For all businesses today, tax finalization is a very important and necessary stage. However, not every company has a team of accountants who can perform tax finalization and work with tax authorities..

To clearly understand the concept of tax finalization, the types and how tax finalization works, please join CPA HCM to learn through the article below.!

WHAT IS TAX FINALITY?

Tax finalization is an activity to determine specific and accurate numbers related to the tax that businesses must pay to the state according to regulations. This is a job that any operating business must do. Tax finalization is also the job of verifying the tax amount payable by both businesses and individuals.

SUBJECTS WHO NEED TAX FINALITY

Subjects that need to finalize taxes according to the provisions of law include:

• Individual: Tax finalization from the personal income tax payable based on salary and wages. Individuals include Vietnamese individuals and foreign individuals residing in Vietnam.
• Organizations and enterprises shall finalize personal income tax for the income that is the salary and wages of employees that the enterprise has paid and finalize the corporate income tax portion in the period.

According to Point D, Clause 6, Article 8 of Decree 126/2020/ND-CP Detailing a number of articles of the tax administration law if the income payment organization is divided, separated, consolidated, merged, converted restructuring, dissolution or bankruptcy, tax settlement must be made with tax authorities and tax deduction documents for employees within 45 days from the date of division, separation, consolidation, merger or conversion. restructuring, dissolution or bankruptcy.

In addition, individuals can authorize organizations or businesses to pay money to perform settlement on their behalf when ensuring the following conditions:

- At the time of personal income tax finalization, the individual is working at an organization or enterprise and has only one source of income from salary or contract at the enterprise for 3 months or more.

- Individuals who are transferred from an old organization to a new organization of an enterprise (or from a headquarters - branch) and do not generate income from elsewhere are authorized to finalize personal income tax for the organization. new.

CURRENT TAX SETTLEMENT CLASSIFICATION

Currently, according to current law, the classification of tax finalization includes: corporate income tax finalization, personal income tax finalization, value added tax finalization,... details are as follows:

Finalization of corporate income tax

Corporate income tax finalization is the activity of declaring the total amount of corporate income tax payable to the tax authority. 

The corporate income tax finalization declaration includes the following items:

• Declare annual tax finalization .
• Declare in case there is a decision on an enterprise's dissolution, separation, consolidation, merger, conversion of enterprise type, conversion of ownership form, or termination of operations, then the tax authority shall issue a decision. decide to settle the settlement with the enterprise, the main purpose is to collect the corporate income tax amount.

When preparing tax finalization documents, the standard business profile will depend on the type of business:

• Vietnamese company.
• The enterprise operates in the exploitation and sale of crude oil and natural gas.
• Foreign Contractor.

The deadline for submitting annual tax finalization documents is 90 days at the latest, from the end of the fiscal year or calendar year.

For businesses in the case of merger, consolidation, separation, dissolution, conversion of ownership, or termination of operations: no later than 45 days from the date of decision on change of business. enterprise.

Finalization of personal income tax

Individuals who generate income from many different sources that are taxable income are required to finalize personal income tax. This settlement can be done by that individual or by the organization or business where that individual is working.

Personal income taxpayers must finalize taxes and pay taxes (if any) within 90 days from the end of the fiscal year (No later than March 30 of the calendar).

According to the law, the following income will be subject to personal income tax:

• Income from business.
• Income from salaries and wages.
• Income from capital investment.
• Income from capital transfer.
• Income from real estate transfer.
• Income from winning prizes.
• Income from copyright.
• Income from franchising.
• Income from inheritance and gifts.

Finalization of value added tax

Business enterprises (except for small and medium-sized households that pay tax at a set revenue rate) must prepare and submit annual value-added tax finalization to the tax authority.

Value added tax is settled according to the calendar year, tax registration must be made no later than 60 days from December 31 of the tax settlement year.

Accountants need to master the process and update regulations when finalizing taxes regularly.

DOCUMENTS RELATED TO TAX SETTLEMENT FOR ENTERPRISES

At the end of the accounting period, businesses will declare and pay taxes to the tax authority. Before finalizing taxes, accountants need to prepare relevant documents such as:

• Value added tax declaration submitted monthly.
• Purchase and sale vouchers and invoices along with submitted declarations.
• Documents for payment of fees.
• Personal income tax finalization according to form 05/KK.
• CIT finalization according to form 03/TNDN.
• Ledger accounts according to the balance sheet of arising numbers.
• Detailed books of related accounts.
• Fixed asset depreciation table and CCD distribution table.
• Minutes of debt reconciliation over the years.
• Detailed accounts receivable book.
• Detailed accounts payable book.

Depending on each type of tax settlement, businesses will prepare complete documents and submit them to the tax authority. Cases of allocation, methods of allocation, tax declaration, tax calculation, tax finalization for the allocated taxes are implemented according to the provisions of Article 13, Article 14, Article 15, Article 16, Article 17, Article 18 , Article 19 Circular 80/2021/TT-BTC on Instructions for implementing a number of articles of the tax administration law.

According to Article 44, Law No. 38/2019/QH14 on tax administration, the deadline for submitting tax finalization documents is clearly stipulated as follows:

• For taxes declared monthly and quarterly: 

+ No later than the 20th day of the month following the month in which tax liability arises in case of monthly declaration and payment.

+ No later than the last day of the first month of the quarter following the quarter in which tax liability arises in case of quarterly declaration and payment.

• For annual tax declaration.

+ No later than the last day of the 3rd month from the end of the calendar year or fiscal year for annual tax finalization dossiers.

+ No later than the last day of the 4th month from the end of the calendar year for personal income tax finalization dossiers of individuals directly finalizing taxes.

The deadline for submitting tax declaration documents for taxes declared and paid each time a tax liability arises is the 10th day from the date the tax liability arises.

Businesses will normally have to present to tax inspectors documents such as documents, invoices, and balanced accounting books in previous years. In case the amount of tax payable is reduced because the business declared it incorrectly, the tax inspector will have to recalculate the actual correct data and calculate the fine amount that the business must pay based on that.

TAX SETTLEMENT SERVICES AND WORKING WITH TAX AUTHORITIES

Tax finalization in every business is an indispensable task, however, many businesses have difficulty in tax finalization and have to work directly with tax authorities. However, if anything is difficult, CPA HCM will take care of it.

CPA HCM specializes in providing tax settlement services for businesses and working with tax authorities.

With more than 1,000 businesses that have been accompanying, trust us to be ready to support businesses when needed.

CPA HCM staff are leading experts with highly qualified auditors and accountants with many years of experience in tax finalization and working with tax authorities, with a good working style. Professional, scientific and able to grasp problems quickly, always supporting businesses in the best way.

If your business is having difficulty in the tax finalization process and working with tax authorities, please contact CPA HCM via Hotline: 18000380 to receive support from a team of leading experts..