its head office and implements centralized accounting, the Company shall **declare tax at the head office and submit a Table of tax allocation** (if any) by each province where the branch is located to the tax authority managing the head office.
The tax declaration according to Clause 2, Article 11 of Decree No. 126/2020/ND-CP mentioned above will follow the Ministry of Finance’s guidelines and will be implemented for the first year of the next budget period from the effective date of the Law on Tax Administration No. 38/2019/QH14 and its guiding documents.
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Question 6: When the tax authority audits an enterprise’s tax finalization: if the enterprise makes an incorrect declaration, the enterprise will be subject to tax arrears and penalties.
If, during the tax finalization audit, the enterprise discovers that the declared figures are incorrect, leading to a higher taxable income and corporate income tax, can the enterprise request the tax authority to adjust the audit report to the correct figures?
If, in the previous audit team’s finalization report, there were errors leading to disadvantages for the enterprise, and the enterprise only discovers them in the subsequent audit period, can the enterprise request the audit team of the current period to adjust the missing contents of the previous report into the current audit report?
Answer:
Clauses 2 and 3, Article 47 of the Law on Tax Administration No. 38/2019/QH14, regulate the supplementary declaration of tax dossiers as follows:
_“2. When the tax authority or competent authority has announced a tax inspection or examination decision at the taxpayer’s headquarters, the taxpayer **may still make supplementary declarations** for the tax dossier; the tax authority shall impose administrative penalties for tax administration violations for acts stipulated in Articles 142 and 143 of this Law._
_3. After the tax authority or competent authority has issued a conclusion or tax handling decision following an inspection or examination at the taxpayer’s headquarters, the supplementary declaration of tax dossiers shall be stipulated as follows:_
_a) Taxpayers may make supplementary declarations for tax dossiers in cases that **increase the tax payable, decrease the deductible tax, or decrease the tax exempted, reduced, or refunded**, and shall be subject to administrative penalties for tax administration violations for acts stipulated in Articles 142 and 143 of this Law;_
_b) If the taxpayer discovers errors in the tax declaration dossier and the supplementary declaration **reduces the tax payable or increases the deductible tax, increases the tax exempted, reduced, or refunded**, then the provisions on resolving tax complaints shall apply.”_
Based on the above regulations, from the effective date of the Law on Tax Administration No. 38/2019/QH14, when the tax authority or competent authority has announced a tax inspection or examination decision at the taxpayer’s headquarters, the taxpayer may still make supplementary declarations for the tax dossier; the taxpayer will be subject to administrative penalties for tax administration violations for acts stipulated in Articles 142 and 143 of this Law.
Point a, Clause 2, Article 112 of the Law on Tax Administration stipulates the duties and powers of the head of the tax administration agency to issue tax inspection decisions and tax administration officials in conducting tax inspections:
_“2. Tax administration officials, when conducting tax inspections, shall have the following duties and powers:_
_a) Strictly **comply with the content and duration** stated in the tax inspection decision;”_
Thus, tax administration officials must strictly comply with the content and duration stated in the tax inspection decision (inspection content, inspection period).
If the tax authority has issued a conclusion or tax handling decision after an inspection or examination, and the taxpayer discovers errors in the submitted tax declaration dossier, the taxpayer may make supplementary declarations and adjustments and shall be handled according to regulations.
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Question 7: How are tax deferral, exemption, and reduction policies applied in cases of force majeure events?
Answer:
The current policies for **tax deferral, exemption, and reduction** for taxpayers affected by force majeure events are regulated as follows:
- Taxpayers who are required to pay late payment interest as stipulated are **exempt from late payment interest** in cases of force majeure (Clauses 1, 8 Article 59 of the Law on Tax Administration).
- Tax payment deferral is considered based on the request of taxpayers who suffer material damage, directly affecting production and business due to force majeure events (point a, Clause 1 Article 62 of the Law on Tax Administration).
- Taxpayers who are fined for administrative violations in tax administration and suffer damage due to force majeure events are **exempt from the fine**. The total maximum fine exemption shall not exceed the value of the damaged assets or goods (Clause 1 Article 140 of the Law on Tax Administration).
These provisions aim to provide relief and support to taxpayers facing unforeseen and uncontrollable circumstances. Do you have any specific force majeure scenarios in mind that you’d like to discuss further?
