Instructions on how to declare additional VAT adjustments in Vietnam

Master the process of declaring additional VAT adjustments with our comprehensive instructions to ensure compliance and optimize your tax reporting. Value-added tax (VAT) is a tax calculated on the added value of goods and services arising in the process from production, circulation to consumption in the territory of Vietnam. Accordingly, the taxpayer is an organization or individual that ultimately consumes goods and services in the territory of Vietnam through the purchase of goods and services at prices inclusive of VAT. Tax declarants and payers are organizations and individuals producing and trading in goods and services subject to VAT in Vietnam and organizations and individuals importing goods and purchasing services from abroad subject to VAT. In the process of tax declaration, incorrect declarations, omissions and mistakes often occur. Therefore, the law on tax administration allows additional declaration of tax returns at any time when enterprises detect errors in the tax declaration process. Hereby, Viet An Tax Agent will provide you with full instructions on how to declare additional VAT adjustments.

Principles for additional VAT declaration

Pursuant to Point 5.1, Clause 5 of Official Letter No. 5189/TCT-CSM guiding the new points in the Decree: “New point 3: Amending regulations that taxpayers are allowed to submit additional declaration dossiers for each tax declaration dossier if detecting that the first-time tax declaration dossier submitted to the tax authority is wrong, errors but have not yet expired the deadline for submitting tax declaration dossiers of the tax period with errors or errors (Clause 4, Article 7)”.

Thus, when declaring VAT for the 2nd time onwards, the taxpayer will make an additional VAT declaration. Regardless of the time of submission of the declaration (previously, if it is still within the declaration time limit, if an error is detected, the taxpayer will make a new declaration (first time return) to submit to the tax authority)

Principle of additional declaration: Where wrong is corrected

• Wrong in any tax period, return to that tax period to make additional declaration
• The wrong indicator finds the right indicator, and corrects that indicator to the correct data book

According to Clause 8, Article 14 of Circular 219/2013/TT-BTC dated 01/01/2014

• For incorrectly declared input invoices: There is no time limit for declaration, if any shortcomings are detected in the declaration process, they may still be additionally declared at any time, before the tax authority makes an inspection decision.
• For incorrectly declared output invoices: if deficiencies are detected in any period, they must make additional declarations or adjustments in that tax period and bear late payment interest on the underdeclared tax amount (if any)
• The VAT return of the following month (quarter) must always be taken according to the period-ending balance (indicator 43) of the official declaration of the month (previous quarter) and adjusted (if any)

Time limit for additional declaration of VAT declaration dossiers

Pursuant to Article 47 of the Law on Tax Administration No. 38/2019/QH14, the time limit for additional VAT declaration will have 3 detailed regulations as follows:

• The deadline for supplementary VAT declarations is 10 years (from the date the tax return is due). However, this must be done before the tax authority issues an audit decision
• Even after the tax authority has issued an audit decision, businesses are still allowed to file supplementary VAT declarations. However, they may be subject to administrative penalties as stipulated in Articles 142 and 143 of the Tax Law

After the tax authority conducts inspection, inspection and issues a decision on tax handling after inspection, the enterprise is still allowed to adjust the VAT return, but there will be 2 cases:

How to declare additional VAT returns according to the latest Circular 80/2021/TT-BTC

Case 1: Additional VAT declaration does not affect tax obligations

The additional declaration of the VAT declaration does not affect the tax obligation such as: the deductible VAT amount or the payable tax amount or the tax amount to be refunded. Taxpayers do not need to make additional VAT declarations, they only need to make and submit an explanation for additional declaration (Form No. 01-1/KHBS)

Case 2: Additional VAT declaration reduces the payable tax amount

In case of additional declaration of VAT returns, which only reduces the payable tax amount in the wrong declaration period, if it has been paid according to the wrong amount, it shall be considered as overpayment, and shall be offset against the arising amount of the current period

Case 3: Additional VAT declaration only increases the tax amount still deductible

In case the additional VAT declaration only increases the tax amount still deductible in the wrong declaration period, the declaration and adjustment of such increased difference shall be included in index 38 of the current tax declaration period.

Case 4: Additional VAT declaration reduces the tax amount still eligible for deduction

When adjusting the VAT declaration (additional declaration), it reduces the tax amount still deducted in the wrong declaration period. If the unit has not yet requested a refund of this difference, it shall declare and adjust this reduced difference in index 37 of the current tax declaration period. If the unit has been refunded, the unit must return the refund amount together with the late payment interest as prescribed.

Case 5: Additional declaration reduces the tax amount still deductible and increases the payable tax amount

The additional declaration reduces the tax amount that is still deductible and increases the payable tax amount that occurs when declaring duplicate input invoices or omitting output invoices. In this case, the enterprise needs to pay the additional difference and late payment interest as prescribed, and at the same time declare and adjust the decrease in indicator 37 of the current tax declaration period

Case 6: Additional VAT declaration increases the payable tax amount

For the additional declaration that increases the payable VAT amount in the wrong declaration period, the enterprise shall pay the increased difference and late payment interest into the state budget as prescribed.

In case of additional declaration of invoices due to omissions

For this case, based on Official Letter No. 3059/TCT-KK issued by the General Department of Taxation, the additional declaration of VAT invoices purchased due to omissions in the current tax declaration period is still accepted. Therefore, accountants can make additional declarations of VAT returns in the original period (the period in which missing invoices are generated) or declare in the VAT returns of the current period (the period in which missing invoices are detected).

Some questions related to the additional declaration of VAT adjustment

Is it necessary to add the undeclared input invoice of the previous quarter to the VAT declaration of that quarter?

It is not necessary to declare additional input invoices in case they are omitted in the previous declaration period, but should be declared in the period of detection of missed input permutations

In case after submitting the additional VAT declaration, it is detected that the VAT is overpaid, how is this overpaid amount handled?

This excess amount will be monitored separately by the accountant to offset the additional payable tax amount of the next tax period.

In case the tax authority or competent authority detects that the tax declaration dossier is wrong or incomplete with relevant indicators, what is the fine level?

Pursuant to Clause 3, Article 7 of Decree 125/2020/ND-CP dated October 19, 2020, in case of incorrect declaration or incomplete declaration of indicators related to the determination of tax obligations in tax dossiers, a fine of between VND 5,000,000 and VND 8,000,000 shall be imposed.

If you have any difficulties or questions related to the additional declaration of VAT adjustment, please contact Viet An Tax Agent for the most specific advice.