WHY DO BUSINESSES NEED TAX REPORTING?

WHY DO BUSINESSES NEED TAX REPORTING?

Periodic tax reporting is one of the obligations of businesses, in which businesses will voluntarily report taxes to competent authorities. Reporting will be checked regularly so businesses need to pay attention to issues related to this reporting activity. To learn more about the above issue, please refer to the article below.

Taxes must be reported monthly and quarterly

According to the provisions of Article 8 and Article 9 of Decree 126/2020/ND-CP detailing several articles of the Law on Tax Administration, businesses will report taxes monthly and quarterly as follows:

Value-added tax report

According to the provisions of Article 8 of Decree 126/2020/ND-CP, VAT is considered a tax declared monthly. Enterprises, if they meet the criteria according to Article 9 of the decree, have the right to choose the quarterly tax declaration method. In the case of business activities with revenue, businesses will be classified into two groups: businesses with the previous year’s revenue of less than 50 billion and over 50 billion.

Enterprises will apply the deduction method when revenue is less than 1 billion VND and the direct method when revenue is over 1 billion VND

Personal income tax reports

Personal Income Tax (PIT) includes tax amounts deducted partly from an individual’s income after calculating deductions. Personal income taxpayers include both resident and non-resident individuals in Vietnam with taxable income.

For resident individuals, taxable income includes income arising both within and outside the territory of Vietnam.

For non-resident individuals, taxable income is income arising in Vietnam.

Enterprises will declare personal income tax monthly if they are declaring VAT quarterly and have personal income income arising in the month exceeding 50 million VND; On the contrary, declare quarterly.

Corporate income tax reports

Corporate Income Tax is considered a direct tax, depending on the final results of production and business activities of organizations and businesses. Corporate income taxpayers include organizations and businesses that produce and trade goods and services that generate income. A business tax code is issued upon tax registration.

Note: If the quarterly CIT amount temporarily paid is 20% lower than the tax amount payable according to the annual finalization declaration, the enterprise will be fined for late tax payments.

Reasons why businesses need to report taxes

Currently, there is no legal term providing a specific definition of tax reporting; However, tax reporting can be understood as the process of declaring input value-added tax invoices that appear during the purchase or use of services, as well as sales invoices that the unit issues. , and also related to output value-added tax.

Tax reports play an important role as a connecting tool, helping tax authorities have a clear view of businesses’ business activities. Therefore, it is important to understand and accurately comply with legal regulations on tax reporting, including the types of tax returns businesses need to submit, the deadline and process for submitting tax returns, and payment time  when there are arising amounts.

However, in reality, tax reports are declared by businesses themselves and have not been confirmed as complete and accurate. Therefore, in the initial stages, the tax authorities only provisionally collect taxes based on the information self-declared by businesses.

Only when the Tax Authority decides to perform a Tax Audit or Tax Audit on the business, will the results from this process be considered the final tax amount, and the business will be recognized as having fully fulfilled its tax obligations to the State.

In case the tax amount previously declared by the enterprise matches the results from the Tax Inspection or Tax Audit, the enterprise will not have to pay additional tax and will not experience a significant impact on business results. On the contrary, if the results from the Tax Inspection or Tax Audit process of the Tax Authority do not match the tax amount the business self-calculated and self-declared, the business will face tax arrears and penalties on the tax amount paid. Deficiency can seriously affect the financial situation of the business, with a penalty of 0.5%/day for the number of days unpaid.

Tax report submission deadline

• Monthly tax report needs to be submitted before the 20th of the following month.
• Quarterly tax reports must be submitted before the 30th day of the first month of the next quarter.
• The deadline for submitting annual tax reports is before January 30 of the following year.
• Enterprises need to declare tax for each arising period, with a maximum deadline of the 10th day after the arising date.
• The annual tax finalization declaration must be submitted before the 90th day from the end of the fiscal year. In case of separation, merger, consolidation, dissolution or termination of operations, the deadline is the 45th day after the date of decision.

Is tax reporting service necessary?

Deciding whether to hire a tax reporting service depends on many factors, including the size of your business, the complexity of your financial situation, the depth of your tax knowledge, and the availability of internal resources. available. Here is a point to consider when hiring a tax reporting service:

• Tax complexity: If the tax regulation system is too complex and the business is not confident in its ability to handle tax operations, hiring a professional service may be a good choice.
• Size of the Business: Large businesses may have a number of transactions and complex tax operations. In this case, support from a professional tax expert can help reduce pressure and ensure compliance with Vietnamese laws.
• Save Time and Effort: Hiring tax reporting services can help businesses save time and effort. This allows you to focus on your core business.
• Legal Compliance: Making sure your tax reporting is in full compliance with the law is important. An experienced tax service will help minimize the risk of violations.

Cost: Compare the cost of hiring a tax service with what you would incur if you did the work yourself. Many times, renting offline can be a good investment.

Before making a decision, you should discuss it with a tax expert and evaluate the specific situation of your business. 

Tax reporting service of Siglaw Law Firm

We provide tax reporting services and support other business activities with the following quality standards:

+ The team of experts and lawyers at Siglaw Law Firm has more than 10 years of experience in the field of tax and business

+ 24/7 consulting time, free consulting for businesses

+ Ensure 100% work completion time

Siglaw Law Firm

Phone: (+84) 961 366 238

Email:

• vphn@siglaw.com.vn
• vphcm@siglaw.com.vn

Headquarters: Floor 12A Sao Mai Building, 19 Le Van Luong Street, Nhan Chinh Ward, Thanh Xuan District, Hanoi City.

Southern branch: No. 99 Cong Hoa, Ward 04, Tan Binh District, Ho Chi Minh City.

Central branch: 177 Trung Nu Vuong, Hai Chau District, Da Nang City

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