BASIC THEORY OF TAX COMPLIANCE OF
Overview of the enterprise
1.1.1 Concept and characteristics of enterprises a) Concept
A business, according to the Institute of Statistics and Economic Research, is an economic organization whose primary function is to manufacture and sell goods and services
Another opinion is that a "enterprise is an organization with its own name, assets, transaction office, registered and established under the provisions of law for business purposes."
An enterprise is an economic organization that may or may not have a legal entity, engaging in business activities while adhering to legal regulations to achieve defined objectives Key characteristics of an enterprise include its structured approach to operations, compliance with laws, and focus on specific goals.
To begin, enterprises have production and business functions, which are inextricably linked and form a closed cycle in business operations
To maximize profits, businesses must focus on continuously enhancing their capacity to meet customer needs effectively.
To thrive in a competitive market, businesses must adapt their strategies to the specific conditions of each period Embracing competition is essential for survival and growth, necessitating a focus on tailored business approaches that respond effectively to changing circumstances.
1.1.2 Types of enterprises a) The byline of business
In the economy, there are six fundamental types of enterprises categorized by their business lines: those operating in the industrial sector, enterprises involved in agriculture and fishery, and those engaged in commerce.
- service, transportation business, construction business, and other businesses (such as finance, insurance ) b) In legal form
The 2014 Law on Vietnamese Enterprises, enacted by the National Assembly, categorizes businesses into three primary legal forms: limited liability companies, state-owned enterprises, and joint-stock companies, along with partnership firms and private enterprises.
Enterprises are formed and operate with the goal of generating economic benefits; however, it also plays an important role in the economy and society, specifically:
Businesses play a crucial role in generating revenue for the state budget, which is essential for funding infrastructure development, enhancing public social activities, and tackling social issues.
Addressing employment challenges and enhancing workers' quality of life is crucial, as established businesses play a vital role in job creation These companies not only generate income for individuals but also empower them to improve their standard of living.
Businesses play a crucial role in driving economic growth and development As the backbone of the economy, diverse business sectors contribute to overall expansion, with their growth directly influencing the economy's progress.
Basic content of tax policies that businesses must comply with
1.2.1 Basic content of current VAT policy in Vietnam
1.2.1.1 The concept and characteristics of VAT
VAT is a tax calculated in the added value of goods and services arising at each stage in the process of production, circulation and consumption.[1]
- VAT is a multi-stage consumption tax that does not overlap.[1]
Value Added Tax (VAT) is applied at every stage of production and business, but it is only charged on the value added at each stage The total VAT collected throughout the process matches the tax amount applied to the final consumer's selling price Consequently, the VAT collected at each stage corresponds directly to the tax calculated on the final selling price to consumers.
- VAT has a high level of economic neutrality.[1]
VAT is an additional component of the selling price of goods and services, rather than a cost factor It is not influenced by the taxpayer's business performance or the organization of economic cycles; regardless of the number of stages a product goes through, the total VAT amount remains unchanged.
- VAT is a type of indirect tax.[1]
VAT is a tax levied on the selling price of goods and services, which is ultimately paid by the end user, known as the taxable person Suppliers of these goods or services are considered VAT payers.
- In comparison to income, VAT is regressive.[1]
Value Added Tax (VAT) is imposed on goods and services, making consumers, irrespective of their income level, responsible for paying this tax Consequently, individuals with higher incomes experience a lower effective tax rate when comparing tax payments to their earnings, while those with lower incomes face a higher tax burden relative to their income.
Final consumers of goods and services within the national territory are taxable objects
1.2.1.2 Current VAT Policy Contents a) General Rule
To begin, objects subject to VAT are goods and services used for production, business, and consumption in Vietnam, with the exception of objects exempt from VAT under regulations
Second, taxpayers are businesses and individuals that manufacture and sell taxable goods and services, as well as businesses and individuals that import taxable goods b) VAT calculation method
First, the taxable price: this is the price excluding VAT, and it is as follows:
Taxable prices are determined based on the type of goods and services and are as follows:
- The price of goods and services sold or provided to other entities by businesses or manufacturing establishment is exclusive of value-added tax
For services rendered by foreign entities to Vietnamese consumers, the contract stipulates the price excluding value-added tax (VAT) In cases where the contract does not specify the VAT amount, the service price payable to the foreign party will be based on the VAT calculation price.
The taxable value of goods and services, whether for exchange, internal use, or donation, is determined by the value-added price at the time these activities occur for items of the same or equivalent type.
The rental price encompasses leasing activities for various assets, including houses, workshops, warehouses, transportation means, machinery, and equipment, without any applicable tax For rentals involving installment payments or prepaid leases, value-added tax is calculated on the total rent paid, including associated costs Additionally, renters are responsible for collecting funds to complete, repair, and upgrade the rental property as requested by the lessee.
When goods are sold using an installment payment method, the selling price is determined as a single payment amount, excluding any installment interest, rather than being calculated based on the periodic installment payments.
- The processing price for goods processing activities is exclusive of tax (including wages, fuel, motivation, auxiliary materials and other costs for processing)
VAT rates are uniformly applied based on the type of goods and services involved in importation, processing, or trading, categorized into three levels: 0%, 5%, and 10% The 0% rate is designated for exports and international transportation, exempting these goods and services from VAT at the time of export A 5% tax rate is applied to essential goods and services that require incentives, including clean water for daily use, medicines for treatment and prevention, and educational tools and supplies.
Tax rate of 10%: Applied essential goods and services as well as services that are not subject to the 0%, 5% tax rate c) Method of calculating VAT
- First, consider the tax deduction method Applies to:
A business establishment with an annual turnover of at least one billion VND must fully comply with the prescribed accounting, invoicing, and voucher regulations, excluding business households that utilize the direct tax calculation method.
Business voluntarily registers use the tax credit method
Foreign organizations and individuals supplying goods and services for oil and gas activities in Vietnam, including prospecting, exploration, development, and extraction, are subject to tax deductions The Vietnamese party is responsible for declaring, withholding, and remitting these taxes on their behalf.
The VAT payable during the period is calculated using the following formula:
VAT amount payable = Output VAT - Deductible input
According to regulations, tax deduction is made based on the following principles:
• Deductible input VAT is VAT on goods, services, and fixed assets purchased for production, business, and services subject to VAT
• Input VAT incurred in any period shall be declared and deducted when determining the payable tax amount of that period, regardless of whether it has been exported or used
- Second, there is the direct method
The direct method of generating revenue By the direct method, apply for:
• An operating business establishment with an annual turnover of less than one billion dong, or a newly established enterprise or cooperative
• Foreign organizations and individuals operating in Vietnam but not in accordance with the Investment Law and the accounting, invoice, and voucher regime
• Organizations and individuals are not businesses or co-ops.Method of calculation: VAT payable = Revenue x Percentage (%)
• In which case, the percentage is stated as follows:
• Construction services excluding raw materials: 5%
• Manufacturing, transportation, or services related to goods and construction, including raw materials: 3%
• Other business activities: 2% d) VAT must be declared and paid
When registering to pay VAT with a competent state agency and receiving a tax identification number, each subject is required by law to file a tax declaration
Tax declaration involves reporting all taxable transactions within a specified timeframe, such as a month, quarter, or year It includes details on the VAT paid for purchases, the VAT collected from sales, and the total VAT payable to the tax authority for that period.
To complete a tax declaration, individuals must fill out the tax declaration form and ensure its accuracy before submitting it to the appropriate state agency Once the form is submitted to the tax office, the tax authority calculates the payable amount and issues a tax payment notice to the taxpayer Verification of the tax return's accuracy occurs prior to tax payment, and tax authorities are accountable for any errors in calculating the owed tax amount.
VAT payment involves the transfer of tax collected by suppliers of goods and services to the State, which consumers pay through the pricing of VAT-exempt items This process represents a fundamental obligation for every taxpayer To ensure compliance with this obligation, several key issues must be effectively addressed.
To begin with, tax payments can be made directly to the tax office or through a bank or the Treasury
Second, let's talk about the tax payment mechanism In practice, there are currently two mechanisms for tax collection:
Self-calculation and payment of taxes empower taxpayers to take responsibility for their financial obligations, thereby enhancing compliance with legal requirements This mechanism not only alleviates the burden on tax authorities but also reduces administrative costs, clearly delineating the roles and responsibilities of both taxpayers and tax officials.
- Tax payment mechanism based on notice of the tax authority: paying tax based on the tax authority's calculation and implemented by a State administrative decision
Third, the scope of the VAT obligation Are organizations and individuals engaged in illegal business (those that do not have a business registration) required to pay tax?
Enterprise Tax Obligations
1.3.1 Enterprise tax obligations: concepts and forms
When a business has tax obligations, it must adhere to the procedures outlined in state tax documents and policies during its interactions with the tax authority This includes fulfilling essential responsibilities that are part of the enterprise's tax requirements.
1.3.1.1 Obligation to register for taxes
To initiate tax compliance, it is essential to register for taxes and obtain a tax identification number (TIN) This obligation arises from significant business events such as the birth, change, or termination of a business entity, with the requirement starting from the date the taxpayer receives their business registration certificate Each taxpayer is assigned a TIN, which serves as the legal basis for identifying and managing their tax responsibilities effectively.
Tax registration applies to various entities, including business organizations, households, and individuals This includes individuals with income subject to Personal Income Tax (PIT), as well as organizations and individuals responsible for withholding and remitting taxes on behalf of others, along with any other entities as specified by tax legislation.
Tax registrants are required to register for tax within 10 working days after receiving their business registration certificate, establishment and operation license, or investment certificate This applies to organizations not subject to business registration and to households and individuals who are subject to business registration but have not yet received their certificates Additionally, personal registrants must also complete their tax registration within the same 10-day timeframe upon receiving the relevant certificates.
When registering for tax purposes, both business organizations and individuals must prepare specific documents Required documents for businesses include a tax registration declaration, a copy of the business registration certificate, or an establishment and operation license For individuals and organizations not subject to business registration, the necessary documents consist of a tax registration declaration, a copy of the establishment or investment decision, and a copy of the individual's identity card or passport.
When submitting tax registration documents, businesses and individuals must do so at the tax office corresponding to their headquarters Organizations and individuals responsible for withholding taxes should register at the tax authority where they are based Individuals should register at the tax office where their taxable income is generated or where they are permanently or temporarily residing Tax authorities are required to issue tax registration certificates within 10 working days of receiving valid submissions In cases of lost or damaged certificates, the tax authority must reissue them within 5 working days upon request.
1.3.1.2 Tax declaration and calculation responsibilities a) Taxation rules
Taxpayers are responsible for declaring and calculating their tax obligations, unless the tax administration agency handles the calculation as per government regulations Consequently, taxpayers must file tax returns based on the principle that they are required to self-determine the amount of tax owed to the State budget, except in instances where the tax authority calculates the tax according to Articles 37 and 38 of the Law on Tax Administration.
Taxpayers are required to fully and accurately disclose all information in their tax declarations to the tax authorities, following the format established by the Ministry of Finance, and must also provide all relevant vouchers and documents as outlined in the tax declaration dossier.
Taxpayers must submit their tax declaration dossiers to the tax authorities within the specified time frame, even if they have no tax liability or qualify for tax incentives, exemptions, or reductions However, this requirement does not apply in instances of business termination or suspension.
During a business suspension, taxpayers are exempt from filing tax returns and have no tax obligations However, if a taxpayer ceases business operations for less than a full calendar or fiscal year, they are still required to submit their annual tax finalization dossier.
The tax return file varies depending on the taxpayer's declaration period selection and the case, but there are primarily three types of tax returns:
A tax declaration dossier for monthly tax declaration and payment consists of essential components, including a monthly tax return, a comprehensive list of invoices for goods and services sold and purchased, along with other relevant tax-related documents.
A tax declaration file for an annual tax period comprises several key components: an annual tax return along with related documents for calculating the payable tax amount; quarterly provisional tax declarations with accompanying documents for determining temporary tax amounts; and, if applicable, tax finalization declarations at the end of the year.
Third, a tax declaration dossier for a tax declared and paid for each time a tax liability arises includes: a tax return; invoices, contracts, and other tax-related documents as required by law
Fourth, customs dossiers are used as tax declaration dossiers for imported and exported goods
In the case of operation termination, contract termination, enterprise ownership transformation, or reorganization, the required dossier must include a tax finalization declaration, financial statements up to the termination or transformation date, and any additional documents pertinent to tax finalization.
Tax declaration dossiers for taxes declared and paid include:
- Invoices, contracts, and other documents related to tax obligations as prescribed by law
Customs dossiers are used as tax declaration dossiers for imported and exported goods
A tax declaration dossier for the case of operation termination, contract termination, business ownership transformation, or business reorganization includes the following documents:
- Financial statements up to the time of operation or contract termination, transformation of enterprise ownership, or enterprise reorganization;
- Other documents related to tax finalization
The government is required to clearly define the various types of taxes, including those declared monthly, annually, quarterly, and upon the occurrence of a tax liability Additionally, it should outline the processes for tax finalization and the submission of tax declaration dossiers for each specific case.
Taxpayers have the option to provide a written explanation or visit the tax office in person When taxpayers choose to explain or supplement information and documents directly at the tax agency, the inspecting officer is required to create a working record following the format established by the Ministry of Finance.
THE HLP INVESTMENT JOINT-STOCK COMPANY’S
Overview of HLP Investment Joint Stock Company
2.1.1 The process of formation and development of the Company
HLP Investment Joint Stock Company is the name of the company Company’s legal representative: Nguyen Manh Cuong, General Manager
Company headquarters: 360 Kim Ma Street, Ngoc Khanh Ward, Ba Dinh District, Ha Noi City, Vietnam, 16 th floor of Daeha Building
On September 21,2017, the company was established under the registration license 0108003239
Industrial classification: Joint stock company
2.1.1.2 The company’s formation and development history
On September 27, 2017, the company was founded
The company operates in the field of renewable energy using an investment project development model
The company is currently developing renewable energy investment projects that include solar power plants and wind power plants
2.1.2 The main areas of production and business
HLP Investment Joint Stock Company is dedicated to generating profit while safeguarding the rights of its owners, the company, and its employees The company prioritizes quality in its core business operations, which focus on the production and distribution of transmission power.
- Manufacturing of motors and generators
- Electrical transformers, distribution equipment, and electrical control are all manufactured
- Cable manufacturing, specifically fiber optic cable manufacturing
- Manufacturing of electrical wires, cables, and other electronic devices
- Electrical conductor equipment of all types is manufactured
- Manufacturing of electrical lighting equipment
- Manufacturing of civil electrical equipment
- Manufacturing of other electrical equipment
- Producing equipment that extracts energy
Table 2.1: Overview of business results of HLP Investment
Total revenue 21,897,775,431 25,572,435,660 23,758,324,506 Total cost 15,766,248,554 18,503,549,861 16,636,187,570 Profit after tax 6,131,526,877 7,068,885,799 7,122,136,936 Taxes payable to the state budget 305,374,589 439,415,428 510,926,041
(Source: According to the Report on business results of HLP Investment Joint Stock Company in 2019 to 2021)
Looking at a summary of business results, we can see:
In 2020, the company's total revenue reached VND 25.57 billion, reflecting a growth of VND 3.67 billion or approximately 16.76 percent compared to 2019 However, in 2021, revenue declined to VND 23.76 billion, marking a decrease of VND 1.81 billion, equivalent to about 7.08 percent from the previous year.
In 2020, the total cost reached VND 18.50 billion, reflecting an increase of VND 2.73 billion (approximately 17.31%) compared to 2019 However, in 2021, the company's costs decreased to VND 16.64 billion, marking a reduction of VND 3.51 billion (around 10.05%) from the previous year.
In terms of profit after tax, the company's profit after tax in 2020 was
VND 7.07 billion, up VND0.94 billion (about 15.33 percent) from
VND6.13 billion in 2019 By 2021, the Company's after-tax profit of
VND7.12 billion had increased by VND0.05 billion (up 0.71 percent compared to 2020), though less than in 2020, it was still positive, and the company plans to increase further in 2022
2.1.3 Organization of the company’s accounting apparatus and tax obligation fulfillment apparatus
Figure 2: Diagram of accounting apparatus of HLP Investment Joint-
The Chief Accountant plays a crucial role in managing a company's finances, overseeing the accounting department, and providing strategic advice to the general director This key position involves making critical decisions regarding financial operations and ensuring accurate general accounting practices.
- Tax accounting entails calculating and paying taxes, as well as performing other tax-related tasks
- Payroll accounting entails tracking salaries, recording and extracting health insurance, social insurance, and so on
- Debt accounting entails monitoring the accounting method, the construction process, and the collection of the Company's installation, construction, and repair works
A treasurer is a professional responsible for managing financial transactions, including the collection and disbursement of funds This role involves maintaining a daily cash fund book and ensuring accuracy by reconciling it with payment accounting records.
The HLP Investment Joint Stock Company’s tax compliance
HLP Investment Joint Stock Company has received a business license from the Hanoi City Agency, and promptly submitted its registration dossier to the Ba Dinh District Tax Department.
HLP Investment Joint Stock Company’s tax registration dossier comprises a tax registration declaration, a copy of the business license issued by the Hanoi City Authority, and the necessary declaration form On September 27, 2017, the Ba Dinh District Tax Department assigned tax code 0108003239 to HLP Investment Joint Stock Company following a thorough review of the company’s tax registration documents for reasonableness and validity.
HLP Private Joint Stock Company has fully implemented state-prescribed invoicing and documentation practices, and is now registered to apply VAT calculation using the deduction method with quarterly declaration periods.
- Vat invoice form GTKT No 01
The VAT declaration form No 01 VAT is essential for reporting the lists and invoices of goods and services purchased and sold, adhering to the Ministry of Finance's requirements, along with any additional specific documents and invoices necessary for accurate tax compliance.
HLP Investment Joint Stock Company is obligated to register Personal Income Tax (PIT) for its employees in compliance with state regulations This process necessitates that employees submit their tax registration documents to the company.
- The copy does not need to be certified as a valid ID card or ID card
Upon completion of the full dossier, HLP Investment Shares will register employees' personal tax identification numbers using declaration form No 05-DK-TH-TCT, which will be submitted to the General Department of Taxation through the Portal.
2.2.2 Executing tax declaration and tax calculation obligations
HLP Investment Joint Stock Company operates on an annual accounting period from January 1 to December 31 and has opted for quarterly tax declarations The company utilizes electronic declarations through the General Department of Taxation's HTKK software for its tax reporting, ensuring compliance and efficiency in the declaration of specific taxes.
2.2.2.1 Obligation to file a VAT tax return
Each month and quarter, the accounting department of the company gathers output and input invoices to verify their accuracy, validity, and compliance with legal standards This process is essential before preparing the company's VAT invoice statement and reconciling it with the figures recorded in the accounting accounts.
The input VAT listed must correspond to the debt recorded in account 1331, while the output VAT should align with the figures in account 3331.
HLP Investment Joint Stock Company calculates VAT using the deduction method with a quarterly declaration period After reconciling the statements and accounts 1331 and 3331, the accountant prepares the VAT declaration through HTKK software in accordance with Form No 01/GTGT, as specified in Ministry of Finance Circular No 26/2015/TT-BTC dated February 27, 2015 Additionally, the VAT amount deducted from the previous period is carried forward.
The VAT declaration must align with the initial balance of TK 1331, with both input and output VAT amounts reported as per the established statement If the output VAT is lower than the input VAT, the company is not obligated to pay tax for that period Conversely, if the output VAT exceeds the input VAT, the payable VAT will be the difference between the two HLP Investment Joint Stock Company will file the declaration electronically via their website.
HLP Investment Joint Stock Company consistently meets the tax declaration deadlines set by nhantokhai.gdt.gov.vn, ensuring submissions are made by the 30th day of the following quarter By proactively filing declarations ahead of schedule, the company minimizes the risk of errors and ensures timely submission of any additional declarations, as well as prompt tax payments.
The company's payable VAT amount has also changed over the three years 2019, 2020, and 2021, specifically as follows:
Table 2.2: VAT statistics payable by HLP investment joint stock company in 2019-2021
(Source: Compiled according to VAT declaration of HLP investment joint stock company in 2019, 2020 and 2021) The amount of VAT payable in 2019 was VND 195,249,541, but by
In 2020, the company's revenue rose to VND 212,643,542, reflecting an increase of VND 17,394,001 or 8.9 percent Correspondingly, the VAT paid by the company reached VND 250,556,682, which is an increase of VND 37,913,140, equivalent to approximately 17.83 percent This trend indicates a consistent rise in the VAT obligations of the company, driven by its growing revenue While both output and input VAT have increased, the rise in input VAT remains minimal compared to the output VAT.
The first quarter of the year typically sees companies facing the highest VAT payments, as this period often coincides with the signing of numerous accounting service contracts These contracts generally have a duration of one year or more, leading to a significant increase in the company's VAT output during this time.
The amount of VAT payable in 2021 increased sharply compared to
Despite the challenges posed by the COVID-19 pandemic in 2021, the company successfully maintained its operations, drawing on valuable experience from 2020, particularly in contract signing As a small to medium-sized enterprise, it has demonstrated resilience and commitment by consistently fulfilling its VAT obligations in a timely and complete manner.
2.2.2.2 The obligation to declare CIT
According to Article 17 of TT151/2014/TT-BCT, as of November 15,
General assessment of tax compliance at HLP Investment Joint
a result, it has encouraged creative initiative as well as a sense of responsibility in each company member's work
2.3 General assessment of tax compliance at HLP Investment Joint Stock Company
It can be stated that, since its inception, HLP Investment Joint Stock Company has taken solid and favorable steps to achieve high efficiency, as evidenced by the contributions that the company makes to society Currently, the company's contribution to the state budget is increasing, and the company is regarded as one of the enterprises conducting business effectively and always adhering to the State's policies and regulations HLP Investment Joint Stock Company has achieved some remarkable results in the implementation of its tax obligations during its operation, as follows:
The implementation of "Declaration Support" (HTKK software), a free tool developed by the General Department of Taxation, has significantly alleviated confusion in tax calculations and accounting records This software ensures accuracy and integrity while saving human resources and costs, and it streamlines the inspection and monitoring of accounting practices By utilizing HTKK software, taxpayers can easily complete declarations by inputting information into the provided forms, with the software offering guidance on tax calculations and declarations for various tax types, enabling businesses to declare their taxes accurately and efficiently.
- In order to facilitate the rapid, accurate, and timely implementation of tax meaning, HLP Investment Joint Stock Company, like other companies, is currently carrying out tax administrative procedures under the Law on Tax Administration through the electronic tax method As a result, HLP Investment Joint Stock Company will carry out tax registration, tax declaration, and tax refund via electronic means rather than going directly to the tax authorities, which helps to minimize costs and risks in the working process while also saving time and travel costs for the company
HLP Investment Joint Stock Company utilizes AM NOTE accounting software to efficiently manage its financial records This software simplifies the process of recording input invoices, outputs, and various accounting services, thereby streamlining tax return filings and finalization statements for the company.
HLP Investment Joint Stock Company has successfully implemented a comprehensive CIT and VAT accounting document system, which includes sales invoices and records for goods and services purchased and sold The company maintains detailed revenue and expense accounting documents, reflecting quarterly production and business results, and ensures accurate monitoring of monthly and quarterly revenues This diligent approach allows HLP to calculate and remit provisional CIT as mandated by tax authorities.
HLP Investment Joint Stock Company has consistently prioritized compliance with tax laws, ensuring that all tax declarations and payments are submitted accurately and on time This commitment has resulted in no violations or penalties, and the company has not faced any tax inspections since its establishment.
HLP Investment Joint Stock Company boasts a dedicated and dynamic accounting team committed to continuous improvement and knowledge enhancement The accountants are highly skilled in their field and excel at adapting to new challenges It is encouraged for team members to confidently share their opinions and provide feedback to enhance the organization of the company's accounting structure.
HLP Investment Joint Stock Company is committed to enhancing its strengths in fulfilling tax obligations by adopting new, effective measures These initiatives aim to simplify and improve the accuracy of the company's tax compliance processes.
During the course of practicing and learning about HLP Investment Joint Stock Company, having access to accounting in general and the implementation of the company's tax obligations in particular, I realized that, in addition to my advantages, HLP Investment Joint Stock Company still has some limitations in the implementation of tax obligations that must be done repair as follows:
During the preparation of the quarterly VAT declaration, it's common to encounter numerous invoices from the previous quarter that remain undeclared These invoices may appear on the list of output invoices due to omissions or discrepancies in prior declarations.
- There are still some company expenses that do not have complete invoices or documents, resulting in them not being included in reasonable expenses when calculating the company's CIT
HLP Investment Joint Stock Company faces challenges due to the lack of coordination between its departments, leading to difficulties in workflow The company's failure to account for quarterly business results complicates fiscal year accounting and heightens the risk of errors Additionally, the inability to accurately determine quarterly costs results in provisional Corporate Income Tax (CIT) calculations that do not reflect reality.
The outstanding limitations at HLP Investment Joint Stock Company are primarily caused by the following factors:
The limited capacity of tax-related staff, primarily composed of accounting majors lacking in-depth tax training, leads to significant loopholes in tax return preparation.
The company's organizational structure and record-keeping practices exhibit significant flaws that lack scientific rigor Petty cash and credit card expenses, often grouped under a single invoice, complicate accurate accounting for deductible expenses when calculating Corporate Income Tax (CIT) Additionally, numerous invoices from the previous quarter persist on the quarterly tax declaration, further hindering financial clarity.
The demanding nature of work at HLP Investment Joint Stock Company requires specialized knowledge across various fields, particularly in calculations, numerical analysis, and office computing This stress leads to high employee turnover, resulting in a shortage of skilled personnel Attracting and retaining talented and experienced employees has become a significant challenge not only for HLP Investment but for the entire business landscape today.
Fourth, because the number of invoices generated by the software may vary, accountants have not paid attention to this point, making document arrangement difficult
In AM NOTE accounting software, the VAT processing for input and output invoices requires automated entry, preventing manual adjustments to the output statement This limitation leads to discrepancies between the tax figures in the software and those exported to Excel, complicating VAT filings and increasing the time required for accurate reporting.
RECOMMENDATIONS ON IMPROVING HLP
HLP Investment Joint Stock Company’s Development
As the economy continues to develop, the number of accounting and auditing firms is increasing This growth has led to heightened competition among these firms for clients To ensure sustainable operations and growth, the Board of Directors of HLP Investment Joint Stock Company is actively implementing strategies to enhance the company's development.
HLP Investment Joint Stock Company has given the following development orientation in the future in order for the company to grow and develop:
- In a rapidly changing global economy, the company strives to assist customers in developing new ways to create, manage, and evaluate value
The organization aims to diversify its offerings and establish consistent service types Currently focused on a specific project, the company plans to expand its focus on tax consulting services in the future, an area increasingly pursued by many large joint stock firms.
The company is dedicated to enhancing the legitimate interests of its members and employees, fostering a high level of motivation and a positive work environment This commitment not only boosts the overall morale of the workforce but also elevates the quality of the company's projects.
Companies involved in international projects play a crucial role in promoting the clean and healthy management of national finances This macro goal not only aids in sustainable economic development but also empowers the State to formulate policies grounded in consistent implementation results.
HLP Investment Joint Stock Company is experiencing significant growth, evolving into a robust investment enterprise By diligently fulfilling its tax obligations, the company fosters trust among client companies, which in turn helps attract and retain a growing customer base This commitment to compliance supports the creation of stable and sustainable development for the company.
HLP Investment Joint Stock Company is shifting its focus towards attracting domestic investments as it scales up its operations, moving away from reliance on foreign investment firms The company is committed to building a strong professional brand, expanding its business network, and enhancing operational efficiency to drive growth and success.
HLP Investment Joint Stock Company aims for long-term growth and aspires to be one of Vietnam's leading investment firms To achieve this, the company will focus on enhancing human resource training and implementing quality control measures in the coming years, ensuring continuous improvement in project quality and scalability.
In the upcoming years, the Board of Directors and employees at HLP Investment Joint Stock Company must remain proactive and dedicated to achieving the company's objectives To successfully meet its primary goals, HLP Investment Joint Stock Company must first accomplish several smaller, foundational objectives.
To achieve stable and sustainable growth, the company will cultivate a dynamic and creative leadership team that is talented, responsible, reputable, and particularly friendly towards employees, while also enhancing overall work efficiency.
The company is committed to implementing its development plan for 2020-2035 by innovating its business management and administration practices This approach aims to foster motivation and drive growth in a competitive landscape that includes participation from various economic sectors in Vietnam, including foreign-invested enterprises and international organizations.
Recommendations on improving HLP Investment Joint Stock Company’s tax compliance
During my internship at HLP Investment Joint Stock Company, I gained valuable insights into general accounting practices and the company's specific tax obligations This experience allowed me to apply my academic knowledge in a practical setting Based on my observations, I would like to offer some comments and recommendations to enhance the company's tax compliance processes.
3.2.1 Improve the level of tax and accounting department of enterprises
Tax accountants play a crucial role in ensuring that a company meets its tax obligations, making it essential to enhance the capabilities of the accounting department By mastering tax regulations and principles, tax accountants can perform their duties with greater accuracy and efficiency, significantly reducing the likelihood of errors To achieve this level of proficiency, the tax accounting department must adhere to specific criteria.
A comprehensive understanding of accounting, auditing, and tax regulations is essential for the accounting department This knowledge forms the foundation for tax accountants to effectively manage bookkeeping and ensure compliance with tax obligations As a result, tasks can be completed with accuracy and efficiency.
Accountants must consistently enhance their understanding of evolving regulatory documents, particularly in accounting, auditing, and taxation In today's era of economic integration, the government frequently updates and revises policies to align with the changing economic landscape.
To comply with state regulations, the tax accounting team must stay informed about updates and amendments to tax policies, ensuring they meet all tax obligations effectively.
Implementing tax accounting in Vietnam requires strict compliance with Vietnamese accounting standards and relevant regulations Companies must also apply their established accounting and auditing processes flexibly, ensuring that practices are legal and not driven by personal gain.
Accounting and auditing require a commitment to independence, integrity, and confidentiality, with the accounting department maintaining a high level of responsibility It is essential that these functions are guided by legal documents rather than relying on unverified advice.
The accounting department requires professionals with sharp minds and logical thinking, capable of quickly and effectively addressing emerging issues while strictly adhering to tax laws and the legal framework of the Republic of Vietnam.
To meet the above-mentioned tax accounting department requirements, HLP Investment Joint Stock Company should implement some of the following measures:
When recruiting for the tax accounting department and other areas of the company, it is essential to prioritize high standards in working skills, as well as a strong understanding of accounting principles, tax regulations, and state policies.
HLP Investment Joint Stock Company should consistently conduct training sessions to enhance employee skills and keep them informed about the latest tax policies and regulatory updates This approach ensures that staff can perform their duties accurately and effectively.
HLP Investment Joint Stock Company should not only organize employee training sessions but also encourage regular participation in in-depth seminars and training programs focused on tax obligations This approach will enable employees to directly acquire essential tax knowledge.
HLP Investment Joint Stock Company must implement strategies to enhance its employees' work attitudes and professional ethics This can be achieved by introducing various forms of recognition, rewards, and disciplinary measures within the company's internal regulations By doing so, the company can foster a positive and productive work environment, encouraging every employee to adopt a more effective and motivated approach to their responsibilities.
To enhance operational efficiency, the company must foster better coordination among its departments, particularly between the tax accounting team responsible for managing tax obligations and the audit and accounting service departments Improved collaboration between tax accountants and the sales department will facilitate the sharing of valuable work experiences, knowledge, and insights into current tax policies, ultimately benefiting the organization as a whole.
3.2.2 Strengthen the application and update of documents and tax books issued by the State
To adapt to the dynamic market economy, our state continually enhances its tax law framework, implementing regular amendments to align with the national economic landscape Consequently, accountants are required to proactively upgrade their knowledge and remain informed about the latest tax documents and policies issued by the government to effectively fulfill their unit's tax obligations.
To enhance the effectiveness of tax document application and policy updates, HLP Investment Joint Stock Company should adopt several key solutions.
Recommendations to improve tax obligations at enterprises
The performance of tax obligations at HLP Private Joint Stock Company is influenced by both internal and external factors, including the management of tax authorities and state tax policies Based on my recent internship experience in the accounting department, I would like to offer recommendations to the Ba Dinh District Tax Department and suggestions for improvements in state tax policy.
3.3.1 Proposal to Ba Dinh District Tax Department
The Ba Dinh District Tax Department oversees the tax obligations of HLP Investment Joint Stock Company However, HLP Investment has identified certain limitations within the Tax Department that require greater attention to enhance the fulfillment of tax responsibilities.
The approval process for tax returns can be lengthy, as HLP Investment Joint Stock Company experiences a delay of approximately 1-2 days in receiving approval notices from the Ba Dinh District Tax Department after submitting their tax declaration dossiers This delay ultimately affects the company's planned tax payment schedule.
The Ba Dinh District Tax Department is required to evaluate its procedures for receiving and processing tax declaration submissions from taxpayers to enhance efficiency and protect taxpayer rights.
The Ba Dinh District Tax Department needs to streamline its administrative procedures to enhance efficiency and reduce processing times for taxpayers By eliminating unnecessary steps, the department can ensure timely handling of tax submissions, lower operational costs, and ultimately improve taxpayer satisfaction and trust in tax authorities.
The Ba Dinh District Tax Department faces challenges due to a limited number of tax officials lacking professional qualifications and up-to-date knowledge of tax policies This deficiency hampers their ability to assist taxpayers efficiently and promptly To address this issue, it is essential for the department to implement training programs that enhance the expertise of tax officials and ensure regular updates on tax policy changes.
A minority of tax officials exhibit a lack of responsibility in their duties, leading to negative experiences for taxpayers When individuals visit the Tax Department to submit their documents, some officials display indifference and a lack of enthusiasm, which fosters a sense of dissatisfaction among taxpayers and erodes public trust in government personnel.
Ba Dinh District Tax Department must consider and implement reasonable measures to improve employee morale and working attitude
The Ba Dinh District Tax Department currently lacks sufficient programs and measures to support taxpayers, particularly during the busy tax finalization period when the volume of dossiers from businesses and individual taxpayers increases significantly To enhance compliance with tax obligations, it is essential for the department to establish dedicated support teams and advisory programs that address taxpayer inquiries regarding procedures and state tax policies By doing so, the Ba Dinh District Tax Department can assist taxpayers in accurately and thoroughly completing their tax dossiers, ultimately facilitating a smoother tax process.
To enhance taxpayer compliance and improve management efficiency, the Ba Dinh District Tax Department must address existing restrictions By doing so, they can foster greater trust among the community and streamline the process for fulfilling tax obligations.
3.3.2 Recommendations to the State to improve tax policies
As the economy continues to grow and integration evolves daily, the government is consistently updating and implementing new policies to align with these changes Nevertheless, the current tax system remains inadequate and requires revision to better support the economic landscape.
To improve the tax payment process, it is advisable to adjust the tax payment deadlines Taxpayers must wait for confirmation of their tax declaration acceptance from the authorities before making payments Therefore, the payment deadlines should not align with the submission deadlines, allowing taxpayers additional time to prepare and reducing the risk of late submissions.
The complexity of tax law provisions often leads to contradictions and unclear regulations within documents Frequent amendments to tax policies hinder timely updates for both taxpayers and tax officials, resulting in compliance issues and inefficiencies in tax administration To mitigate these challenges, the State must thoroughly evaluate proposed amendments to avoid costly repeated revisions and consider issuing a consolidated document that simplifies compliance for all parties involved.
The state's tax policy greatly influences business tax obligations, necessitating timely updates to ensure benefits for both individual businesses and all taxpayers Regular revisions are essential to facilitate effective policy implementation and to ease the tax responsibilities of taxpayers.
After completing a three-month internship at HLP Investment Joint Stock Company, I gained valuable insights into the company's organizational structure and operational mechanisms, despite not being fully involved in its transactions, which were only officially initiated during my tenure.
During my dissertation research, I systematically analyzed the principles of implementing Value Added Tax (VAT), Corporate Income Tax (CIT), and Personal Income Tax (PIT), integrating theoretical knowledge from my studies with practical insights gained from my experience in the company.
Simultaneously, contributing to the clarification of some issues in tax law contributes to further improving tax implementation at the company