In the context of tax policy reform becoming an urgent requirement to suit the reality of the digital economy and the trend of integration, the Draft Law on Tax Administration (amended) 2025 ("Draft") is expected to create a more appropriate transparent legal framework. However, in addition to the positive new points, the Draft also reveals many unreasonable regulations, potentially risky for taxpayers, especially enterprises and business households, who are directly affected by the current tax policies and laws.
Abolition of flat tax but no clear roadmap
One of the notable changes of the Draft is the abolition of the flat tax mechanism for business households. From a policy perspective, this is a step oriented towards transparency in tax administration activities and ensuring fairness among groups of taxpayers. However, the Draft has not determined a specific transformation roadmap, has not clearly stated measures to provide technical support, accounting and declaration to business households in the first stage of application. The change of the tax mechanism from presumptive tax to self-declaration and self-payment is a big step but there is no specific guidance on the declaration method or management method for business households that are not capable of implementing this new mechanism.
At that time, instead of creating an incentive for compliance, the new regulation may increase pressure on business households that are prone to making mistakes in the tax declaration and payment process, leading to tax debts or failing to meet new management requirements. Moreover, if the policy is implemented without a clear transition period and a corresponding support mechanism for administrative procedures, the goal of improving transparency will most likely be overshadowed by the risk of declining the number of business households - a large proportion of the private economy today.
Expanding the scope of taxpayers - is it reasonable?
According to Clause 1, Article 2 of the Draft, taxpayers are determined to include foreign organizations and individuals doing business on e-commerce and digital economy platforms. This regulation represents a remarkable effort by the drafting agency in covering new business models and combating tax loss in the context of the increasing popularity of cross-border trade activities. However, this regulation also raises big questions about the feasibility of being applied in practice. The tax administration of foreign organizations and individuals that are not present in Vietnam is a complex issue, requiring a coordination mechanism between tax authorities, payment intermediaries and service providers. Without technical solutions and clear enforcement mechanisms, the risk of new regulations not being implemented in practice is very high.
In the long run, a regulation that is difficult to apply will reduce management efficiency and have a negative impact on the confidence of domestic taxpayers, especially when they have to strictly comply with current regulations while foreign actors may not be commensurately bound.
Taxpayer classification: unclear criteria
Article 3 of the Draft addresses the classification of taxpayers according to risk management criteria and compliance level. This is an orientation that approaches the risk management model that many countries have applied, helping tax authorities focus resources on high-risk groups and support better compliance with tax laws. However, the Draft does not specify the grouping criteria in this law, but assigns the Ministry of Finance to provide detailed guidance, which is expected to be specified in the upcoming guiding documents. This approach poses risks to the transparency and independent verifiability of tax authorities for groups of taxpayers. If the results of the classification do not reflect the current situation, the enterprise may be classified as a high-risk group, thereby increasing the pressure of being inspected, limited in priority in carrying out administrative procedures or affecting the reputation of tax credit.
In addition, the quality of data for grouping is still a big question mark. In the condition that information infrastructure is still technically limited, risk scoring based on inconsistent data can lead to misclassification, negatively affecting businesses. Therefore, in addition to completing specific criteria, the Draft needs to establish a feedback mechanism and the right to review the grouping results to ensure transparency, helping businesses have the opportunity to adjust compliance behaviors instead of being unilaterally imposed.
Promote digital transformation and the modernization of tax collection management through the application of advanced, interconnected, and integrated information technology systems. Source: Government News
Disclosure of taxpayer information: lack of transparency standards
Point a, Clause 3, Article 7 of the Draft stipulates that tax authorities are allowed to disclose information about taxpayers who "evade tax, delay in paying tax". This regulation comes from the goal of strengthening tax discipline and transparency of compliance behavior. However, the problem lies in the fact that the Draft does not clearly define what is "tax evasion" or "delay in paying tax", as well as there are no specific criteria on conditions, scope and authority to disclose information. In particular, the Draft also does not mention the mechanism for complaints or requests for reconsideration in case the enterprise is falsely disclosed or disagrees with the conclusion of the tax authority, leading to the disclosure of violation information.
Without these standards, disclosure can take place without grounds, even before the violation is determined by an official conclusion, seriously damaging the reputation, business opportunities and market confidence of the enterprise. In the context that tax data is being digitized, interconnected and easily spread, the risk from a public decision that lacks a basis will be greater and almost impossible to overcome.
In principle, transparency does not mean arbitrary disclosure. To ensure fairness, the Draft needs to stipulate the order of notification, the right to feedback and the time limit for review before publication, and limit the scope of disclosure only to cases where there have been examination and inspection conclusions or legally effective judgments. Only then will the disclosure mechanism truly become a tool to enhance transparency, rather than creating additional risks for the business environment.
Changing the regulations on additional declaration of dossiers - is it a step backwards in the tax policy for businesses?
Another notable change of the Draft is the shortening of the time limit for additional declaration of tax dossiers from 10 years to 5 years specified in Clause 5, Article 12. The goal of this regulation is to be consistent with the statute of limitations for handling administrative violations and to avoid enterprises taking advantage of a long period of time to adjust tax obligations in their favor.
However, problems arise when the new regulations are applied right at the time the new tax administration law takes effect without a corresponding transition period. In fact, many enterprises with erroneous records from 6-10 years ago, which were allowed to be adjusted according to current regulations, are no longer subject to additional declaration but can still be sanctioned if the tax authority detects violations. Meanwhile, the procedure for adjusting tax records is not always convenient, may be interrupted due to technical errors, data problems or delays on the part of the tax authorities. Not only that, the Draft also removes all detailed provisions on cases that are allowed to declare additional dossiers (such as false declarations that increase, decrease or not change tax obligations) which were clearly stipulated in the Law on Tax Administration 2019. The lack of this specific guidance makes it difficult for businesses to determine the right to re-declare the dossier.
To avoid the risk of businesses "not being able to catch up", it is necessary to have a transition mechanism or non-retrospective regulations for old documents, allowing businesses to have a reasonable time to adapt to new regulations. In addition, it is recommended to consider restoring the right to make additional declarations in some special cases, such as when there is an inspection conclusion or force majeure factors proving that the old dossier is falsified due to objective factors that are not caused by the enterprise itself. It can be seen that a modern tax system not only requires compliance of taxpayers but also ensures transparency, self-regulation and their right to protection. If the new regulation lacks these elements, the goal of transparency may be overshadowed by unnecessary legal risks for businesses.
Overall, the Draft has shown the comprehensive reform efforts of the legislature towards a modern, transparent tax administration system that is suitable for the development of the digital economy. However, in order for the new policies to really come to life, the points that are still unclear and not really suitable in the Draft need to be reviewed more thoroughly, especially with regulations that can directly impact the rights and obligations of taxpayers. These are all landmark changes, but they need to be carefully considered in terms of reasonableness and applicability in practice.
Lawyer Cao Nguyen Bao Lien
HM&P Law Firm
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