Enterprises consultancy on drafting Law on Tax Administration (amended)

An overview of the workshop

The workshop was to collect enterprise’s recommendations on drafting the Law on Tax Administration (amended) organized by Vietnam Chamber of Commerce and Industry on December 5, 2017.

Current law is "backward"

According to Mr. Luu Duc Huy, Director of Tax Policy Department, General Department of Taxation and Law on Tax Administration passed by the National Assembly on November 29th, 2006, effective from July 1st, 2007 and amended and supplemented three times in: Law No. 21/2012/QH13 dated November 21st, 2012, effective from July 1st, 2013; Law No. 71/2014/QH13 dated November 26, 2014, effective January 1st, 2015 and Law No. 106/2016/QH13 dated April 6th, 2016, effective from July 1st, 2016.

After nearly 10 years of implementation, the Law on Tax Administration has created a basic legal framework, unifying tax collection management policy in line with international tax laws and practices. Facilitating tax administration to change the management mode under the form that taxpayers shall calculate, declare and pay by themselves, and take responsibility for the fulfillment of tax obligations complying with the tax law.

However, Mr. Luu Duc Huy acknowledged that the Law on Tax Administration has not yet created sufficient legal conditions for the modernization of tax administration. First of all, the implementation of electronic tax administration procedures is too widespread. In the context of the strong development of e-commerce in the 4th industrial revolution, non-cash payment in the economy has seen remarkable changes compared to previous years.

"Therefore, it is necessary to develop a new law that is appropriate to the modern situation and to improve the efficiency of the tax administration and prevent losses with new types of businesses that is are developing so fast”, said Mr. Huy.

The Ministry of Finance has openly solicited comments on the proposal to develop the Law on Tax Administration (amended), with the objective of tax administration in a simple, clear, open, convenient and uniform manner with international standards and electronic tax administration. The content of e-transactions, tax declaration, tax records, functions of inspection and examination, invoices and e-commerce tax administration will be implemented by the tax administration agencies in a more convenient way for taxpayers and regulators.

According to Mr. Dau Anh Tuan, Head of Legal Department, Vietnam Chamber of Commerce and Industry (VCCI), Law on Tax Administration (Amended) has a great impact on enterprises, because the tendency of reform, frequency of declaration , electronic transactions, papers in coordination with the relevant agencies are very large. Therefore, the draft law contains important provisions such as the promotion of electronic transactions, electronic invoices, electronic tax returns, tax declaration and tax accounting... will directly affect enterprises.

"The Drafting Board and the General Department of Taxation always welcomes the opinions of enterprises and affected subjects. Therefore, the openness and transparency of the drafting committee will meet the needs and expectations, requires changes in tax administration of enterprises,” said Mr. Tuan.

Adjust regulations on tax declaration and report

Speaking at the workshop, Mr. Ha Thi Tuong Vy, head of the accounting practice management board (VAA), said that the draft still has some proposals that makes it difficult for businesses when comes into force. For example, removing the declaration of tax finalization and integrating tax finalization declaration into financial statements. This will lead to a lack of independence between accounting, financial reporting and tax declaration, contrary to the orientation of developing the accounting system of Vietnam which is separate from accounting and tax of the Ministry of Finance.

“In fact, the declaration for finalization of corporate income tax is not too long but mainly complicated in the attached annexes. The nature of the report on the results of production and business activities is only included in the appendix and attached by the finalization of corporate income tax, which can not be replaced. Unnecessary changing of forms will increase the costs for the State budget, society and enterprises”, said Ms. Ha Thi Tuong Vy.

The representative of the VAA also said that, the regulation that “tax service business organizations will be allowed to provide tax accounting services and review accounting books, financial statements" is unclear. Explaining this matter, Ms. Ha Thi Tuong Vy said that this work is only one of many contents of accounting services in accordance with the Law on Accounting and is one of many contents of accounting work of enterprises. As such, such regulations are not in accordance with the Accounting Act of 2015 and the laws relating to this matter.

Giving comments on the drafting the Law on Tax Administration (amended), Ms. Pham Thu Trang, Deputy General Director of Ernst & Young Vietnam Co., Ltd., proposed to review the regulations on quarterly tax declaration dossiers and revise the time limit for submission of tax finalization dossiers.

"The deadline for submission of the annual business income tax declaration is 90 days from the deadline for submitting financial statements of the enterprise. The deadline for submitting information and transaction dossiers will be 180 days (or 1 year) from the deadline for submitting financial statements of the enterprise,” Ms. Trang suggested.