IMPLEMENTATION OF CORPORATE INCOME TAX OBLIGATIONS OF TOKYO CONSULTING CO , LTD

MINISTRY OF FINANCE ACADEMY OF FINANCE -*** - PHAM THI MINH CHAU CLASS: CQ56/02.02 GRADUATION THESIS TOPIC: IMPLEMENTATION OF CORPORATE INCOME TAX OBLIGATIONS OF TOKYO CONSULTING CO., LTD Major : Taxation Code : 02 Supervisor : Assoc Prof Dr Ly Phuong Duyen HANOI - 2022 i DECLARATION I would like to assure you that this is my own research, the figures and results stated in the graduation thesis are honest from the actual situation of the internship unit Thesis’s author Pham Thi Minh Chau ii THANK YOU During my studies at the Academy of Finance and graduate thesis research, I received a lot of support from school, family, agencies, and friends In order to complete the graduation essay, in addition to the serious investment of myself, I also received a lot of support and help from everyone By the way, I would like to thank you: teachers at the Academy of Finance have imparted useful knowledge to me, especially Prof Dr Ly Phuong Duyen has guided my graduation thesis, and the manager and the staff at TOKYO CONSULTING CO., LTD helped me during my internship at the company as well as provided the necessary documents for me to complete the thesis My teachers, family and friends encouraged me in the process of the thesis I appreciate the support, help, and encouragement from teachers, family and friends I'd like to thank you very much! Thesis’s author Pham Thi Minh Chau iii TABLE OF CONTENTS DECLARATION i THANK YOU ii TABLE OF CONTENTS iii LIST OF FIGURES vi LIST OF TABLES vii INTRODUCTION 1 Background The purpose of the research thesis 3 Objects and scope of research Research methods The general structure of the topic CHAPTER 1: BASIC THEORIES ABOUT THE IMPLEMENTATION OF CORPORATE INCOME TAX OBLIGATIONS AT ENTERPRISES 1.1 Overview of CIT 1.1.1 Definition characteristics of CIT 1.1.2 The role of CIT 1.1.3 Current regulations on CIT applicable to enterprises 1.2 CIT compliance obligations of enterprises 18 1.2.1 Overview of the enterprises 18 1.2.2 Obligations to comply with a corporate income tax of enterprises 21 1.3 Factors affecting the performance of CIT obligations 30 1.3.1 Public service quality 30 1.3.2 Level of corruption 30 1.3.3 Penalties for tax offenses 31 iv 1.3.4 Tax administration 31 1.3.5 Tax legislation system and equity perspective 31 1.3.6 Compliance cost 31 1.4 The purpose to strengthen the implementation of CIT obligations 32 CHAPTER 2: AN EVALUATE THE IMPLEMENTATION OF CORPORATE INCOME TAX OBLIGATIONS AT TOKYO CONSULTING CO., LTD 34 2.1 Overview of Tokyo Consulting Co., Ltd 34 2.1.1 The process of information and development of business 34 2.1.2 Organization of the company's business activities 35 2.1.3 Characteristics of the company's the production and business activities 38 2.2 The status of the implementation of CIT obligations at Tokyo Consulting Co., Ltd 38 2.2.1 The status of registration 38 2.2.2 About the CIT declaration 39 2.2.3 CIT payment 43 2.2.4 CIT finalization 45 2.2.5 Accounting and use of voucher invoices 49 2.3 Achievements and limitations of enterprises in the implementation of CIT obligations 50 2.3.1 Results achieved 50 2.3.2 Limitations 52 2.3.3 Reasons 53 CHAPTER 3: SOLUTIONS TO IMPROVE THE IMPLEMENTATION OF CORPORATE INCOME TAX OBLIGATIONS AT TOKYO CONSULTING CO., LTD 55 3.1 Future business development trends 55 v 3.2 Some solutions 56 3.2.1 Specific solutions 56 3.2.2 Recommendations to complete the implementation of taxes at the company 57 CONCLUSION 59 REFERENCE 60 vi LIST OF FIGURES No Figures Name CIT Corporate income tax PIT Personal income tax VAT Value-added tax vii LIST OF TABLES Figure 2.1: Diagram of the company's management apparatus 36 Figure 2.2: Diagram of the company's accounting apparatus 37 Table 2.1: The situation of declaring the basis for calculation of CIT in 2019 40 Table 2.2: The situation of the CIT calculation in 2020 41 Table 2.3: Results of temporary CIT payment 44 Table 2.4: CIT calculation results of Tokyo Consulting Co., Ltd 46 Table 2.5: Results of CIT settlement 48 Table 2.6: Invoice usage situation 50 INTRODUCTION Background Taxation is a major and important source of revenue for the State budget, through this revenue the Government spends on public works and implementing social security To meet the needs of the country's integration development, the tax policy system has been gradually reformed and completed Since the implementation of the policy of innovation on, economic integration The State always creates legal corridors to promote production and business for different economic sectors in order to stabilize and develop people's lives and increase revenues for the state budget Therefore, paying taxes according to law is the right and obligation of individuals and organizations In Vietnam, most businesses pay three main taxes: VAT, CIT, and PIT After completing the procedures for registration of the establishment of the company, the Department of Planning and Investment granted the business license and tax code, the enterprise must conduct the initial tax declaration dossier with the tax authority and pay the above taxes CIT is a direct tax, levied on the taxable income of the enterprise including income from the production and trading of goods, services, and other income as prescribed by law However, tax is a direct revenue that is not refundable, so the self-awareness of the way the enterprise paying CIT is very difficult leading to a backlog, of tax debt Moreover, in recent years, the economic situation has been difficult due to the instability of the political and economic situation in the world along with difficulties from previous years that have not been thoroughly resolved such as the pressure on the economy's ability to absorb capital is not high; the pressure of bad debts is still heavy; domestic goods consumed slow; the management capacity and competitiveness of the enterprise are low; therefore, businesses and business individuals also face many difficulties in business and financial activities, unable to fulfill their tax obligations, also leading to outstanding tax debts According to statistics from the Ministry of Planning and Investment of Vietnam, in 2020, the whole country has 134.9 thousand newly registered enterprises with a total registered capital of more than 2,235.6 trillion VND and a total number of registered employees of 1,043 thousand employees, a decrease of 2.3% of enterprises, an increase of 29.2% in registered capital , and a decrease of 16.9% in the number of employees over the previous year The average registered capital of a newly established enterprise in 2020 reached VND 16.6 billion, up 32.3% over the previous year If including 3,341.9 trillion dongs of additionally registered capital of 39.5 thousand enterprises registered to increase capital, the total additional registered capital in the economy this year is nearly 5,577.6 trillion dongs, an increase of 39.3% over the previous year In addition, there were 44.1 thousand enterprises returning to operation, an increase of 11.9% compared to 2019, bringing the total number of newly-established enterprises and enterprises returning to operation in 2020 to 179 thousand businesses, up 0.8% over the previous year On average, every month there are 14.9 thousand businesses newly established and returned to operation This shows that the dynamic business environment that Vietnam owns along with the open mechanism for business registration has created great conditions for small and medium enterprises to go into production and business Accordingly, in order to serve the study of the status of CIT obligations of small and medium-sized enterprises, during my internship at the company, I chose the topic: "Implementation of corporate income tax obligations of Tokyo Consulting Co., Ltd." as my graduation thesis 49 According to the new provisions of the Law on Tax Administration 2019, enterprises will have to temporarily pay 75% of the estimated CIT tax for the whole year at the latest on the last day of the third quarter declaration period, however, according to the CIT finalization declaration issued with Circular 80/2021, the difference between the amount of provisional tax paid and the amount of tax payable for the whole year is no longer 2.2.5 Accounting and use of voucher invoices * Accounting work: + The company applies the Vietnam Corporate Accounting Regime issued under Circular No 200/2014/TT-BTC dated December 22, 2014, issued by the Ministry of Finance and Circular No 53/2016/TT-BTC dated March 21, 2016 amending and supplementing a number of articles of Circular No 200/2014/TT-BTC dated December 22, 2014 + The company uses the form of accounting: A general diary - Invoice documents: The company uses self-printed invoices * Order of procedures for creating print invoices: Step 1: Check if the business is the object of self-printed invoices Step 2: Make a dossier of self-printed invoices and submit them to tax authorities Step 3: Tax authorities come down to check the location and facilities of the organization printing the invoice itself Step 4: The unit conducts the printing of invoices Step 5: Make an invoice release notice 50 Table 2.6: Invoice usage situation Quota Number of 2018 2019 2020 562 420 385 0.7% 0% 0.52% invoices used Number of wrong invoices, lost Wrong invoice rate Source: BC26/AC Bill Usage Report In the period 2018-2020, the number of invoices used by enterprises in 2018 was 562 invoices, of which wrongly written invoices accounted for 0.7%; in 2019 there were 420 invoices, no misrepresented invoices; In 2020, there were 385 invoices of which the number of wrongly written invoices was accounting for 0.52% Thus in this period the rate of writing wrong invoices is very little and decreases The reason the wrong invoice was removed was mainly that the employee misrepresented the quantity, and the unit price led to the wrong amount of payment However, wrong invoices are detected before being delivered to customers or delivered to customers but detected right in the period so they are adjusted immediately to be able to modify and recalculate immediately 2.3 Achievements and limitations of enterprises in the implementation of CIT obligations 2.3.1 Results achieved It can be said that since its establishment, Tokyo Consulting Co., Ltd 51 has taken solid and favorable steps to achieve high efficiency as shown in the achievements that the company contributes to society and to the state budget Currently, contributing to the state budget of the company is increasing, the Company is considered as one of the enterprises doing business effectively and always complying with the policies and regulations of the State Throughout its operations, Tokyo Consulting Co., Ltd has achieved some remarkable results in the implementation of its tax obligations as follows: - The company's use of "Declaration Support" (HTKK software), a computer program developed by the General Department of Taxation and provided free of charge to enterprises has minimized confusion in calculations, and accounting records, ensuring accuracy, high honesty, saving human resources and costs, facilitate the inspection and monitoring of accounting When using HTKK software, taxpayers can make declarations by filling in the information according to the form, in addition, the software also provides contents to guide the calculation of taxes, and tax declaration with each tax for businesses to declare accurately and quickly - In order to facilitate the rapid, accurate and timely implementation of tax meaning, just like other companies Tokyo Consulting Co., Ltd is currently carrying out tax administrative procedures under the Law on Tax Administration by electronic tax method Accordingly, Tokyo Consulting Co., Ltd will carry out tax registration, tax declaration, and tax refund electronically without having to go directly to the Tax Office, this helps to minimize costs as well as risks in the process of working, saving time as well as travel costs of the company - The documents for the initial accounting are in accordance with the economic and legal requirements of the arising economic operation, in accordance with the form prescribed by the Ministry of Finance 52 - Because the company always focuses on and well implements the tax law, in the past years, the situation of declaring, submitting tax declarations, and paying tax of the company is always ensured to comply with the regulations on how to proceed as well as the prescribed time limit, there is no phenomenon of violation of tax law, not to be reminded or reprimanded for violations related to tax laws Therefore, since the establishment of Tokyo Consulting Co., Ltd has never been subject to tax inspection About the accounting team in the company: The company has a team of enthusiastic, dedicated accountants, always trying to improve knowledge and are quite dynamic with the job Most accountants have solid expertise and adapt quickly to the job In the process of working, always boldly propose opinions, and give opinions related to the completion of the organization of the accounting apparatus at the company Tokyo Consulting Co., Ltd will try to better promote its strengths in the implementation of tax obligations, as well as take new and more appropriate measures to help the implementation of the company's own tax obligations be easier, more accurate, and more effective 2.3.2 Limitations Through the process of practicing and learning about Tokyo Consulting Co., Ltd., having access to accounting in general and the implementation of tax obligations of the company in particular, I realized that besides my advantages, Tokyo Consulting Co., Ltd still has a few limitations in the performance of tax obligations that need to be overcome as follows: - The declaration of CIT calculation bases still has a state of error: failure to present payment documents, and false declaration of deductible expenses - There are still some expenses of the company that not have full invoices, and documents leading to not being included in reasonable expenses when calculating the CIT of the company 53 - The departments and working departments are still separated from each other, there is no rhythmic coordination in the work, leading to many difficulties in the work Specifically, the sales department and the tax accounting department have not coordinated in the process of issuing invoices, the administrative department has not coordinated with the tax accounting department in checking the reasonableness, validity, and legality of input invoices when the exporting supplier returns the invoice - The operating accounting apparatus has not achieved the best results, namely tax accounting Due to the relatively large amount of tax work, tax accountants not have much experience, so it is easy to make mistakes in the process of calculating as well as determining the amount of tax payable Therefore, the annual tax amount the company pays to the SBV is high, but the company also miscalculated expenses that are not deducted as deductible expenses leading to tax arrears and penalties for late payment of CIT in 2018 and 2019 - The company does not calculate the results of the business quarterly, so it makes the accounting work of the fiscal year more severe, and the risk of errors occurs greatly The inability to determine costs in the quarter makes the issue of CIT provisionally calculated in the quarter not close to reality 2.3.3 Reasons The outstanding limitations at Tokyo Consulting Co., Ltd mainly occur due to the following main reasons: - The work of arranging and storing documents and invoices is still has many shortcomings, not really scientific For small expenses in cash or by credit card that not always take the invoice but most of the accumulated in one invoice leading to the accounting of reasonable expenses to calculate CIT is difficult, the quarterly tax declaration still appears many invoices of the previous quarter 54 - When making documents amending tax laws, tax administration officials have not promptly notified enterprises so that accountants have time to learn, research, and ask timely questions - The tax legal system regularly updates and amends its charters to suit the market economy and serve tax administration; however, accountants often follow the path and not update in the time leading to wrongdoing - The number of transactions takes place a lot but the staff of the accounting department is not corresponding, especially the tax accountant is very limited, inexperienced - The fine for late payment of CIT stemmed from the cause of false declaration, insufficient payment of the amount of CIT temporarily paid quarterly, and the temporary calculation of precious CIT of the enterprise is not good - The company does not have proper procedures and principles for storing documents and needing kidneys, perfect In general, the organization of accounting work at the company is relatively scientific and reasonable Due to objective as well as subjective reasons, the implementation of CIT obligations still exists and is limited Although these restrictions are not large, not seriously affect, if overcome, they will contribute to a more complete the performance of tax obligations, improving business efficiency for the company 55 CHAPTER SOLUTIONS TO IMPROVE THE IMPLEMENTATION OF CORPORATE INCOME TAX OBLIGATIONS AT TOKYO CONSULTING CO., LTD 3.1 Future business development trends - The company strives to help customers come up with new ways to create, manage and evaluate the value in a rapidly changing global economy - The company will aim to diversify and develop uniform types of services Currently, the company's key activities are in business and forwarding services, but in the coming time, the company will step up and focus more on tax consulting services, which is also a type of service that is being developed strongly in many other large joint-stock companies - Constantly improve the legitimate interests of members and employees in the company to create the highest motivation and working spirit for the whole company, while improving the quality of forwarding and business services, import and export commensurate with regional and international qualifications - Contributing to the clean and healthy the national financial system: this is one of the more macro goals of the company, the company with its provided services will help the financial statements of the enterprise become clean, and will be a powerful tool for the State to manage and develop the economy sustainably Based on the results of implementation, the state makes appropriate policies - Continue to build and develop the company, turning the company into a strong enterprise in the field of accounting and tax consulting services Tokyo Consulting strictly complies with and complies with its tax obligations to make the trust of customer companies, thereby helping the company attract 56 and increase the number of customers continuously in recent years to create a stable and sustainable development of the company Maintaining and developing services and products is considered as the strength of the business, thereby creating potential development steps to serve more customers - Continue to invest in expanding the size of customers in different fields, previously the number of customers was mainly foreign-invested companies, but now Tokyo Consulting company is trying to expand its customer funnel to Vietnamese companies and other foreign-invested companies and the target audience is companies Small and medium-sized companies that not have specialized accounting departments Build and develop a professional brand, accelerate the progress of expanding the business network, and improve the efficiency of the company's operations 3.2 Some solutions 3.2.1 Specific solutions * Register: The process of implementing tax accounting and tax registration must absolutely comply with Vietnamese accounting standards and relevant regulations, and flexibly apply the accounting and auditing process that the company has built It is not for personal gain that it is contrary to the law * Declaration: Must maintain independence, integrity, and security in accounting and auditing, always have a high responsibility in the process of performing the work It is recommended to base on legal documents to carry out the work without just following other unsubstantiated advice * Tax payment: Strengthen tax inspection and survey and regular tax payment in the company Periodically, the Company should maintain the verification between the system of book documents and accounting software to ensure the correct entry of accounting data, avoiding the case of virtual invoicing, and invalid invoices still entered into the declaration system 57 * Finalization: - Improve the level of the tax accounting department of the enterprise It is necessary to have a solid knowledge of accounting, auditing in general, and taxes as well as tax policies and regulations of the State in particular, as this is the basis for tax accountants to be able to account for books and fulfill tax obligations for the company From there, it is possible to complete the work in the most accurate and effective way - It is necessary to regularly update and improve knowledge about new regulatory documents in general and knowledge of accounting, auditing, and taxation in particular During the time of economic integration, the State always updates and revises policies to suit the economic context Therefore, the tax accounting team must also promptly update the changes and additions in tax policies to comply with tax obligations in accordance with the State's regulations - Improve facilities to serve compliance with tax obligations The company should focus on investing, and replacing accounting room equipment such as computers, and printers, to ensure the quality of the work of accountants, especially tax accountants must use online tax declaration software regularly 3.2.2 Recommendations to complete the implementation of taxes at the company - The economy is developing, and the times of integration and always changing daily so the State has constantly revised and issued new policies to suit the context of the economy However, the taxes issued by the State are still not suitable and need to be amended, specifically: + Regarding the time limit for tax payment: It is recommended to change a few tax payment deadlines because after submitting tax declaration dossiers, taxpayers must wait for the notification of acceptance of tax declaration dossiers 58 from tax authorities to make payment of tax amounts, so the time limit for tax payment should not coincide with the time limit for submitting tax declaration dossiers for taxpayers have more time to prepare, avoid unwanted late submissions + The content of the provisions of the Tax Law is still complicated, many contents between the documents are contradictory and overlapping and there are some contents that are not clearly regulated + The situation of amending and supplementing tax policies takes place continuously and many times, making taxpayers and tax officials unable to update in time, leading to compliance with tax obligations and the handling of the work of tax officials with many shortcomings Therefore, the State needs to consider as carefully and extensively as possible before making amended documents and decisions to avoid having to make repeated revisions leading to costly state costs or issuing consolidated documents on the revised terms - Have a keen mind, logical thinking, agility, dynamic, and know how to handle problems arising quickly and effectively while ensuring compliance with the provisions of tax law in particular and the legal provisions of the State of Vietnam in general The state's tax policy greatly governs the tax obligations of enterprises Therefore, the State needs to carefully consider and have timely revised documents to suit and ensure benefits for businesses in particular and all taxpayers in general Avoiding constant revisions makes it difficult to apply policies as well as the implementation of tax obligations of taxpayers - The State should review the documents guiding the implementation of tax laws, guide and explain unclear points from taxable subjects, taxable subjects, the application of tax rates, declaration, payment of taxes, tax refund, tax exemption, use of voucher invoices 59 CONCLUSION After the internship period at Tokyo Consulting Co., Ltd., although not fully exposed to the operations because the company has only officially conducted transactions, initially I was exposed, learn the organizational structure, and the operating mechanism of the company Over the time of research, on the basis of the knowledge and methodology obtained at the school combined with the actual situation in the company, my thesis course has codified the general reasoning of the implementation of CIT At the same time, contributing to clarifying some issues in the tax law contributes to further improving the implementation of taxes at the company The topic has come up with a number of solutions to improve the responsibility to fulfill tax obligations and address the outstanding limitations in the company as well as in the current tax management system Due to the time conditions, the document, the topic does not go into specific research into the procedures implemented from the design, initial assignment, or planning stage of the company and but the acceptance stage affects the tax and does not analyze in detail the application of tax law in the Company but only exposes the situation according to the as documents obtained in books and accounting documents I would like to sincerely thank Dr Ly Phuong Duyen for the enthusiasm and you for helping me complete this essay Hanoi, May 19, 2022 Student Pham Thi Minh Chau 60 REFERENCE Assoc Prof PhD Le Xuan Truong (2010), Tax Management Textbook of Academy of Finance Assoc Prof PhD Nguyen Thi Lien (2011), “Income Tax Curriculum”, Finance Publisher, Academy of Finance Assoc Prof PhD Ly Phuong Duyen (2013), “Taxation a university textbook”, Finance Publisher, Academy of Finance Other tax documents Websites: www.tapchithue.com www.gdt.gov.vn www.mof.gov.vn NHẬN XÉT CỦA NGƯỜI HƯỚNG DẪN KHOA HỌC Họ tên người hướng dẫn khoa học: PGS.TS Lý Phương Duyên Nhận xét trình thực tập tốt nghiệp sinh viên: Phạm Thị Minh Châu Khóa: CQ56 Lớp:02.02 Đề tài: “ Tình hình thực nghĩa vụ thuế thu nhập doanh nghiệp Công ty TNHH Tokyo Consulting” Nội dung nhận xét: Về tinh thần thái độ thực tập sinh viên Về chất lượng nội dung luận văn : - Sự phù hợp tên nội dung đề tài với chuyên ngành - Độ tin cậy tính đại phương pháp nghiên cứu Điểm: Bằng số Bằng chữ Người nhận xét (Ký ghi rõ họ tên) NHẬN XÉT CỦA NGƯỜI PHẢN BIỆN Họ tên người phản biện: Nhận xét trình thực tập sinh viên: Phạm Thị Minh Châu Khóa: CQ56 Lớp: 02.02 Đề tài: “ Tình hình thực nghĩa vụ thuế thu nhập doanh nghiệp Công ty TNHH Tokyo Consulting” Nội dung nhận xét: - Sự phù hợp tên nội dung đề tài với chuyên ngành - Đối tượng mục đích nghiên cứu - Độ tin cậy tính đại phương pháp nghiên cứu - Nội dung khoa học Điểm: Bằng số Bằng chữ Người nhận xét (Ký ghi rõ họ tên) ... implementation of Corporate Income Tax Obligations at Tokyo Consulting Co. , Ltd Chapter 3: Solutions to improve the implementation of Corporate Income Tax Obligations at Tokyo Consulting Co. ,. .. INCOME TAX OBLIGATIONS AT TOKYO CONSULTING CO. , LTD 2.1 Overview of Tokyo Consulting Co. , Ltd + Company name: Tokyo Consulting Co. , Ltd + Legal representative of the company: + Chairman of the Company:... subject of the study is the situation of the implementation of CIT obligations at Tokyo Consulting Co. , Ltd - Scope of content: Performance of CIT obligations to Tokyo Consulting Co. , Ltd - Scope of