Vietnam year-end tax finalization checklist for firms

Vietnam year-end tax finalization is due within 90 days after your financial year ends. For a company on the calendar year, that means the end of March. The date feels far away in December. It is not. Most of the work is gathering records, and that is easiest while the year is still open.

Source: Law on Tax Administration 78/2006/QH11, as amended by Law 21/2012/QH13, and Circular 156/2013/TT-BTC, Ministry of Finance.

What finalization means

During the year a company pays corporate income tax in advance, one quarter at a time. These are provisional payments. Each is due by the 30th day of the month after the quarter ends.

Finalization is the yearly true up. You work out the tax for the whole year on your real profit. Then you compare it with what you already paid. If you paid too little, you pay the gap. If you overpaid, the gap can come back as a refund, or it can roll forward as a credit.

The standard corporate income tax rate is 20 percent. Some firms have lower rates because of investment incentives. Check your investment certificate and your tax office notices before you assume any rate.

Source: Law on Corporate Income Tax 14/2008/QH12, as amended by Law 32/2013/QH13, and Circular 78/2014/TT-BTC, Ministry of Finance.

The deadline and the cost of missing it

The rule is simple. The finalization return and any tax due must reach the tax office within 90 days of the end of the financial year. The year may be the calendar year or a different year your company has registered. Count from your own year end.

Late payment has a price. The tax law charges interest on unpaid tax for each day it is late, at a rate set in the law. Ask your adviser for the current rate. Late filing can also bring an administrative fine. The size of the fine depends on how many days late the return is.

Put the real date in your calendar now. Then set a reminder about three weeks before it. If the date falls on a weekend or public holiday, ask your tax office or adviser how the rule treats it that year.

Source: Law on Tax Administration 78/2006/QH11 as amended by Law 21/2012/QH13, Circular 156/2013/TT-BTC, and Circular 166/2013/TT-BTC on administrative penalties, Ministry of Finance.

Documents to gather in December

Start a single folder, on paper or on a shared drive. Put these items in it.

The trial balance and the draft financial statements for the year.
A list of all sales and purchase invoices, matched to your ledger.
Bank statements for every account, including foreign currency accounts.
Payroll records, contracts and social insurance records.
The fixed asset register with purchase dates, costs and depreciation.
Loan agreements and interest statements.
Contracts with related companies, if any, and proof of the prices used.
Copies of the four quarterly provisional tax returns and the payment slips.

A gap in this list is easier to fix now. A supplier can still reissue a missing invoice in December. It is much harder in March.

Source: Circular 78/2014/TT-BTC and Circular 156/2013/TT-BTC on tax returns and records, Ministry of Finance.

Check which costs the tax office accepts

Your accounting profit and your taxable profit are not always the same. The tax rules accept an expense only if it meets set conditions. The cost must relate to the business. It must be backed by a proper invoice and other documents.

Some costs are not accepted at all or only up to a limit. Fines and penalties are not deductible. Depreciation above the rates set by the Ministry of Finance is not deductible. Interest on loans is limited in some cases. Staff welfare spending is limited too.

Go through your largest expense lines one by one. For each, ask three things. Is there a valid invoice? Is the supplier name and tax code right? Was the payment made the way the rules require? Fix what you can before the books close.

Source: Law on Corporate Income Tax 14/2008/QH12 as amended by Law 32/2013/QH13, Decree 218/2013/ND-CP, and Circular 78/2014/TT-BTC.

A simple plan from now to the deadline

Break the work into small steps with an owner for each.

Late December: reconcile bank accounts and chase missing invoices.
January: close the books and count stock and fixed assets.
February: prepare the draft return and list the costs that need adjusting.
Early March: have a senior person review the numbers and sign off.
Well before the deadline: file the return and pay any balance.

Keep a copy of the filed return and the payment proof for as long as the law requires. If your company is large or has complex deals, ask a licensed tax adviser to review the draft. This article is general information, not professional tax advice.

Source: Law on Tax Administration 78/2006/QH11 as amended by Law 21/2012/QH13, and Circular 156/2013/TT-BTC.

Sources

Law on Tax Administration 78/2006/QH11 and Law 21/2012/QH13 amending it
Law on Corporate Income Tax 14/2008/QH12 and Law 32/2013/QH13 amending it
Circular 156/2013/TT-BTC, Circular 78/2014/TT-BTC and Circular 166/2013/TT-BTC, Ministry of Finance