GDT Explains More about Tax Payment Time Calculation

According to the General Department of Taxation (GDT), in enforcing the Government’s Resolution 19 on reform of tax administrative procedures, as directed by the Ministry of Finance, the GDT asked the Ministry of Finance, the Government and the National Assembly to issue regulations to amend and simplify tax policies and tax administrative procedures, and redesign tax document forms to reduce compliance time for businesses. Specifically, in 2014, the Ministry of Finance made amendments and supplements and proposed the Government and the National Assembly to amend related legal documents to reduce tax compliance period of companies by 290 hours (Circular 119/2014/TT-BTC helped cut 201.5 hours, and Decree 91/2014/ND-CP helped slash 88.36 hours). From January 1, 2015, Law 71/2014/QH13 and instructive documents (Decree 12/2015/ND-CP, Circular 96/2015/TT-BTC, Circular 26/2015/TT-BTC) amended and supplemented such contents as: Eradicating provisions that businesses must establish and send detailed statements of goods and services purchased and sold enclosed VAT declaration forms; removing regulations that restrict marketing and advertisement expenses in calculating lawful costs of enterprises; applying unified regulations on accounting and taxation in defining exchange rates between Vietnamese dong and other currencies; and amending some regulations on invoices and documents among other things. These regulations helped cut the time required for dealing with corporate tax administrative procedures by 120 hours (Law 71/2014/QH13 shortened 80 hours; Circular 26/2015/TT-BTC trimmed 10 hours; Circular 96/2015 reduced 30 hours). At the same time, the GDT accelerated the deployment of tax declaration and electronic tax payment services, helping businesses not to send written documents to tax authorities as earlier. This thus killed another 10 hours a year. As such, a total of 420 hours has been cut and the GDT basically finished reducing the corporate compliance time as required by the Resolution 19 of the Government.

 

In the World Bank’s Doing Business Report 2016, the time of corporate tax payment was reduced by only 102 hours, of which tax payment duration was cut by 40 hours and social insurance time was trimmed by 62 hours. This result came as the report took data from January 1, 2014 to December 31, 2014. This agency calculated the new time when new policies took effect. If policies came into force at the start of the year, it counted 100 percent of time but they come into effect in the middle of the year, the percentage would be reduced accordingly. After delving into time data of this agency, tax authorities found out that all tax reforms of Vietnam in 2014 were recorded but the time of tax declaration was calculated from October and November, based on the effective date of relevant legal documents. Therefore, the tax payment time in 2014 was calculated in just two months, equivalent to a reduction of 40 hours. New changes will be recorded in the Doing Business Reports in 2017 and 2018.

 

GDT officials said the ongoing tax reform has mainly focused reviewing and simplifying tax policies and administrative procedures and advancing information technology application to electronic tax declaration and payment. To bring the degree of facilitation on par with ASEAN 4 nations, Vietnamese tax authorities will concentrate on enhancing the capacity and level of tax officers, building monitoring and checking mechanism over tax officers, and expanding electronic tax declaration and payment. Electronic tax declaration and payment will also be applied to individuals who pay taxes on house rents and registration fees.