Changes in the global business environment, together with newly-issued regulations and guidance on corporate tax obligations, have been substantially affecting many business activities in Vietnam. Companies need to properly invest the right resources in order to meet and comply with new regulations as well as to avoid tax risks, EY Vietnam experts told the 2019 Tax Symposium “How to better accommodate an increasingly stringent tax administration system driven by digitalization” co-organized by EY Vietnam and the Vietnam CFO Club on September 13 in Hanoi. The symposium attracted more than 400 participants from local and foreign businesses in Vietnam.

The tax environment has been affected by trade wars, political instability, volatility in the global economy, and rapid technological advancement. In the context of escalating trade conflicts around the world, countries are using tariffs as major weapons to reestablish trade fairness. However, they also create direct pressure on businesses and require they restructure their global value chain and supply chain.

In 2015, the OECD introduced its policy recommendations through the Base Erosion and Profit Shifting (BEPS) Inclusive Framework, with 15 actions. The BEPS attracted the participation of more than 100 countries and territories around the world, including Vietnam. All member countries must institutionalize the framework.

In addition, the rapid development of e-commerce and Industry 4.0 have brought new challenges to many economies in taxing the digitalized economy. On June 9, G20 ministers of finance and central bank governors agreed that a global system to tax internet-based giants is urgently in need.

On that basis, Vietnam’s tax policies have seen remarkable changes, especially in tax administration reforms. The recent tax regulatory amendments aim at reducing tax compliance costs and increasing IT application for businesses to better comply with tax regulations.

The revised Tax Administration Law, passed by the National Assembly on June 13, will take effect from July 1, 2020. The law introduces new regimes on the implementation and management of taxes on the internet platform (e-tax). For the first time, the law sets regulations on e-invoices, which will be effective from July 1, 2022. It requires goods sellers and service providers to issue e-invoices to buyers. Sellers’ computers for invoice calculation and e-invoices issuance, if used, must be registered and connected with the tax authorities’ data system.

The law, for the first time, introduces tax administration rules for e-commerce activities. Foreign suppliers running e-commerce businesses but having no permanent establishment in Vietnam are obliged to register, declare, and pay taxes in the country. In addition, commercial banks are responsible for withholding and making tax payments on behalf of overseas businesses and individuals conducting e-commerce activities and deriving income from Vietnam.

Beside the tax policy changes and administration reforms, tax inspection and examination activities are also expected to be gradually more effective. The focuses of the State Inspectorate in the coming time are (1) inspecting businesses whose tax contribution is potentially significant, and (2) enhancing after-tax-return examinations, especially at businesses that have inter-company transactions and signs of transfer pricing issues.

“The inspection activities will be more effective with the aid of advanced technology,” said Ms. Huong Vu, General Director, EY Consulting Vietnam. “As tax authorities’ management has become more effective, businesses must be better compliant to avoid tax penalties and back taxes.”

Participants at the symposium expressed many concerns about new regulatory compliance, especially e-invoicing, transfer pricing, and personal income tax. EY Vietnam experts structurally explained and addressed the knowledge and practical experience needed in dealing with corporate tax, tax risk management, and preparations for tax inspections.

The Tax Symposium 2019 is a major annual tax event of EY Vietnam. It provides businesses with more strategic and in-depth views in order to create opportunities for better tax planning and risk management, thus improving business performance.