No Back Taxes for Small Businesses

As per the new regulations, approximately 37,000 business households are required to use electronic invoices generated from cash registers starting June 1st. This applies to businesses with an annual revenue exceeding VND 1 billion operating in the fields of retail and direct provision of goods and services to consumers.

Many business households are concerned about potential back taxes on their previous fixed tax contributions if their actual revenue surges when issuing e-invoices.

At a press meeting in Hanoi on June 16th, Mr. Mai Son, Deputy Director of the Taxation Department of the Ministry of Finance, asserted that the fixed tax amount was determined based on data from the tax authority in conjunction with the business household’s declaration.

If there is a fluctuation in revenue exceeding 50% (increase or decrease) during the year, the business household can proactively request an adjustment of the tax amount. Mr. Son emphasized, “The adjustment only takes effect from the time of the fluctuation and onwards. There is no question of back taxes under this policy.”

Regarding the implementation of electronic invoices generated from cash registers, a new point in the current tax policy, the leader of the Taxation Department acknowledged that there might be initial obstacles and mistakes. He stated, “Among the more than 30,000 officers and employees in the tax industry, there are still individuals who lack patience and firmness, even causing annoyance to the people. We will strictly handle such cases.”

Sharing his thoughts with Tien Phong newspaper, Mr. Nguyen Van Thuc, Chairman of the Board of Members of BCTC JSC (BCTC Tax Agency), pointed out that in reality, many households are still hesitant and reluctant to make the transition, partly because they are not used to it and partly because they are afraid of being scrutinized and taxed more.

“The application of the fixed tax for many years has led to the business operations of these households falling into a ‘gray area’ – where actual revenue differs from the reported fixed tax amount. Now, with the shift to transparent declaration, there will undoubtedly be cases where declared revenue is higher than the previous fixed amount. This makes some households worried that they will be taxed for the difference by the tax authority. As a result, they hesitate, hold back, and even look for ways to cope instead of taking a proactive approach,” analyzed Mr. Thuc.

According to Mr. Thuc, the fault does not lie entirely with the business households. He suggested that the managing authority should consider sending a clear message and providing support during the transition period, without back-taxing the difference in revenue from the past.

“Certainly, business households will feel more comfortable and confident in declaring and actively participating in the tax system,” Mr. Thuc asserted.