Finalizing Vietnam's CIT and PIT for the 2023 tax year

Ensuring adherence to CIT and PIT finalization regulations is essential for both businesses and individuals in Vietnam. This article will cover the reporting obligations and important deadlines related to this matter.

The period from January 1 to March 31 is commonly referred to as the "high season" by accounting and audit professionals in Vietnam. During this time, organizations are busy preparing and submitting finalization returns for Corporate Income Tax (CIT) and Personal Income Tax (PIT).

To ensure that organizations in Vietnam comply with tax regulations and report their taxes on time, the Binh Duong Tax Department issued several official notices on January 12, 2024. These notices, including Official Letter 1000/CTBDU-TTHT, Official Letter 1016/CTBDU-TTHT, and Official Letter 1017/CTBDU-TTHT, aim to provide clear guidance on important aspects of the 2024 Vietnam tax compliance calendar, specifically focusing on CIT and PIT finalization for the 2023 tax period.

General Advisory - Official Letter 1000/CTBDU-TTHT

Deadlines and Rates

It is crucial for organizations to strictly adhere to the specified deadlines for declaring and paying license fees. Failure to comply may lead to penalties or legal consequences. It is essential for businesses to accurately calculate and fulfill their financial obligations within the given timeframes.

VAT Declarations

The advisory provides clarity on the frequency of VAT declarations, whether monthly or quarterly. Businesses should ensure they comprehend and fulfill their obligations accordingly to avoid any discrepancies or penalties.

PIT Declarations

Organizations are accountable for declaring Personal Income Tax from salaries and wages. It is vital to accurately report and fulfill PIT obligations in accordance with the regulations outlined by the tax authorities.

Non-Agricultural Land Use Tax

The advisory specifies the deadline for declaring and paying non-agricultural land use tax. Businesses must meet this deadline to avoid any penalties or legal consequences.

Natural Resources Tax

Clear information is provided on the declaration and finalization deadlines for natural resources tax.

Depreciation of Fixed Assets

Guidance is provided on registering the method for fixed asset depreciation.

Tax Agent Staff

Responsibilities are outlined for tax agent staff regarding reporting and updating knowledge related to tax matters. Businesses must ensure their tax agent staff are well-informed and capable of fulfilling their duties effectively.

Electronic Invoices and Deduction Documents

Businesses should pay attention to important considerations when using electronic invoicing and tax deduction documents. It is crucial to comply with electronic invoicing requirements and maintain proper documentation to prevent penalties and ensure precise tax reporting..

Tax Policy Expiry

An overview is provided of tax policies set to expire in 2024, including the VAT reduction policy from 2023, the tax payment extension policy from 2023, and the registration fee reduction policy.

Guidelines for CIT finalization: Official Letter 1016/CTBDU-TTHT

Provisional payments

Companies must make provisional Corporate Income Tax (CIT) payments throughout the fiscal year, ensuring that the total provisional CIT paid for the four quarters is at least 80 percent of the CIT amount payable according to the annual settlement. Failure to meet this requirement will lead to late payment penalties.

Submission deadline

Companies are required to submit their CIT finalization declaration for the fiscal year 2023 by the last day of the 3rd month following the end of the calendar year or fiscal year.

Required documents

The CIT finalization dossier should consist of the following documents:

1. Corporate income tax settlement declaration form as per Form No. 03/TNDN issued alongside Circular No. 80/2021/TT-BTC by the Ministry of Finance.

2. Audit Report and Annual Financial Report: Annual financial statements or financial statements until the termination of activities or conversion of business type or restructuring of the enterprise following accounting and audit laws.

3. Appendices (number may vary based on the actual circumstances of the taxpayer):

- Appendix of production and business results: Form No. 03-1A/TNDN, Form No. 03-1B/TNDN, Form No. 03-1C/TNDN.

- Appendix of loss transfer: Form No. 03-2/TNDN.

- Appendices linked to preferential CIT/tax incentives: Form No. 03-3A/TNDN; Form No. 03-3B/TNDN; Form No. 03-3C/TNDN; Form No. 03-3D/TNDN.

- Appendix of foreign CIT paid: Form No. 03-4/TNDN.

- Appendix of tax on real estate transfer activities: Form No. 03-5/TNDN.

- Appendix of tax on real estate brokerage activities: Form No. 03-8D/TNDN.

- Appendix allocating tax amounts payable to production establishments: Form No. 03-8/TNDN.

- Other appendices as specified.

Companies must provide these documentation materials to ensure accurate tax reporting.

Related-party transactions

Enterprises engaged in transactions with related parties are required to include extra documentation as specified in Appendices I, II, III, and IV, which are issued alongside Decree 132/2020/ND-CP.

This market research outlines the requirements for provisional payments and submission deadlines for Corporate Income Tax (CIT) in Vietnam. It also specifies the required documents for the CIT finalization declaration, including forms, financial reports, and appendices.

Guidelines for PIT finalization: Official Letter 1017/CTBDU-TTHT

Requirements for Tax Finalization

Companies:

In 2023, companies can be exempted from declaring PIT finalization only if there were no income payments or temporary suspensions of operations throughout the entire calendar year. However, if any income payments occur in 2023, companies must declare their PIT finalization, even if no tax deductions apply.

For companies undergoing dissolution, bankruptcy, termination of operations, or business reorganization in 2023, PIT finalization is required up to the time of such events.

In cases where businesses undergo a conversion of business types (excluding state-owned enterprises) and the converted entity inherits all tax obligations of the original enterprise, there is no requirement to finalize PIT until the decision on the conversion is made. The enterprise will settle the tax obligations at the end of the fiscal year.

Individuals:

Individuals subject to direct tax finalization will be exempted from declaring PIT finalization in 2023 under specific circumstances:

- If they have an additional tax amount payable after the finalization of VND 50,000 or less.

- If there is an overpaid tax amount after finalization, but no tax refund or tax offset is required.

- If their current income does not exceed VND 10 million per month and they have 10 percent tax deducted at source.

Deadline for Submission

For companies, the latest submission date is the last day of the 3rd month following the end of the calendar year.

For individuals, the deadline is no later than the last day of the 4th month after the end of the calendar year.

Method of Tax Finalization Declaration

Companies can conveniently submit their PIT finalization dossiers online via the electronic tax service system (using the HTKK tax declaration support software). There is no need to submit additional paper dossiers.

For individuals, the option is to submit the tax finalization declaration form 02/QTT-TNCN through the electronic submission system.

Conclusion

Based on the information provided in the text regarding compliance with CIT and PIT finalization regulations in Vietnam, it is evident that adherence to tax requirements is crucial for both companies and individuals. The detailed guidance on reporting obligations, deadlines, and documents outlined in the official letters issued by the tax department emphasizes the importance of accurate and timely tax reporting to avoid penalties or legal consequences.

The "high season" from January to March is a critical period for preparing and submitting finalization returns for CIT and PIT. Businesses must ensure they understand and fulfill their obligations related to VAT declarations, PIT declarations, non-agricultural land use tax, natural resources tax, fixed asset depreciation, and other tax-related matters in alignment with the regulations set forth by the authorities.

Moreover, the guidelines provided on CIT and PIT finalization, including provisional payments, submission deadlines, required documents, related-party transactions, and specific criteria for companies and individuals to settle tax, offer a comprehensive framework for tax compliance in Vietnam.

As companies and individuals navigate the complex landscape of tax regulations, including new policies and expiring tax incentives, it is essential for them to stay informed, prepare accurate documentation, and meet submission deadlines to ensure smooth tax finalization processes. Utilizing electronic tax service systems for submitting finalization dossiers can streamline the process and facilitate compliance with tax requirements.

In conclusion, proactive tax planning, a thorough understanding of tax obligations, and meticulous attention to detail in tax reporting are paramount for ensuring compliance with CIT and PIT finalization regulations in Vietnam. By following the guidelines and leveraging available resources, businesses and individuals can mitigate risks, avoid financial penalties, and uphold their tax responsibilities effectively.