Updates on e-invoicing & important developments of law on tax - - PowerPoint PPT Presentation

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Updates on e-invoicing & important developments of law on tax administration

Thursday, September 26 2019

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• PwC Vietnam established offices in Hanoi and HCMC in 1994.
• We also have a separate affiliated law firm in Vietnam, licensed the Vietnam’s Ministry of

Justice, enabling us to offer comprehensive legal and advisory services.

• Our multi-disciplinary team have expertise across a range of skill sets and industries

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• We maintain strong relationships with key ministries such as the General Department of

Taxation, General Department of Customs, State Bank of Vietnam, Ministry of Finance, Ministry of Industry and Trade and major financial institutions.

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PwC is the world’s largest professional services

• rganisation. Drawing on the knowledge and skills of

more than 250,000 people in 158 countries, we build relationships by providing services based on quality and integrity.

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• MS. PHUNG THI NGOC ANH

Director Corporate Tax – PwC Vietnam

ABOUT US

Ngoc Anh has more than 15 years experience in professional tax advisory in Vietnam and the US. Ngoc Anh holds a Bachelor’s degree in International Business, Foreign Trade University of Vietnam and is a Member of the UK Association of Chartered Certified Accountants (ACCA) and Member of the Vietnam Tax Consulting Association. Her professional experience has been focused on advising clients on inbound investments into Vietnam,

• perational tax compliance and

advisory services, M&A and structuring services, effective cross- border transactions and structures, and tax controversy services. Ngoc Anh has served a wide range

• f clients including multinational

companies and local companies in sectors such as automotive, energy & resources, FMCG, F&B, manufacturing, trading and distribution, agricultural businesses, financial services and real estate.

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ABOUT US

Baker McKenzie is the largest international law firm in Vietnam and consistently rated among the best. We assist with the whole spectrum of corporate and commercial transactions, bringing nearly three decades of market experience to every deal aspect. We have helped facilitate meaningful legal reform and have shaped policy by participating in the drafting process of the Securities Law, Investment Law, Intellectual Property Law, Law on Credit Institutions, Commercial Law, Competition Law, Land Law, Labor Code, tax laws and several other pieces of legislation. At the same time, we help clients proactively manage emerging opportunities and risks. Our in-depth local knowledge - coupled with far-reaching resources in 47 countries - enables us to create effective and innovative solutions tailored to your business strategies. Drawing on integrated capabilities across practices and borders, we execute deals efficiently and with greater legal insight.

• Mr. Thanh Vinh Nguyen

Partner of Baker McKenzie Thanh Vinh Nguyen is a Partner in the Baker McKenzie Ho Chi Minh City office, where he leads the Tax and Customs practice group in Vietnam. Mr. Nguyen's practice areas include tax and customs, trade and general commercial

• matters. Mr. Nguyen practiced tax advisory work for two

international accounting firms for eight years and worked in the compliance function of an international insurance

• company. An expert in tax planning and law, Mr. Nguyen

has assisted clients with advice and structuring work as well as contentious appeals with the tax authorities. Mr. Nguyen is an award winning practitioner, recently recognized by the International Tax Review in the categories of: Indirect Tax Leader (2017) and Tax Controversy Leader (2017) as well as being ranked as a Leading Lawyer for Taxation in Legal 500 Asia Pacific (2017).

• Mr. Nguyen holds a Bachelor of Arts degree in English

from the University of Ho Chi Minh City and an LL.B from the University of Law of Ho Chi Minh City.

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Morn rnin ing Brie riefin ing

September 26, 2019 AGENDA

8:30am Registration & Refreshment 9:00am Welcome remarks 9:10am Presentation, followed by Q&A 10:30am Event Ends

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Requir irements on E-rela lated matters -

E-commerce activities E-tax transactions

E-invoices

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Guidance Effectiveness Form

New Law vs Decree 119/2018 Guidance on e-invoicing under the new law aligns with the guidance under the new decree on e-invoicing (i.e. Decree 119/2018). The provisions on e-invoice will take effect from 1 July 2022 However, Decree 119/2018 requires all taxpayers to apply e-invoices from 1 November 2020. This slippage in the implementation of e-invoicing and further developments in this respect need to be closely monitored. Draft decree amending Decree 119/2018 will be submitted to the Government in January (or February) 2020. With or Without code of tax authorities Some other specific taxpayers can use e-invoices without code of tax authorities if certain conditions should be met.

E - invoice

Im Imple lementatio ion of f e-in invoic icin ing

PwC

Practical issues that enterprises are facing regarding E-invoicing

Transition to e-invoice - manage the implementation and deployment of e-invoice system, e.g. technology infrastructure. Receiving and storing e-invoices (e.g. e-format vs. paper converted e-invoice) Date of 'making e-invoice' is different from the date of 'electronically signing e-invoice‘. How to deal with? Long description: is billing attachment acceptable? How secure the data will be if it is kept in the server of the e- invoice solution provider? If the buyer's e-signature is required on the e-invoice? If yes, what if the buyer do not have e-signature? How to avoid duplicate claims in certain sectors, e.g. insurance?

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Draft Cir ircula lar guid idin ing Decree 119/2018/ND-CP

• Using e-invoices with verification codes

is required for enterprises classified as high tax risk, including enterprises which have in the past been penalized for tax evasion.

• Regarding the timing of e-invoice

issuance, the draft circular stipulates that for e-invoices without verification codes, the timing of e-invoice issuance will be the time the seller electronically signs the e-invoices, which contradicts recent guidance in some rulings which specify the date of the invoice

• How to handle cases where invoices are

wrongly issued after being granted a verification code, and guidance on the issuance of amended e-invoices for trade discounts.

• The transfer of e-invoice data to the tax

authorities, including guidance on the timing and type of data transfer. In addition, sellers also need to upload invoices to their websites.

• Credit institutions, banks, and payment

intermediaries need to report banking transactions to the tax authorities if required

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Fin inal l Draft Cir Circula lar guid idin ing Decree 119/2018/ND-CP

• The MoF has recently conducted a meeting on the final draft version of the Circular guiding the implementation of e-invoices, after gathering

all comments on the draft version of the Circular. The official Circular is expected to be released soon.

• Compared with the current draft version, some changes have been made, including the below:

E-signature of the buyer is specifically mentioned as not a compulsory item on e-invoices. More details on the required format of e- invoices (i.e. xml. would be required). More guidance on transfer of data (invoices with verification or non-verification codes) to the GDT portal. Specify cases which are considered as high risk enterprises whereby e-invoices with verification code are specified. Shorten the period that the enterprise is required to use e- invoices with verification code from 2 years to only 1 year. All detailed guidance on using electronic stamp are removed

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New Law

Penalties and interest

Transfer pricing

E- Commerce tax

Tax dispute

Procedure and timeline for tax declaration and payment ▪ Law No. 38/2019/QH14 adopted on 13 June 2019 (“New Law”) ▪ The New Law comes into force from 1 July 2020 ▪ Provisions on e-invoice will come into force from 1 July 2022

New La Law on Tax Admin inis istratio ion

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Due date for Current Law New Law Quarterly tax declaration and payment 30th day following the last day of each quarter the last day of the first month of the subsequent quarter. Annual finalization declaration within 90 days following the last day of a fiscal year the last day of the third month of the subsequent fiscal year (excluding PIT finalization declaration of individuals directly conducting their PIT finalization) PIT finalization declaration of individuals directly finalizing PIT within 90 days following the last day of a tax year the last day of the fourth month of the subsequent tax year

New La Law on Tax Admin inis istratio ion

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Tax authorities will have to pay interest of 0.03%/day if: ✓ taxpayers so request in case a decision handling administrative appeal or a court award provides that the tax, penalty or interest payable by taxpayers is less than the amount previously assessed by the tax authorities. ✓ tax authorities delay in issuing tax refund decisions due to the tax authorities' fault.

Tax authority Taxpayers Interest Interest

Tax authorit itie ies wil ill l als lso have to pay in interest on tax redundantly ly paid id by taxpayers

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Taxpayers will not be subject to administrative penalty and late payment interest if they have already complied with guidelines and decisions of the tax authorities or other competent authorities in relation to their tax liabilities. However, this would imply that taxpayers still need to pay tax additionally assessed by the tax authorities even if the assessment is not in line with the previous guidance of the tax authorities.

Recognit itio ion of f th the vali lidit ity of f tax ru rulin lings

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Lo Longer r duratio ion of f tax audit it

Duration of a tax audit is increased from 5 working days to 10 working days. Specifically, under the New Law, a tax audit conducted at taxpayers' site must not exceed 10 working days with one time of extension of another 10 working days.

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Taxpayers who are subject to coercive measures for tax collection will be provisionally suspended from exiting Vietnam.

Dela lay in in exit xitin ing Vie ietnam in in case of f outs tstandin ing tax li liabil ilit itie ies

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New ru rule les on e-commerce tax

• New rules provided under the New Law on Tax Administration

(Applicable from 1 July 2020)

Tax collection

Commercial Banks Vietnamese Contracting Party Offshore Supplier (no PE)

• Main players:

✓ Vietnamese end-users ✓ Local banks ✓ Offshore suppliers having no PE

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Case 1

E-Commerce Transactio ions

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Case 2

E-Commerce Transactions

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Case 3

E-Commerce Transactio ions

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New ru rule le on e-commerce tax – Grey areas

• Tax registration and payment applies to foreign companies

without a permanent establishment conducting e-commerce, business on digital platform or providing other services to customers in Vietnam ✓ It seems to apply to all services provided on a cross-border basis

• Whether foreign service providers having a PE must directly

conduct tax registration, filing and payment or it is an option?

• Whether the withholding regime continues to be applicable

✓ “By default” withholding obligation of local customers being business entities?

• In which circumstance a particular entity (bank, foreign

service provider without PE or customer) is responsible for tax declaration and payment ✓ No double or triple taxation? ✓ Tax base on agent commission or whole proceeds?

• Which entity will conduct the procedure of claiming tax

treaty protection?

• Role of third-party payment processors?

✓ Banks are still liable for withholding tax?

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New ru rule le on e-commerce tax – Co Comin ing guid ideli lines

Government and the Ministry of Finance will issue a decree and circular respectively to provide implementing guidelines to the law. Comments can be contributed during drafting process.

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Q & A

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