Latest regulations regarding provisional corporate tax payment
2023/01/17
- US CPA
- Masaya Sakai
Introduction
On October 30, 2022, the Government of Vietnam issued Decree 91/2022/ND-CP amending and supplementing Decree 126/2020/ND-CP. Under the previous Decree 126/2020/ND-CP, “the total amount of provisional corporate tax paid in the first, second, and third quarters of the fiscal year must be at least 75% of the total corporate tax paid in the annual tax return.” It was stipulated that On the other hand, Decree 91/2022/ND-CP stipulates that “the total amount of provisional corporate tax paid in the first, second, third, and fourth quarters of the fiscal year must be 80% or more of the total corporate tax paid in the annual tax return. ” and is being applied retroactively from fiscal year 2021.
The table below provides a detailed explanation of changes in laws regarding provisional corporate tax payments.
| Laws and regulations | (1) Circular 60/2007/TTBTC dated June 14, 2007 (2) Circular 28/2011/TTBTC dated February 28, 2011 |
Circular dated October 10, 2014 151/2014/TTBTC Article 17 |
(1) Article 8, Paragraph 6, Point 4 of Decree 126/2020/NDCP of October 19, 2020 (2) Tax Administration Act 2019 dated June 13, 2019 |
(1) Decree 91/2022/NDCP of October 30, 2022 (2) Tax Administration Act 2019 dated June 13, 2019 |
| Fiscal year | 2007-2013 | Since 2014 | 2021 | Since 2021 |
| Content | •Quarterly provisional corporate tax return documents must be submitted. • Deadline for self-assessment and tax payment: Until the 30th day of the quarter following the quarter in which the tax liability occurred. |
•No need to submit quarterly provisional corporate tax return documents. •Based on performance, taxpayers pay the provisional tax amount quarterly. Deadline for self-assessed tax: Until the 30th day of the quarter following the quarter in which the tax obligation arose. •The total amount of provisional corporate tax paid by the tax deadline for the fourth quarter must be at least 80% of the total amount of corporate tax paid in the annual tax return. •Late interest will be charged on the shortfall in the provisional tax amount starting from the day after the last day of the fourth quarter tax payment deadline. |
•No need to submit quarterly provisional corporate tax return documents. •Based on performance, taxpayers pay the provisional tax amount quarterly. Quarterly tax payment deadline: By the 30th of the first month of the following quarter •The total amount of provisional corporate tax paid in the first, second and third quarters of the fiscal year must be at least 75% of the total corporate tax paid in the annual tax return. •Late interest will be charged on the shortfall in provisional tax payments from the day after the last day of the third quarter tax payment deadline of the fiscal year until the day the shortfall is paid in the national budget. |
•No need to submit quarterly provisional corporate tax return documents. •Based on performance, taxpayers pay the provisional tax amount quarterly. Quarterly tax payment deadline: By the 30th of the first month of the following quarter •The total amount of provisional corporate tax paid in the first, second, third, and fourth quarters of the fiscal year must be at least 80% of the total corporate tax paid in the annual tax return. •Arrears interest will be charged on the shortfall in the provisional tax amount from the day after the last day of the tax payment deadline for the fourth quarter of the fiscal year until the day before the day on which the shortfall is paid to the national budget. |
With the aim of increasing national budget revenue, after continuing for seven years the provision stipulating that “the total amount of provisional corporate tax paid must be at least 80% of the total amount of corporate tax paid in the annual tax return,” the government adopted Cabinet Order 126. /2020/ND-CP was issued to change the provisions regarding provisional tax payments. On the other hand, this change has had an impact on businesses. The following are the main reasons.
– In the second and third quarters of 2021, due to the impact of the new coronavirus, the functions of many provinces and cities across the country decreased, and at the same time many companies suspended their operations.
– After the corona countermeasures, companies are gradually recovering their business in the fourth quarter of 2021. By the end of the fiscal year, a considerable number of companies had made large profits.
– Even without the impact of the coronavirus, requiring companies to estimate their total corporate tax for the year in the third quarter is unreasonable in terms of time and may also impact companies’ cash flows. After receiving various opinions from organizations and companies, on October 30, 2022, the government will amend the provisions regarding provisional corporate tax payments, with the aim of promoting economic development under conditions that are effective for companies and taxpayers. Decree 91/2022/ND-CP was issued.
《important point》
1. When paying the provisional total amount of corporate tax for the year up to the fourth quarter
– According to the current regulations, the deadline for calculating and paying the provisional amount of quarterly corporate tax is the 30th day of the first month of the next quarter.
Taxes payable are based on quarterly performance.
As a general rule, if a company incurs a tax liability, late payment interest will be charged if the tax liability exceeds the above deadline.
– Currently, the Tax Bureau’s system assumes that late payment interest will be charged if the total amount of provisional tax payments is less than 80% of the total amount of corporate tax due in the annual final tax return.
Late payment interest will be charged starting from the day after the last day of the fourth quarter tax payment deadline of the fiscal year.
– Therefore, if you do not calculate and pay quarterly corporate taxes, there is a risk that interest on late payments will be pointed out in future tax inspections and investigations.
If a company has profits, it is recommended to calculate and pay the provisional tax amount on a quarterly basis to minimize tax risks.
If there is no profit, no action is necessary.
2. Points to note to avoid the risk of underpaying the total amount of provisional tax due to regulations
In order to avoid the risk of being charged late payment interest due to underpayment of the provisional tax amount, companies should keep in mind the following points:
– Plan and manage production and management
– Calculate and pay the provisional tax amount every quarter
– Adjust and estimate tax and accounting differences
3. Points to note when applying retroactively the provisions regarding the provisional amount of corporate tax for the fiscal year 2021 based on Decree 91/2022/ND-CP
-If the total amount of provisional tax paid by the taxpayer in the first, second and third quarters of the 2021 tax year is 75% or more of the total corporate tax due in the annual tax return, the provisions of Decree 91/2022/ND-CP apply.
No application required.- Late payment interest (1) will accrue if the total amount of provisional tax paid by the taxpayer in the first, second and third quarters of the 2021 tax year is less than 75% of the total corporate tax as per the annual tax return. do. In that case, whether Decree 91/2022/ND-CP is applicable will be determined as follows.
-When recalculating, if the total provisional tax paid in the first, second, third, and fourth quarters of the 2021 tax year is 80% or more of the total corporate tax according to the annual tax return, the late payment interest will be Does not occur. In this case, Decree 91/2022/ND-CP can be applied.
-When recalculating, if the total amount of provisional tax paid in the first, second, third, and fourth quarters of the 2021 tax year is less than 80% of the total corporate tax according to the annual tax return, late payment interest will be applied. (2) occurs. In order for Decree 91/2022/ND-CP to apply, late payment interest (2) must be lower than late payment interest (1).
-During the tax audit, the tax bureau official calculated the arrearage interest on the shortfall in the provisional total tax payment in accordance with Decree 126/2020/ND-CP, but when the provisional total tax payment was recalculated in accordance with Decree 91/2022/ND-CP, the tax was delinquent. If the interest rate decreases, the entity will need to perform the following tasks: According to Tax Administration Law 38/2019/QH14 Chapter VIII and Article 60
– The taxpayer shall submit a written request for reduction adjustment of the arrearage interest to the tax authority where the arrearage interest has been incurred, using Form No. 01/GTCN in the appendix attached to Decree 91/2022/ND-CP.
– After the reduction adjustment, the excess taxes, late interest, and penalties will be offset against the next tax, late interest, and penalties, or refunded.
– If a taxpayer requests offset of unpaid taxes, late interest, and penalties, no late interest will be charged on the offset for the period from the date of overpayment to the date of offset by the tax administration.
*This article was translated by Yarakuzen.
