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Foreign investors establish tax agency
In the current economic integration situation, the number of foreign-invested enterprises is increasing, the demand for tax agency services with a good understanding of both Vietnamese and foreign tax laws is increasing. Therefore, many foreign investors are interested in establishing tax agencies in Vietnam to meet market demand. Through this article, let’s learn about the conditions, opportunities and challenges for foreign investors when establishing tax agencies in Vietnam.
Tax agencies and their role in tax administration
What is a tax agency?
A tax agency, also known as a tax procedure service business, is a type of enterprise or branch of an enterprise that has fully met the conditions to provide services related to tax procedures, as prescribed in the Law on Tax Administration and other relevant provisions of law.
The role of tax agencies in tax management
Tax agencies provide a range of tax-related services, including tax registration, tax declaration, tax payment, tax settlement, tax exemption, tax reduction, tax refund and other tax administrative procedures, on behalf of taxpayers in accordance with the provisions of the Law on Tax Administration and signed service contracts.
Due to the complexity and direct impact on the finances of enterprises and the state, the implementation of tax-related procedures requires professional qualifications. Therefore, tax service business is a conditional business line. In particular, from July 1, 2020, when the Law on Tax Administration 2019 officially takes effect, enterprises established after February 1, 2020 need to pay attention to complying with the business conditions under the new law.
Conditions for investment in establishing tax agencies for foreign investors in Vietnam
Before deciding to establish a tax agency in Vietnam, foreign investors need to consider the investment conditions for Tax Services business (CPC 863), including investment conditions under bilateral and multilateral agreements and Vietnamese law.
Investment conditions under WTO, FTAs, AFAS
According to commitments in WTO, FTAs, AFAS, Vietnam has no restrictions on foreign investors who are members participating in investing in establishing tax agencies in Vietnam.
Investment conditions under Vietnamese law
Although there are no restrictions under multilateral and bilateral commitments, foreign investors must still meet the same basic conditions as Vietnamese enterprises when they want to conduct tax agency services, including:
- Organizations providing tax procedure services must register to establish a business in Vietnam.
- Have at least two employees who are granted tax procedure service practice certificates.
- People granted tax procedure service practice certificates must have a college degree or higher in one of the following majors: economics, finance, accounting, auditing, law and have worked for 02 years or more in these fields;
- Have full civil act capacity, good moral qualities, honesty, and strict compliance with the law.
Opportunities and challenges when foreign investors establish tax agencies in Vietnam
Opportunities and Potentials
Enhancing professional services: The establishment of tax agencies by foreign investors in Vietnam provides opportunities to develop professional services in the tax sector, meeting the increasing demand for tax management of businesses and individuals.
Expanding the market: Vietnam is a potential market with a rapidly developing economy. Foreign investors have the opportunity to approach and cooperate with businesses in providing tax agency services, expanding their customer network and increasing revenue.
Support from the government: The Vietnamese government is creating a favorable environment and providing support policies to attract foreign investors. This creates favorable conditions for investors to establish tax agencies and participate in the domestic market.
Risks and challenges
Competitors: The tax agency market in Vietnam is increasingly competitive, with the participation of many domestic and foreign enterprises. Foreign investors must face fair competition and grasp competitive advantages to grow in this environment.
Changes in tax policies: Tax policies can change over time and affect tax agency operations. Foreign investors need to ensure a deep understanding of the latest tax regulations and make necessary adjustments to comply with the new regulations.
Local business culture: Foreign investors need to face aspects of local business culture, such as work processes, business thinking, and relationships with authorities and customers. This requires understanding and adapting to the local business culture to build sustainable relationships.
Measures to limit risks and develop customer networks
Improve service quality: Foreign investors need to invest in improving service quality to create trust and attract customers. This includes training professional staff, applying modern technology and maintaining high quality standards.
Diversify customer networks: Foreign investors need to seek and develop a diverse customer network, including both domestic and foreign enterprises. This helps reduce the risk of over-reliance on a few specific customers and expand business opportunities.
In summary, foreign investors establishing tax agencies in Vietnam bring opportunities for development in a potential market. However, they also face challenges and risks, such as competition, changes in tax policies and local business culture. By improving service quality and diversifying their customer base, foreign investors can limit risks and develop successfully in this field.
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