Firms passed PIT filing obligations

Decree 106/2010/ND-CP which will take effect from January 1, 2011 provides changes pertaining to tax management regulations in Decree 85/2007/ND-CP guiding the Tax Management Law and Personal Income Tax (PIT) regulations in Decree 100/2008/ND-CP guiding the PIT law.

Under the new decree, which covers the expansion of tax assessment cases, enterprises will face tax assessment if they do not register or do not submit tax reports within 10 days from the submission deadline under regulations or do not present accounting documents or invoices.

A tax director of an independent accounting firm in Vietnam told VIR the new decree displayed tighter tax management controls.

“Countries have been trying to reduce individuals’ tax filing obligations and place the onus on income payers to withhold and declare the tax.  This is a more efficient mechanism of tax collection,” said Thomas McClelland, tax partner of Deloitte Vietnam

McClelland added that in Vietnam the Personal Income Tax (PIT) Law and regulations had the objective of bringing more individuals into the tax system. However, it was  difficult to place the responsibility on individuals and for tax authorities to deal with thousands of individual returns.

However, EuroCham executive director Matthias Duhn said the changes were positive and consistent with the government’s objective to reduce administrative procedures  consistent with the government’s Project 30 on administrative reforms.

McClelland added that for 2009 as a concession tax authorities allowed employers to file on behalf of employees where they only received income from the company.

“This concession has now become law through Decree 106 and will apply going forward.  Hence, such employees will not be required to file their own tax returns.

“There are also some reductions in the filing obligations for individuals as mentioned below regarding frequency of declaration for non residents which is beneficial as it is difficult and impractical for non residents to file on a monthly basis,” McClelland added.

Under Decree 106, regarding tax management regulations, in case of temporary stop in operations already notified to the tax authority, the taxpayer is not required to lodge tax declaration dossier to the tax authority. If a firm moves location, the taxpayer must pay all declared tax liabilities and request for a tax refund before moving location.

About the responsibility of an income paying entity in regards to PIT, the new decree regulates that income paying entity is responsible for offsetting, withholding and refunding PIT liabilities for individual taxpayers.

Regarding to changes in PIT regulations, while Decree 85 did not regulate the yearly declaration for individuals having one source of income, individuals can authorise income paying entity to conduct PIT finalisation on their behalf.