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Penalty for late submission of CIT finalization declaration

Vietnamese law strictly regulates businesses in submitting corporate income tax (CIT) finalization declarations. In particular, submitting tax finalization declarations on time is one of the requirements that businesses must comply with, or else they will be fined. When is the deadline for submitting the tax finalization declaration, and if it is late, what is the penalty? In the article below, Viet An Law will guide the penalty for late submission of CIT finalization declaration.

Tax advisors

Legal basis

  • Law on Tax Administration 2019.
  • Decree No. 12/2023/ND-CP extends the deadline for paying value-added tax, corporate income tax, personal income tax, and land rent in 2023.
  • Decree No. 126/2020/ND-CP details several articles of the Law on Tax Administration, as amended and supplemented by Decree 91/2022/ND-CP.
  • Decree No. 125/2020/ND-CP regulating penalties for administrative violations of taxes and invoices, as amended and supplemented by Decree 102/2021/ND-CP.
  • Circular 80/2021/TT-BTC guiding the Law on Tax Administration and Decree 126/2020/ND-CP guiding the Law on Tax Administration, amended and supplemented by Circular 13/2023/TT-BTC and Circular 43/2023/TT-BTC.

What is corporate income tax finalization?

Corporate income tax finalization, also known as finalization declaration, refers to the business’s activities in declaring the total amount of corporate income tax that needs to be paid to the tax authority. Corporate income tax finalization declaration includes annual tax finalization declaration, declaration in case there is a decision on dissolution, consolidation, separation, merger, or conversion of the business type of the enterprise. There is also a conversion of ownership form and termination of operations, at which point the tax authority issues a settlement decision to the enterprise with the main purpose of collecting the enterprise’s income tax.

Time limit for submitting corporate income tax finalization declaration

According to Article 8 of Decree 126/2020/ND-CP, corporate income tax is a tax that is settled quarterly, monthly, annually, or each time it arises in specific cases and depending on each business field.

In the case of annual declaration, based on Clause 2, Article 44 of the Law on Tax Administration, the deadline for submitting tax finalization declaration documents for taxes with annual tax periods is prescribed. CIT payment no later than the last day of the third month from the end of the calendar year or fiscal year. Previously, the deadline for corporate income tax finalization was the ninetieth (90th) day from the end of the calendar year (March 30). Thus, from the 2020 corporate income tax finalization period, the deadline for submitting annual corporate income tax finalization documents has been extended by 1 day compared to the previous regulations, i.e. March 31 every year.

In addition, Article 55 of the Law on Tax Administration stipulates that if a taxpayer calculates tax, the tax payment deadline is the last day of the tax declaration submission deadline. In case of additional tax declaration, the tax payment deadline is the tax declaration deadline for the tax period containing the error. Besides, in some special cases, the time limit for tax finalization is prescribed as follows:

  • For corporate income tax, temporary payment is made quarterly, and the tax payment deadline is the 30th day of the first month of the following quarter.
  • For crude oil, the time limit for paying natural resources tax and corporate income tax according to the sale of crude oil is 35 days from the date of sale for domestically sold crude oil or from the date of customs clearance according to the provisions of customs laws for exported crude oil.
  • For natural gas, the deadline for paying natural resources tax and corporate income tax is monthly.

Note: If the deadline for submitting tax finalization documents coincides with a prescribed holiday, the deadline for submitting tax finalization documents is the next working day. If an individual has a corporate income tax refund but is late in submitting the tax finalization declaration according to regulations, no penalty will be imposed for administrative violations of tax finalization declaration past the deadline.

Sanction for late submission of personal income tax finalization declaration

No Violation Form of sanction Legal basis
1 Submit your tax return 1-5 days past the deadline and there are extenuating circumstances. Caution. Clause 1 Article 13 Decree 125/2020/ND-CP.
2 Submit tax declaration 1-30 days past the deadline, except for case (1). Fine from 2,000,000 to 5,000,000 VND. Clause 2, Article 13 of Decree 125/2020/ND-CP.
3 Submit your tax return 31-60 days beyond the prescribed time limit. Fine from 5,000,000 to 8,000,000 VND. Clause 3 Article 13 Decree 125/2020/ND-CP.
4 ·       Submitting tax declaration documents 61-90 days beyond the prescribed time limit;

·       Submitting a tax declaration 91 days or more beyond the prescribed time limit but not incurring any tax payable;

·       Failure to submit tax declaration but no tax payable arises;

·       Failure to submit appendices according to regulations on tax administration for enterprises with associated transactions along with corporate income tax finalization dossiers.

Fine from 8,000,000 to 15,000,000 VND. Clause 4 Article 13 Decree 125/2020/ND-CP.
5 Submitting a tax declaration more than 90 days after the deadline for submitting the tax declaration, resulting in tax payable and the taxpayer has paid the full tax amount and late payment interest to the state budget before the deadline. The point where the tax authority announces the tax audit or tax inspection decision or before the tax authority makes a record of the late submission of tax declaration documents.

Note: In case the fine amount applied under this clause is greater than the tax amount incurred on the tax declaration, the maximum fine in this case is equal to the tax amount payable on the tax declaration. but not lower than 11.5 million VND.

Fine from 15,000,000 to 25,000,000 VND. Clause 5 Article 13 Decree 125/2020/ND-CP.

Corporate income tax finalization dossier

For Vietnamese businesses

Vietnamese businesses conducting corporate income tax finalization need to fully prepare the following documents:

  • Corporate income tax finalization declaration according to form 03/TNDN.
  • Finalized annual financial statements or financial statements up to the time of decision on dissolution, merger, consolidation, separation, conversion of ownership form, conversion of business type, or termination of business operations.
  • Additional appendices depend on the specific situation of the business.

For businesses carrying out activities of exploiting and selling natural gas and crude oil

Enterprises operating in the fields of exploiting and selling natural gas and crude oil are required to prepare a set of documents including:

  • Corporate income tax finalization declaration for oil and gas (form 02/TNDN-DK).
  • Appendix detailing tax obligations of oil and gas contractors (form 01/PL-DK).
  • Financial statements (CTC) up to the end of the oil and gas contract or annual financial statements.

For foreign contractors

In addition to the above documents, the supplier needs to add:

  • Consular legalized residence certificate of the settlement year
  • Confirm the signing of the contract by the related party.
  • Corporate income tax finalization declaration (form 03-TNDN).
  • Documents for tax exemption or reduction according to agreements or explanations (form 03/TNDN) if complete documents cannot be gathered.

In case of applying corporate income tax finalization declaration according to Form 03/TNDN

Enterprises that pay tax according to the revenue-cost method when declaring annual corporate income tax (CIT) finalization, use the Corporate Income Tax finalization declaration according to Form 03/TNDN (stipulated in Appendix II issued together). according to Circular 80/2021/TT-BTC).

Some related questions

If I am late in paying the fine due to late submission of the full tax declaration, will I be fined?

After receiving the penalty decision, the taxpayer is obliged to pay the fine on time in the decision. In case of late payment of fines, additional late payment fees will be charged. The level of late payment fines is specified in Article 42 of Decree 125/2020/ND-CP as follows:

1 day late payment interest = 0.05% x Late payment amount

Remedy for late submission of tax finalization declaration?

Remedial measures for the above acts are specified in Clause 6, Article 13 of Decree 125/2020/ND-CP as follows:

Firstly, force the full payment of late tax payment amount into the state budget for violations specified in (1), (2), (3), (4), and (5) in case the payer delayed tax filing leads to late tax payment.

Forcibly requiring submission of tax declaration documents and attached appendices for the following acts:

  • Failure to submit tax declaration but no tax payable arises;
  • Failure to submit appendices according to regulations on tax administration for enterprises with associated transactions along with corporate income tax finalization dossiers.

Customers who need advice on the penalty for late submission of CIT finalization declaration, please contact Viet An Tax Agent for the best support.

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