Draft Government Resolution: Special Policies for Taxpayers That Have Suspended Business but Not Yet Closed Their Tax Codes

The Ministry of Finance is preparing a draft Government Resolution introducing special policies (the “Draft”) to remove difficulties for taxpayers (“Taxpayers”) in complying with tax administration law, and to meet the urgent need to perform international commitments on exchange of information on request.

The Draft applies to Taxpayers that have suspended business but have not completed the procedure to terminate their tax code (“Status 03”) and Taxpayers not operating at the address registered with the tax authority (“Status 06”) as of the effective date of the Resolution, together with tax administration authorities, tax officials, and related agencies, organisations and individuals. In particular:

1. Tax Return Policy

• • Exemption from filing: A Taxpayer is not required to file tax returns for tax periods in which no tax liability arises during the period it was not operating at its registered address, as notified by the tax authority (1).
  • Revoked licences: A Taxpayer that has not completed tax code termination is not required to file tax returns during the period in which the competent authority has issued a decision revoking its enterprise, cooperative or household business registration certificate, establishment and operation licence or equivalent document, except for the tax finalisation dossier up to the revocation date.
  • Obligations retained: The Taxpayer shall file all outstanding tax returns for tax periods before the time specified in (1) above, and tax returns for tax periods in which tax liability arises after the time specified in (1) above.
  • Invoices: The Taxpayer is not required to prepare or submit notifications and reports on invoices under Decree No. 123/2020/ND-CP when it returns to complete the procedure to terminate its tax code.
  • Undertaking: The Taxpayer shall give an undertaking, and is legally responsible, regarding tax periods in which no tax liability arises during the period specified in (1) above. The undertaking shall specify the period of non-operation at the registered address and the tax periods without tax liability, and shall be included in the tax code restoration dossier or tax code termination dossier.

2. Administrative Penalty Policy (for Taxpayers that have filed all outstanding tax returns)

• • Graduated penalty rates (relative to the penalty under Article 13 of Decree No. 125/2020/ND-CP, as amended and supplemented):
    • 30% for returns filed from the effective date of the Resolution to 30 June 2027 (2);
    • 50% for returns filed from 1 July 2027 to 31 December 2027;
    • 70% for returns filed from 1 January 2028 to 30 June 2028.
  • Households and individuals paying tax by the presumptive method: No penalty applies for violations of tax procedures under Article 9.4 of Decree No. 125/2020/ND-CP.
  • Households and individuals paying tax by the declaration method: A penalty of 50% of the penalty specified in (2) applies from the effective date of the Resolution to 30 June 2028.

3. Exclusions: The policy does not apply to acts showing signs of tax evasion, or to Taxpayers under inspection, investigation, prosecution or trial for tax evasion, tax fraud or the use of illegal invoices or documents.