Tax administration

Regulation on invoices

On 19th October 2020, the Government issued Decree No. 123/2020/ND-CP which details some important points about e-invoices as follows:

– The regulation of compulsory use of e-invoices according to Clause 2 and Clause 4, Article 35, Decree No. 119/2018/ND-CP dated 12th September 2018 shall be revoked.

– Decree No. 51/2010/NĐ-CP (Decree 51) remains in force until 30th June 2022. Therefore, companies shall continue to use paper invoices according to regulations of Circular No. 39/2014/TT-BTC or e-invoices as per the guidance of Circular No. 32/2011/TT-BTC.

– For companies established from 19th October 2020 to 30th June 2022: In case the companies receive the notifications from the tax office to request the companies to apply e-invoices based on the regulation of this Decree, the companies should follow it.  Otherwise, the companies can follow the regulations of Decree 51 or Decree No. 04/2014/ND-CP dated 17th January 2014 by the Government.


New regulations on administrative penalties about taxes and invoices

On 19th October 2020, the Government issued Decree No. 125/2020/ND-CP (Decree 125) amending some regulations about administrative penalties for taxes and invoices. We highlighted some changes in this Decree compared with current regulations as stated in Decree No. 129/2013/ND-CP (Decree 129) as follows:

Description As per guidance of Decree 125 As per guidance of Decree 129
Maximum penalty for administrative violations on invoices VND 100 million (for businesses),

VND 50 million (for individuals)

VND 50 million (for businesses),

VND 25 million (for individuals)

Violations on tax registration, notice for temporary business termination, notice for continuing the business before the informed deadline Maximum VND 10 million Maximum VND 2 million
Violations on deadline for changes in the application for tax registration Maximum VND 7 million Maximum VND 2 million
Mistake or inadequate information in the tax dossiers Maximum VND 8 million Maximum VND 3 million
Violations on deadline for submitting the tax dossiers Maximum VND 25 million Maximum VND 5 million
Violations on providing information related to the determination of tax obligations Maximum VND 5 million Maximum VND 2 million
Violations on implementation of decisions on tax inspections, enforcement of decisions on taxation Maximum VND 10 million Maximum VND 5 million
Collaboration, concealment of tax evasion Maximum VND 16 million Maximum VND 10 million
Tax evasion Up to 3 times of the evaded tax for the first offense Penalty applied from the second offense
Destroying invoices after the deadline Maximum VND 8 million No regulations
Converting data of e-invoices after the deadline Maximum VND 20 million No regulations

The Decree comes into force on 05th December 2020.


Regulations for Law on Tax Administration 2019

Decree No. 126/2020/ND-CP dated 19th October 2020 issued by the Government has some highlighted contents which detail the Law on Tax Administration 2019 as follows:

– Tax administration for taxpayers during the termination period of business:

In case taxpayers come back to their business at the time that they registered, they do not need to notify the authority office. In case they come back before the registered time, a notice for early comeback must be sent. Also, they must follow regulations on taxation adequately, submit the tax dossiers as well as invoice usage reports on time as regulated by law.

– Tax registration:

Individual taxpayers changing the information on the identification card or passport must notify the changes in the tax registration form within 20 days (30 days for individuals in rural areas, borders, islands) from the date of new identification card or passport.

For each kind of taxes, taxpayers do not need to submit the tax returns if they only have business activities which are not subject to that tax office.

– The total CIT paid for the first 3 quarters of the taxable year shall not be less than 75% of the total CIT payable calculated in the CIT finalization dossier. In case the taxpayers do not pay enough CIT for the first 3 quarters, they must pay the late payment interests which is calculated based on the insufficient CIT amount from the date right after the deadline for the payment of the 3rd quarter CIT to the date that taxpayers pay the insufficient CIT to the state budget.

– The stable 3-year cycle for determining the declaration period for VAT shall be revoked. Accordingly, taxpayers that meet the criteria for declaring tax quarterly can choose to declare tax monthly or quarterly stably for the whole calendar year.

The Decree comes into force on 05th December 2020.


Tax administration for companies having related-party transactions

According to Decree No. 132/2020/ND-CP dated 05th November 2020 issued by the Government which replaces the Decree No. 20/2017/ND-CP dated 24th February 2017 and Decree 68/2020/ND-CP dated 24th June 2020 about tax administration for companies having related-party transactions, there are some highlighted regulations as follows:

– Clarify and supplement some cases that are considered to have related-party transactions:

A company transferring capital or receiving transferred capital of at least 25% capital of its owners in the taxable period; company lending to or receiving loans from the executive officers or individuals that control the company with the amount of at least 10% capital of its owners at the time that the loan occurs, are considered as companies having related-party transactions.

– New regulation about obligation related to country-by-country report (for both cases that ultimate parent companies are in Vietnam and overseas).

– Apply the limitation for interest expense from 20% to 30% of EBITDA (earnings before interest, tax, depreciation and amortization).

– Adjust the standard arm’s length range: from 35% to 75% instead of from 25% to 75% stated in Decree 20.

– In case a company only has related-party transactions with the related party that has CIT obligation in Vietnam, applies the same CIT rate and no parties receive CIT incentives in the taxable period, the company shall be exempted from the transfer pricing documentation (Decree 20 only allow the exemption for requirements referred to in Section III and IV of Form 01 in the CIT finalization return).

The Decree comes into force on 20th December 2020 and shall be applied for CIT finalization of taxable year 2020.


Donation, contribution for prevention of Covid-19 pandemic shall be deductible for CIT

According to Resolution No. 149/NQ-CP dated 10th October 2020, the Government agreed with the request from the Ministry of Finance to let companies consider their contribution or donation to the activities for preventing Covid-19 pandemic as deductible expenses for CIT purpose.