The Tax Administration Law of Vietnam, which was approved and took effect on July 1^st, 2020, has set forward several goals to assist both the regulators and businesses in their tax processes and management. In short, the Law attempts to simplify administrative and tax procedures of entities operating in Vietnam, and at the same time to increase regulatory enforcement in order to reduce and eliminate tax evasion practices.

Firstly, in its attempt to eliminate tax evasion, the authorities will have more power in collecting taxes. This development is especially important for multinational companies, as the new law specifically targets companies who do not meet transfer pricing rules. In short, entities that engage in transfer pricing are required to file a separate return. The regulators are expected to increase international cooperation with their foreign counterparts, as well as international organizations, in order to improve the flow and exchange of information.

Secondly, if a company is found to be non-tax compliant or has not paid due taxes by the given deadline, a legal representative of such entity may be prevented from leaving the country by the local authorities.

In addition, the new administrative measures within the Tax Administration Law includes a shorter time frame for the issuance of tax registration certificates, which now only takes three days, as well as an easier procedure to file the annual personal income tax return, as individuals can use their citizenship code instead of using a separate tax code and ID code.

Furthermore, new measures include improved transparency for taxpayers, for example, a clearer timeline of the tax-related requests and their applications made to the authorities. Moreover, starting from November 2020, e-invoices have become compulsory for all enterprises in Vietnam.

Finally, starting from July 2022, a new set of rules will affect businesses operating on e-commerce platforms. Specifically, companies that operate online sales platforms in Vietnam, but do not have a permanent establishment in the country will have to register with the authorities and declare and pay taxes on their income which is Vietnam-sourced.

As usual, please feel free to reach us at info@phcadvisory.com to learn more on the most recent Tax Administration Law and its impact on your business in Vietnam, as our professionals may be able to clarify certain fiscal matters, which you might find somewhat confusing.