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Official Gazette

Saturday, August 8, 2020

Revised Law on Tax Administration

Updated: 10:14’ - 27/06/2013

The Law Amending a Number of Articles of the 2006 Law on Tax Administration (the Revised Law) will take effect next month. It revises 36 out of 120 articles of the 2006 Law, focusing on three major groups of issues: simplifying tax administrative procedures; reforming and modernizing tax administration in line with international practices; and increasing the effect and efficiency of tax administration.

Simplifying tax administrative procedures

Under the Revised Law, the value-added tax declaration frequency is reduced from 12 times to four times a year, for small- and medium sized taxpayers. The 2006 Law only provides monthly, annual declaration, declaration for quarterly temporary calculation or declaration for each time of arising of tax liability, so the Revised Law adds provisions on quarterly tax declaration. The Government will define criteria for identifying taxpayers to make quarterly tax declaration.

The Revised Law also shortens the time for settling tax extension and tax refund. The time for settling tax extension is reduced from five to three working days. The time for settling tax refund is from 15 working days to six, for dossiers eligible for tax refund before examination, and from 60 working days to 40, for dossiers subject to examination before tax refund. 

Reforming and modernizing tax administration

The Revised Law introduces the application of the risk management mechanism in tax administration, through: collecting information and data on taxpayers; elaborating sets of tax administration criteria; assessing taxpayers’ law observance; and recommending and applying methods of tax administration.

Tax administration agencies may apply necessary professional measures to collect, exchange and process information from domestic and foreign sources, including official information supplied by foreign tax administration authorities and competent authorities under treaties to which Vietnam is a contracting party and taxation and customs agreements signed between Vietnam and related countries for use in tax administration.

As a basis for applying Advance Pricing Agreement, the Revised Law allows tax agencies to apply the mechanism of prior agreement on the method of determining taxable prices. Accordingly, tax agencies may apply this mechanism with taxpayers and tax authorities of countries or territories with which Vietnam has signed agreements on double taxation avoidance and tax fraud and evasion prevention with regard to income tax. This mechanism will enable taxpayers to proactively determine taxable prices and pay their tax as well as help tax agencies to prevent transfer pricing frauds.

Raising effect and efficiency of tax administration

The time limits for tax payment for imported and exported goods are adjusted. The grace period for tax payment for raw materials and supplies imported for export production remains 275 days from the date of registration of the customs declaration. However, the Revised Law categorizes enterprises to enjoy the grace period. Enterprises must fully satisfy four conditions: having an export production establishment in the Vietnamese territory; having conducted import and export activities for at least two consecutive years by the date of registration of the customs declaration without committing any acts of tax fraud or evasion and owing any overdue tax debts, late-payment interests or fines; observing the accounting and statistics laws; and making via-bank payment.

For goods temporarily imported for re-export, the Revised Law sets a stricter requirement that taxes must be paid before the customs procedures are completed for such goods, instead of within 15 days from the expiration of the time limit for temporary import for re-export under current regulations.

The Revised Law increases tax fines. For late tax payment, the late-payment interest rate is 0.05%/day for up to 90 late payment days, and 0.07%/day for more than 90 late payment days, instead of 0.05%/day under current regulations. For acts of making incorrect declaration leading to decreases in payable tax amounts or increases in refundable tax amounts, fines will increase from 10% to 20%.

The Revised Law adds provisions on collection of tax arrears. After the statute of limitations for sanctioning tax law violations, taxpayers will not be sanctioned but must fully pay the underpaid, evaded or defrauded tax amounts and late-payment interest that arose within 10 years before the date such violations are detected, or before such violations are detected, for taxpayers that do not make tax registration.

Besides, the Revised Law amends provisions on the order of paying taxes, late-payment interest and fines, prolongation of tax payment time limits and enforcement measures.-


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