Tax extension excites firms

The MoF draft of the revised law will be submitted at the 13th National Assembly’s second session in October this year and then approved in the third session in May 2012.

The Law on Tax Administration currently stipulates that enterprises have to finalise their tax paperwork for each year by March 31 of the following year, or within 90 days. This deadline applies for all companies, no matter what their size.

But the new draft law gives a grace period for state-owned groups and corporations, and large-scale enterprises as well as those operating in many cities and provinces.

If the new law is approved, those taxpayers will see the corporate income tax finalisation deadline extended by 60 days. Definitions of “large-scale enterprises and companies operating in many cities and provinces” will be made in guiding documents to be issued later.

Under the draft amended law, taxpayers will have to inform the tax authority of the time they intend to conduct tax finalisation.

“This change is critical since it creates favourable conditions for enterprises, especially large businesses which need a long time to finish tax finalisation reports,” said Dang Thi Binh An, chairwoman of C&A Tax Consultancy Company.

An explained that businesses had to collect data from their subsidiaries and make financial reports. Meanwhile, foreign-invested companies needed to submit financial reports together with tax finalisation reports to be audited by an independent auditing company in accordance with accounting regulations.

“Therefore, companies with foreign investment are often late in submitting the yearly tax finalisation reports and they have to pay fines,” said An, who used to be a deputy director of the General Department of Customs.

The new draft law also gives enterprises extra grounds for the cancellation of outstanding taxes and fines. These include enterprises cases where a business has gone bankrupt. Enterprises recording losses, going out of business or stopping production and truly unable to pay tax could also see exemptions from taxes and fines.

The current Law on Tax Administration said that companies which go bankrupt and have already made all payments required by the Law on Bankruptcy and do not have any assets to pay taxes/fines on will be absolved from tax/fine debts.

This is also true for individuals who died or have gone missing or have no capacity for civil acts or have no assets to pay taxes/fines.

Pham Xuan Huu, an adviser of Vietnam Textile Association, said these rules did not go far enough.

“In many cases where tax/fine debts arise as the result of objective reasons, calculating the exact amount of taxes that must be paid proves very difficult,” said Huu.

“Therefore, some tax debts have arisen and consideration must be given to their elimination, but there are not yet any regulations which serve as a legal basis for tax officials to do this,” he added.

Many experts have also proposed changes in the frequency of tax declarations, the time in which tax authorities should address tax administrative procedures and the documents that taxpayers must submit to tax officials.