Vietnam CIT and PIT Finalization for the 2023 Tax Period

Compliance with CIT and PIT finalization regulations is crucial for companies and individuals in Vietnam. We discuss reporting requirements and relevant deadlines in this article. For support with your corporate tax and audit obligations in Vietnam, you can reach our professional service advisors at vietnam@dezshira.com.

The timeframe spanning from January 1 to March 31 in a calendar year is commonly known as the “high season” among accounting and audit professionals in Vietnam. This period is characterized by the preparation and submission of finalization returns for Corporate Income Tax (CIT) and Personal Income Tax (PIT).

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To ensure compliance and timely tax reporting for organizations in Vietnam, the Binh Duong Tax Department issued multiple official notices on January 12, 2024: Official Letter 1000/CTBDU-TTHT, Official Letter 1016/CTBDU-TTHT, and Official Letter 1017/CTBDU-TTHT.

These advisories aim to provide clarity and guidance on essential aspects of the 2024 Vietnam tax compliance calendar, including comprehensive guidance on CIT and PIT finalization for the 2023 tax period.

Official Letter 1000/CTBDU-TTHT: General advisory

Rates and deadlines

Organizations must strictly adhere to the specified deadlines for declaring and paying license fees. Failure to comply may result in penalties or legal consequences. It is imperative for businesses to accurately calculate and fulfill their financial obligations within the stipulated timeframes.

VAT declarations

Clarity is provided in the advisory regarding the frequency of VAT declarations, whether monthly or quarterly. Businesses should ensure they understand and fulfill their obligations accordingly to avoid any discrepancies or penalties.

PIT declarations

Organizations are responsible for declaring Personal Income Tax from salaries and wages. It is essential to accurately report and fulfill PIT obligations in compliance 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.

Fixed asset depreciation

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. It is crucial for businesses to ensure their tax agent staff are well-informed and capable of fulfilling their duties effectively.

Electronic invoices and deduction documents

Important considerations are highlighted for businesses using electronic invoicing and tax deduction documents. Compliance with electronic invoicing requirements and proper documentation is essential to avoid penalties and ensure accurate tax reporting.

Tax policy expiry

An overview is provided of tax policies set to expire in 2024, including the VAT reduction policy from 2023, tax payment extension policy from 2023, and registration fee reduction policy for cars. Businesses should prepare for the expiration of these policies and adjust their tax planning strategies accordingly.

New tax policies

Details are provided on new tax policies taking effect in 2024, including the global minimum tax (additional CIT/top-up tax), environmental protection tax reduction policy for gasoline and oil, and VAT reduction policy specified in Decree 94/2023/ND-CP. Businesses should familiarize themselves with these new policies and adapt their tax compliance practices accordingly.

CIT finalization guidelines: Official Letter 1016/CTBDU-TTHT

Provisional payments

Enterprises are required to make provisional payments of CIT throughout the fiscal year. The total provisional CIT paid for the four quarters must not fall below 80 percent of the CIT amount payable according to the annual settlement. Failure to meet this threshold will result in late payment penalties.

Submission deadline

Enterprises must submit their CIT finalization declaration for the fiscal year 2023 no later than the last day of the 3rd month following the end of the calendar year or fiscal year.

Required documents

The CIT finalization dossier should include the following documents:

• Corporate income tax settlement declaration form according to Form No. 03/TNDN issued together with Circular No. 80/2021/TT-BTC by the Ministry of Finance.
• 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 according to the provisions of laws of accounting and audit.
• 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 prescribed.

Enterprises must provide these documentation materials to demonstrate accurate tax reporting.

Related-party transactions

Enterprises involved in related-party transactions must include additional documents as prescribed in Appendices I, II, III, IV, issued with Decree 132/2020/ND-CP.

PIT finalization guidelines: Official Letter 1017/CTBDU-TTHT

Subjects required to settle tax

• Companies:

Companies are eligible for exemption from declaring PIT finalization in 2023 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 in cases where 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 dissolution, bankruptcy, termination, or reorganization.

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 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.

Submission deadline

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.

Form of Tax Finalization Declaration

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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 tax service system available at the provided link. However, individuals must also physically sign and send a paper copy to the tax authority if required. It is important to note that individuals who have not been granted an electronic tax transaction account should be aware of this requirement when preparing their tax finalization declarations.

Tax settlement dossier:

• Personal income tax settlement form according to Form No. 05/QTT-TNCN issued together with Circular No. 80/2021/TT-BTC.
• Appendix to List No. 05-1/BK-QTT-TNCN; Appendix to List No. 05-2/BK-QTT-TNCN; Appendix to List No. 05-3/BK-QTT-TNCN issued together with Circular No. 80/2021/TT-BTC.

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