WHAT TYPES OF PERIODIC REPORTS MUST BE SUBMITTED BY FOREIGN COMPANIES?

WHAT TYPES OF PERIODIC REPORTS MUST BE SUBMITTED BY FOREIGN COMPANIES?

QUESTION

Dear TLK Law Firm, we hope to have your company’s answer to the following question: My company is a Japanese enterprise in Vietnam. Currently, the company has been in operation for 3 months but I still have some questions related to the types of periodic reports that must be submitted by foreign companies according to Vietnamese law. So let me ask: What types of periodic reports must be submitted by foreign companies? Looking forward to your company's answer. Thank you!

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Thank you for your trust and sending questions to TLK Law Firm. Based on legal regulations and practical solutions, we would like to send you the following consulting content:

LEGAL BASIS

1. Document consolidating the Law on Value Added Tax No. 01/VBHN-VPQH passed by the National Assembly on April 28, 2016;

2. Document consolidating the Accounting Law No. 14/VBHN-VPQH passed by the National Assembly on July 4, 2019;

3. Law on Tax Administration No. 38/2019/QH14 passed by the National Assembly on June 13, 2019;

4. Document consolidating the Law on Corporate Income Tax No. 14/VBHN-VPQH passed by the National Assembly on July 15, 2020;

5. Other legal documents providing relevant guidance.

CONSULTATION CONTENT

Monthly, quarterly, and annual reports are a form that generally reflects the business performance of the enterprise. According to current legal regulations, there are types of reports that businesses must prepare periodically to submit to competent authorities so that the State can manage and control the activities of the business. Normally, newly established businesses, even businesses that have been operating for a long time but lack a professional accounting department, have difficulty understanding the reports that need to be submitted according to regulations. Therefore, you are very confused and do not clearly understand Vietnam's regulations on the types of periodic reports that businesses must submit, especially for foreign-invested companies. Through the article below, we - TLK Law Firm will help you answer the questions related to What types of periodic reports must be submitted by foreign companies?

Photo 1. What types of periodic reports must be submitted by foreign companies?_ Hotline: 0972118764

I. SOME IMPORTANT LEGAL ISSUES RELATED TO TYPES OF PERIODIC REPORTS MUST BE SUBMITTED BY FOREIGN COMPANIES

Periodic reports of businesses in general and foreign companies, in particular, are a type of report that shows the status of the business on one or several issues and is sent to the competent authority according to the law. These types of reports are done cyclically every month, every quarter or every year. For foreign companies, the types of periodic reports that must be submitted include the following types of reports:

1. Tax report

Tax reporting is one of the activities that declares input VAT invoices as well as output VAT invoices for activities arising during the process of purchasing goods and using services. Like Vietnamese businesses, foreign companies operating in Vietnam must also make tax reports according to legal regulations. As follows:

1.1. Types of tax reports

(1) Value Added Tax (VAT) Report

Pursuant to the 2008 Value Added Tax Law (amended and supplemented in 2013, 2014, 2016), input value-added tax arising in any month is declared and deducted when determining the tax payable of the month. In case a business establishment discovers that the input value-added tax amount when declaring and deducting is incorrect, it may declare and deduct additional information before the tax authority announces the tax audit or tax inspection decision at the taxpayer's headquarters.

In addition, according to Decree 126/2020/ND-CP, businesses can declare value-added tax quarterly in the following cases:

- Taxpayers who are required to declare value-added tax monthly, if their total revenue from selling goods and providing services in the preceding year is 50 billion VND or less, can declare value-added tax quarterly;

- Taxpayers who have just started operating or doing business can choose to declare value-added tax quarterly. After full 12 months of production and business, from the immediately following calendar year, the year with 12 full months will be based on the revenue level of the preceding calendar year (full 12 months) to declare value-added tax according to the monthly or quarterly tax period.

Thus, value-added tax must be reported monthly or quarterly.

(2) Corporate income tax (CIT) report

Pursuant to the Law on Corporate Income Tax 2008 (amended and supplemented in 2013, 2014, 2020, 2022), for foreign enterprises, the corporate income tax period is determined as follows:

- Foreign enterprises with permanent establishments in Vietnam pay tax on taxable income arising in Vietnam and taxable income arising outside Vietnam related to the operations of that permanent establishment: Calculation period Corporate income tax is determined according to the calendar year or fiscal year;

- Foreign enterprises with permanent establishments in Vietnam pay tax on taxable income arising in Vietnam that is not related to the operations of the permanent establishment; or Foreign enterprises without permanent establishments in Vietnam pay tax on taxable income arising in Vietnam: The corporate income tax period depends on each time income is generated.

Thus, corporate income tax for foreign enterprises is reported according to the calendar year, fiscal year or each time a tax liability arises.

(3) Report on invoice usage

Pursuant to Decree 123/2020/ND-CP, tax reports are a type of report in the tax field. Accordingly, every quarter, businesses, economic organizations, households, and individuals purchasing invoices from the tax authority are responsible for submitting a report on the use of invoices and a list of invoices used during the period for direct management by tax authorities.

Thus, the situation of using invoices of foreign enterprises must be reported on a quarterly basis.

Note:

- Report on invoice usage is applied to printed invoices purchased from the tax authority. Therefore, businesses using electronic invoices do not need to report on invoice usage when using electronic invoices;

- In case no invoices are used during the period, the enterprise, economic organization, business household or individual shall submit a report on invoice usage stating the number of invoices used is zero (= 0), no need to use invoices. Send a statement of invoices used during the period;

- In case the previous period has used up all invoices, reported the status of using invoices in the previous period with a balance of zero (0), and during the period did not buy invoices or use invoices, the enterprise or organization Businesses, households, and individuals do not have to report on the use of invoices.

1.2. Deadline for submitting tax reports

Pursuant to the Law on Tax Administration 2019, the deadline for submitting tax reports is prescribed as follows:

- For monthly tax reports: No later than the 20th day of the month following the month in which tax obligations arise in case of monthly declaration and payment;

- For quarterly tax reports: No later than the last day of the first month of the quarter following the quarter in which tax obligations arise in case of quarterly declaration and payment;

- For periodic tax reports each time a tax liability arises: no later than the 10th day from the date the tax liability arises.

=> See more: What are the benefits of foreign-invested enterprises?

2. Report on employment situation

Pursuant to Decree No. 145/2020/ND-CP amended by Decree 35/2022/ND-CP, every 6 months and annually, employers must report the status of labor changes Employers must report the situation of labor changes to the Department of Labor, War Invalids and Social Affairs through the National Public Service Portal and notify the district social insurance agency where its headquarters, branches, and representative offices are located.

Thus, the report on labor use is a type of periodic report every 06 months and annually. The report must be made and sent to the competent authority before June 5 and December 5 every year.

Note: 

- In case the employer cannot report the situation of labor change through the National Public Service Portal, send a paper report to the Department of Labor, War Invalids and Social Affairs and notify the insurance agency. Social insurance at district level where headquarters, branches, representative offices are located;

- For employees working in industrial parks and economic zones, employers must report the situation of employee changes to the Department of Labor, War Invalids and Social Affairs and the district-level social insurance agency where the headquarters, branches, representative offices and industrial park and economic zone management boards are located for monitoring.

3. Financial reports

Pursuant to the Accounting Law 2015 (amended and supplemented in 2019), the accounting unit must prepare a financial report at the end of the annual accounting period. The annual financial report of the accounting unit must be submitted to the competent state agency within 90 days from the end of the annual accounting period according to the provisions of law.

Note:  Foreign enterprises that prepare annual financial statements must be audited.

4. Report on the implementation of investment projects

Pursuant to Decree No. 31/2021/ND-CP, foreign companies implementing investment projects must report to the investment registration agency and the local state management agency on statistics. Reporting on investment performance is carried out periodically on a quarterly and annual basis. As follows:

- Quarterly reports are made before the 10th day of the first month of the quarter following the reporting quarter, including the following contents: Realized investment capital, net revenue, exports, imports, labor, taxes and budget payments , land and water surface use situation;

- Annual reports are made before March 31 of the following year of the reporting year, including indicators of quarterly reports and indicators on profits, employee income, expenditures and investments in research. science and technology development, environmental treatment and protection, origin of technology used.

=> See more: What industries can foreign-invested enterprises operate in?

5. Report on monitoring and evaluating overall investment for the whole year

Pursuant to Decree 29/2021/ND-CP, every year, businesses need to submit an overall investment monitoring and evaluation report for the whole year.

Types of investment monitoring and evaluation reports:

- Periodic monitoring and evaluation reports: every 6 months and the whole year;

- Monitoring and evaluation reports before adjusting the project;

- Final assessment report (if any).

Time limit for investment monitoring and evaluation reports

- Submit reports 6 months before July 10 of the reporting year;

- Submit annual reports before February 10 of the following year;

- Submit reports before submitting project program adjustments.

Thus, during project implementation, investors of investment projects using other capital sources need to prepare periodic investment monitoring and evaluation reports every 6 months, the whole year and before adjusting the next project. The Department of Planning and Investment or the Management Board of industrial parks, export processing zones, high-tech zones, economic zones and focal agencies carry out investment supervision and assessment where investment projects are implemented.

Note: The report form is specified in Form No. 01 of Circular 05/2023/TT-BKHDT.

II. SUMMARY OF ANSWER SECTION: WHAT TYPES OF PERIODIC REPORTS MUST BE SUBMITTED BY FOREIGN COMPANIES?

Dear Customers, from the above synthesis and analysis, TLK Law Firm would like to give the following answer:

The preparation and submission of periodic reports by foreign companies is a legal requirement that businesses must comply with. These reports help ensure that businesses operate within the law and do not violate business regulations. At the same time, from periodic reports of foreign enterprises, state agencies understand the operating situation of the enterprise.

Types of periodic financial reports that foreign companies must submit include:

(1) Value Added Tax Report: monthly or quarterly reporting. Report submission deadline: 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 obligations arise in case of quarterly declaration and payment.

(2) Corporate Income Tax Report: Report each time a tax liability arises. Report submission deadline: no later than the 10th day from the date the tax liability arises;

(3) Report on invoice usage: Report periodically on a quarterly basis. Report submission deadline: no later than the last day of the first month of the quarter following the quarter in which tax obligations arise in case of quarterly declaration and payment;

(4) Report on employment situation: 6-month and annual reports. The report must be made and sent to the competent authority before June 5 and December 5 every year;

(5) Financial reports: Annual reports and must be audited. Financial reports must be submitted to competent state agencies within 90 days from the end of the annual accounting period according to the provisions of law;

(6) Investment reports (if the company implements investment projects): Quarterly reports (made before the 10th day of the first month of the quarter following the reporting quarter) and annually (made before the reporting date). March 31 of the following year of the reporting year);

(7) Overall investment monitoring and evaluation report for the whole year: Annual report according to Form No. 01 Circular 05/2023/TT-BKHDT. Time limit for the company's investment monitoring and evaluation report:

- Submit reports 6 months before July 10 of the reporting year;

- Submit annual reports before February 10 of the following year;

- Submit reports before submitting project program adjustments.

(5) Financial reports: Annual reports and must be audited. Financial reports must be submitted to competent state agencies within 90 days from the end of the annual accounting period according to the provisions of law;

(6) Investment reports (if the company implements investment projects): Quarterly reports (made before the 10th day of the first month of the quarter following the reporting quarter) and annually (made before the reporting date) March 31 of the following year of the reporting year).

(7) Overall investment monitoring and evaluation report for the whole year: Annual report according to Form No. 01 Circular 05/2023/TT-BKHDT. Time limit for the company's investment monitoring and evaluation report:

- Submit reports 6 months before July 10 of the reporting year;

- Submit annual reports before February 10 of the following year;

- Submit reports before submitting project program adjustments.

=> See more: Where to submit an application to establish a foreign-invested enterprise?

Photo 2. What types of periodic reports must be submitted by foreign companies?_ Hotline: 0972118764

III. HOW SHOULD YOU BEST CHOOSE AN ORGANIZATION THAT PROVIDES LEGAL SERVICES?

An organization providing quality and reputable legal services should have the following criteria:

First: Must be an official legal organization with a legal operating license;

Second: It is better if the Board of Directors must be lawyers, experienced and have high degrees;

Third: Have a team of lawyers and a systematic, professional, and thoroughly trained human resources system;

Fourth: Friendly, dedicated and make every effort for the benefit of customers. Consider customer satisfaction and work quality as your own honor;

Fifth: Professional, thoughtful, flexible and logical service provision process to optimize work performance and save customers' time;

Sixth: Reasonable and competitive service prices;

Seventh: Rich services in both fields of supply and service packages in the same field for customers to choose the appropriate service package, as well as comprehensive support for customers throughout the operation process. movement;

Eighth: Have the ability to Connect - Promote commercial relationships for customers if customers have needs,...

Finding a comprehensive, professional and reputable legal consulting organization is what every customer wants. Because no one wants to risk losing both money and time when the results are not as expected. However, finding such an organization is not easy because the number of service providers in the Vietnamese market today is very large with varying quality.

A suggestion for you: Although our TLK Law Firm does not dare to claim to be the best legal service provider on the market, we satisfy all of the above criteria and more will definitely be a good choice for you.

=> See more: Can a foreign company establish a subsidiary in Vietnam? What are conditions?

IV. SOME QUESTIONS RELATED TO TYPES OF PERIODIC REPORTS REQUIRED BY FOREIGN COMPANIES

Question 1: Is there a penalty for not submitting a tax return?

Reply:

The answer is Yes.

Pursuant to Decree 125/2020/ND-CP, violations of the tax declaration submission deadline will be subject to administrative sanctions depending on the time of delay in tax declaration submission. As follows:

(1) A warning shall be imposed for submitting tax declarations 1 to 5 days after the deadline and there are extenuating circumstances;

(2) Fine from 2,000,000 VND to 5,000,000 VND for submitting tax declaration documents 1 day to 30 days late;

(3) Fine from 5,000,000 VND to 8,000,000 VND for submitting tax declaration documents 31 days to 60 days beyond the prescribed time limit;

(4) Fine from 8,000,000 VND to 15,000,000 VND for one of the following acts:

- Submitting tax declaration documents from 61 to 90 days beyond the prescribed time limit;

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

(5) Fine from 15,000,000 VND to 25,000,000 VND for submitting tax returns more than 90 days after the deadline for submitting tax returns.

Question 2: Initially, my business was headquartered - business location in Hai Phong. Currently, we need to move our headquarters - business location to Nam Dinh, where do I have to submit a report on invoice usage?

Reply:

Pursuant to Decree 123/2020/ND-CP, in case an enterprise, economic organization, business household or individual moves its business location to an area other than the one directly managed by the tax agency, it must pay Report the status of invoice usage and the list of invoices used during the period to the tax authority of the place of transfer.

Thus, when changing headquarters - business location, customers must submit tax reports for that quarter to the tax administration agency in Hai Phong. At the same time, when changing headquarters - business location, customers need to change tax registration information at the competent authority. After changing tax registration information, from the next quarter onwards, customers submit a report on the use of business invoices to the tax administration agency in Nam Dinh.

=> See more: Can foreign individuals establish a company in Vietnam? What are conditions?

Above is some general advice that we would like to offer to our customers. As a service provider, we always understand and are ready to accompany and solve the needs and difficulties that customers are facing. If you still have questions or need more in-depth advice, please contact the hotline: 0972118764 to receive direct advice from a lawyer (completely free consultation).

Thank you very much!

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