FOREIGN INVESTORS ESTABLISH TAX AGENTS

In the current economic integration situation, the number of foreign-invested enterprises is increasing, and the demand for tax agent services that understand both Vietnamese and foreign tax laws is increasing. Therefore, many foreign investors are interested in setting up tax agents in Vietnam to meet market demands. Through this article, let’s learn about the conditions, opportunities, and challenges for foreign investors when setting up a tax agency in Vietnam.

Tax agents and roles in tax administration

What is a tax agent?

A tax agent, also known as a tax procedure service enterprise, is a type of enterprise or branch of an enterprise that has fully met the conditions to provide services related to tax procedures, as stipulated in the Law on Tax Administration and other relevant provisions of law.

The role of tax agents in tax administration

• Tax agents provide a wide range of tax-related services, including tax registration, tax declaration, tax payment, tax finalization, filing of applications for tax exemption, tax reduction, tax refund, and other tax administrative procedures, on behalf of taxpayers under the Law on Tax Administration and signed service contracts.
• Because of the complexity and direct impact on the finances of enterprises and the state, the implementation of tax-related procedures requires professional qualifications. Therefore, the tax service business is a business with eligibility requirements. In particular, from 01/07/2020, when the Law on Tax Administration 2019 officially takes effect, enterprises established after 01/02/2020 should pay attention to comply with business conditions under the new law.

Conditions for investment in establishing tax agents for foreign investors in Vietnam

Before deciding to set up a tax agent in Vietnam, foreign investors need to consider the conditions for investment in the Tax Services business (CPC 863), including investment conditions under bilateral, multilateral agreements, and Vietnamese law.

Investment conditions according to WTO, FTAs, AFAS

According to commitments at WTO, FTAs, and AFAS, Vietnam has no restrictions for foreign investors who are members of investment to establish tax agents in Vietnam.

Investment conditions under Vietnamese law

Although there are no restrictions under multilateral and bilateral commitments, foreign investors still have to meet the same basic conditions as Vietnamese enterprises when they want to provide tax agency services, including:

• Tax procedure service providers must register their establishment of enterprises in Vietnam.
• There are at least two employees who are certified to practice tax procedures.
• The person who is granted a certificate of practicing tax procedures must have a College degree or higher in one of the majors in economics, finance, accounting, auditing, or law and have worked for 02 years or more in these fields;
• Having full civil act capacity, good moral qualities, honesty, and strict observance of the law.

Opportunities and challenges when foreign investors set up tax agents in Vietnam

Opportunities and potential

Strengthening professional services: The establishment of a tax agency by foreign investors in Vietnam provides an opportunity to develop professional services in the field of taxation, meeting the growing demand for tax administration of businesses and individuals.

Market expansion: Vietnam is a potential market with a rapidly growing economy. Foreign investors have the opportunity to approach and cooperate with businesses in providing tax agency services, expanding customer networks, and increasing revenue.

Government support: The Vietnamese government is creating an enabling environment and providing supportive policies to attract foreign investors. This creates favorable conditions for investors to establish tax agents 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 businesses. Foreign investors must face fair competition and seize competitive advantages to grow in this environment.

Tax Policy Changes: Tax policies may change over time and affect the activities of tax agents. Foreign investors need to ensure a deep understanding of the latest tax regulations and make the necessary adjustments to comply with the new regulations.

Local business culture: Foreign investors need to face aspects of local business culture, such as working processes, entrepreneurial thinking, and relationships with authorities and customers. This requires understanding and adapting to the local business culture to build strong relationships.

Measures to limit risks and develop customer network

Improving service quality: Foreign investors need to invest in improving service quality to create trust and attract customers. This includes training professional personnel, applying modern technology and maintaining high quality standards.

Diversification of customer networks: Foreign investors need to seek and develop a diverse customer network, including both domestic and foreign enterprises. This reduces the risk of over-reliance on a specific number of customers and expands business opportunities.

In short, foreign investors setting up tax agents in Vietnam offer development opportunities in a potential market. However, they also face challenges and risks, such as competition, changes in tax policy and local business culture. By improving service quality and diversifying customer networks, foreign investors can limit risks and develop successfully in this field.

Siglaw Law Firm

Phone: (+84) 961 366 238

Email:

• vphn@siglaw.com.vn
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