Regulations on VAT declaration for centralized accounting companies
According to the guidance of the Tax Department, in case a company switches to a centralized accounting model at its head office, the company can declare VAT centrally for all activities of its branches, including branches in other provinces. However, the company must meet the following conditions:
- Issue output VAT invoice for production and business activities of the branch.
Ensure eligibility for input VAT deduction for branch operations.
In addition, the company must local VAT allocation where there is a production facility as prescribed in Article 12, Article 13 Circular 80/2021/TT-BTC.
Real life example:
If the parent company has branches in province B and these branches all use invoices issued by the parent company, the company can declare taxes jointly at the head office and allocate taxes to province B if it fully meets the conditions for input tax deduction.
Regulations on VAT declaration for self-selling branches
In contrast to the centralized accounting model, if a branch directly sells goods and uses invoices registered with the tax authority, the branch will have to self-accounting for input and output VAT of yours. Then the branch will Declare and pay VAT to the tax authority directly managing the branch.
This means that the branch must fully perform tax declaration and payment procedures separately at the tax authority of the province where the branch operates.
Real life example:
A branch in province C, if it sells goods by itself and uses invoices issued by the branch, will need to declare taxes separately and pay taxes to the tax authority of province C.
VAT declaration with Business Cooperation Contract
For companies that sign a business cooperation contract (BCC) with an organization but do not establish a separate legal entity, the company will have to separate VAT declaration of the business cooperation contract as agreed in the contract.
The company should note that, even though the branch does not establish a separate legal entity, it must still comply with the regulations on separate tax declaration for business cooperation contracts, to ensure transparency and compliance with regulations.
Notes when performing and consequences if declaring incorrectly
Enterprises need to pay special attention when declaring VAT for branches outside the province. Incorrect or incomplete declaration can lead to serious consequences, including administrative penalties. According to Decree 125/2020/ND-CPIf the business declares incorrectly, the fine can range from 2-5 million VND depending on the severity of the violation.
Some common examples of penalties:
- Enterprises that incorrectly declare the amount of tax payable or fail to allocate tax properly according to regulations will be penalized according to specific penalty levels of Decree 125.
- If there is intentional fraud in tax declaration, the penalty may be higher and will affect the company's reputation.
Conclude
In summary, VAT declaration for branches outside the province depends on the company's accounting model and the branch's operations. Enterprises need to clearly understand the regulations on general or separate tax declaration for each situation to ensure compliance with the law and avoid unnecessary legal risks.
To protect the interests of businesses, it is very important to master tax regulations. Businesses should proactively determine their tax declaration model and follow the correct steps according to the law.
References:
- Circular 80/2021/TT-BTC, dated September 29, 2021, guiding the implementation of the Law on Tax Administration 2019.
- Decree 125/2020/ND-CP, dated October 19, 2020, regulating administrative sanctions for tax violations.
