New Points in Amended Tax Administration Law

One, reducing the frequency of value-added tax (VAT) declarations from 12 times to 4 times a year, applicable to small and medium-scaled taxpayers. The Government shall determine quarterly declaration criteria for taxpayers.

 

Two, shortening the duration for settling procedures for tax extension requests from 5 working days to 3.

 

Three, some contents concerning tax refund are amended and supplemented, like shortening the duratioin of settlement for the case of “checking first, refunding tax later” from 60 working days to 40 working days dating from the date of receipt of fully eligible records and the duration of "refunding tax first, checking later” from 15 working days to 6 working days.

 

Adding the regulation that taxation agency must check within one year dating from the date of making the decision on reimbursement, applicable to four risk-prone subjects, including Business establishments report on two straight yeaqrs of loss or the loss value in excess of owner’s equity; Tax-reimbursed business establishments operate in real estate business, trade and service fields; Business establishments change the head office two times or more in 12 months backdating from the date of tax-refund decision; Business establishments have unusual changes in taxable revenue and the tax is refunded within 12 months backdating the date of tax-refund decision.

 

Four, replacing tax finalisation declaration documents enclosed the debt-clearing requests in case companies declare corporate bankruptcy.

 

Adding risk management principles in tax administration to lay the basis for applying unified advanced management techniques and professions.

 

Supplementing advance pricing agreement (APA) mechanism to prevent transfer pricing in foreign direct investment (FDI) companies. The addition of APA mechanism facilitates collection, prevent loss and support FDI enterprises to be active in business planning and tax obligation fulfilment.

 

Adding obligations of taxpayers in applying information technology to improve business management and develop electronic tax administration methods: Where taxpayers are business organisations situated in locations with information technology infrastructure, they shall perform tax declarations, payments and transactions with tax authorities by means of electronic media, as provided by the laws on e-transaction.

 

One, the order of tax and fine payment: Changing the order to increase the effect of overdue tax collection and facilitate local tax accounting. Accordingly, the order of payment is defined as follows: Indebted tax, tax in arrears, overdue tax, emerging tax, fines.

 

Two, tax payment extension: Supplementing tax payment extension for taxpayers subjected to reallocate production facilities under the order of competent State agencies.

 

Three, supplementing the regulation on partial tax payment for taxpayers incapable of making one-time settlement: Allowing taxpayers to pay indebted taxes in a given period of time (subjected to overdue fine of 0.05 per cent per day, or 1.5 per cent per month, or 18 per cent per year). The partial tax payment is carried out on the basis of taxpayers’ commitments and guarantee of credit institutions to reduce forced collection and support taxpayers, especially in case taxpayers have a huge amount of taxes (due to fines equalling 1-3 times of tax amount) and face short-term financial difficulties.

 

Four, tax and fine write-offs: According to current laws, tax and fine write-offs are applied in case companies declare bankruptcy; individuals are legally deemed dead, missing or civilly incapacitated. The amended law specifies that write-offs are applied to debts unlikely to be recovered after all possible forced measures applied, and unpaid in 10 years. The tax write-off authority belongs to the Provincial People’s Committee, Head of General Department of Taxation, Head of the General Department of Customs, Finance Minister and Prime Minister.

 

Five, forced tax duty fulfilment: The current law specifies seven measures of forced tax duty fulfilment and the order of applying these measures. The new law supplements the halt to customs clearance of exported goods. In case taxpayers show acts or behaviour of escape or property dispersion, management agencies are entitled to take appropriate forceful measures to ensure timely collection of tax debts.

 

Six, tax-violating penalties: The new law clarifies the nature of overdue payments and apply progressive fines on overdue payment: 0.05 per cent per day of tax value on tax payment delayed in less than 90 days and 0.07 per cent per day on taxes delayed in 90 days or more. The rate of fines is raised from 10 per cent to 20 per cent on acts of deliberately declaring wrong values to have less tax paid.

 

Seven, the time for settling tax-law violations: The old law stipulates that the duration for tax recollection was five years backward. The new ruling however lengthens the duration to 10 years dating from the date of unearthing violations in order to match the archives regulations specified by the Accounting Law.

 

Eight, tax inspection at head offices of taxpayers: The prevailing law specifies that tax inspection is primarily based on declaration records and explanations of taxpayers but the amended ruling provides that tax inspection at the head office of taxpayers is based on risk assessment criteria.

 

Nine, amendments for compliance with other laws: The amended law redefines the contents concerning the duration of declarations, payments and inspections to match land law, non-farming use land law, and inspection law.