At what time must an enterprise converted to a business type fulfill its tax payment obligations?

At what time must an enterprise converted to a business type fulfill its tax payment obligation?

Completing the tax payment obligation in case of business type conversion is specified in Clause 3, Article 68 of the Law on Tax Administration 2019 as follows:

Completing tax payment obligations in case of business reorganization

1. The divided enterprise is responsible for fulfilling its tax payment obligations before dividing the enterprise; In case the tax payment obligation has not been fulfilled, the new businesses established from the divided enterprise are responsible for completing the tax payment obligation.

2. Enterprises that are separated, consolidated, or merged are responsible for fulfilling their tax payment obligations before the separation, consolidation, or merger; In case the tax payment obligation has not been fulfilled, the separated enterprise and the separated enterprise, the consolidated enterprise, and the merged enterprise are responsible for fulfilling the tax payment obligation.

3. Enterprises that are converted into business types are responsible for fulfilling their tax payment obligations before conversion; In case the tax payment obligation has not been completed, the converting enterprise is responsible for completing the tax payment obligation.

4. Reorganization of an enterprise does not change the tax payment deadline of the reorganized enterprise. In cases where reorganized enterprises or newly established enterprises do not fully pay taxes by the prescribed tax payment deadline, they will be punished according to the provisions of law.

Completing the tax payment obligation means paying the full amount of tax payable, late payment interest, fines for violations of tax laws and other revenues belonging to the state budget. (specified in Clause 12, Article 3 of the Law on Tax Administration 2019)

According to regulations, in case an enterprise is allowed to convert its business type, it must complete its tax payment obligations before converting.

If the tax payment obligation has not been completed, the converting enterprise is responsible for completing the tax payment obligation.

If an enterprise changes its type, will it change its tax code?

The tax code in case an enterprise changes its type is specified in Clause 3, Article 30 of the Law on Tax Administration 2019 as follows:

Subjects for tax registration and tax code issuance

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3. The issuance of tax codes is regulated as follows:

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b) An individual is granted a unique tax code to use throughout that individual’s life. Dependents of individuals are issued tax codes to reduce family circumstances for personal income taxpayers. The tax code issued to a dependent is also the tax code of the individual when the dependent incurs obligations to the state budget;

c) Enterprises, organizations, and individuals responsible for withholding and paying taxes on behalf of them are granted a tax code on behalf of the taxpayer to declare and pay taxes on behalf of the taxpayer;

d) The issued tax code cannot be reused to issue to taxpayers other;

đ) The tax code of an enterprise, economic organization, or other organization after converting its type, selling, giving, donating, or inheriting will remain the same;

e) The tax code issued to households, business households, and individual businesses is the tax code issued to the individual representative of the household, business household, or business individual.

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Thus, according to regulations, the tax code of the enterprise after converting the type remains the same and does not change.

What does the tax declaration dossier for converting the type of business include?

The tax declaration dossier for converting the business type is specified in Clause 6, Article 43 of the Law on Tax Administration 2019 as follows:

Tax declaration dossier

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4. Tax declaration documents for taxes declared and paid each time tax obligations arise include:

a) Tax declaration;

b) Invoices, contracts and other documents related to tax obligations according to the provisions of law.

5. For exported and imported goods, customs documents according to the provisions of the Customs Law are used as tax declaration documents.

6. Tax declaration dossiers for cases of termination of operations, termination of contracts, conversion of business type, and reorganization of enterprises include:

a) Tax finalization declaration;

b) Financial statements up to the time of termination of operations or contract termination or conversion of business type or business reorganization;

c) Other documents related to tax finalization.

7. Report cross-country profits in case the taxpayer is the ultimate parent company of a group in Vietnam that has cross-border transactions and has global consolidated revenue exceeding the prescribed level or the taxpayer has an ultimate parent company in a foreign country and the ultimate parent company is obliged to prepare a cross-country profit report according to the regulations of the host country.

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Thus, according to regulations, tax declaration documents in case of converting business type include:

(1) Tax finalization declaration;

(2) Financial statements up to the time of business type conversion;

(3) Other documents related to tax finalization.