Understanding Tax Codes: Structure, Usage, and Legal Basis

Tax codes are a fundamental yet highly significant principle that individuals engaged in business accounting must be well-versed in. These codes play a crucial role in facilitating the payment of taxes by businesses and taxpayers to the State, while also enabling them to access relevant information when required. Hence, it is imperative to understand the essence of tax codes and the regulations governing them. In this article, we will delve into the intricacies of tax codes with NT INTERNATIONAL LAW FIRM.

What is a Tax Code?

A tax code, also known as a Tax Identification Number (MST), is a unique identifier assigned by the tax authorities to individuals and businesses. This code serves as the primary identifier for tax purposes and facilitates various functions, including:

• Tax declarations and payments: Businesses and individuals use tax codes to declare their income and pay taxes to the State budget.
• Financial transactions: Tax codes are required for opening bank accounts, engaging in financial transactions, and obtaining certain licenses.
• Administrative procedures: Tax codes are used for various administrative procedures, such as registering for tax purposes and obtaining business licenses.
• Information lookup: Tax codes allow individuals and businesses to access their tax information and verify the tax status of others.

What is a Tax Code?

Structure of Tax Codes

Tax codes consist of 13 digits structured as follows:

• N1N2: Province division number, based on the province division code list.
• N3N4N5N6N7N8N9: Sequential identification numbers from 0000001 to 9999999.
• N10: Check digit.
• N11N12N13: Dependent unit code for branches and representative offices (001 to 999).

Tax Code Usage

Businesses:

10-digit tax code:

• Mandatory on invoices, vouchers, and business documents: This ensures proper identification and tracking of business transactions for tax purposes.
• Used for tax declarations: Businesses submit income tax declarations using their 10-digit tax code, providing details of their income and expenses.
• Tax payments and refunds: The 10-digit code facilitates the smooth payment of taxes owed to the State budget and the processing of any tax refunds due to the business.
• Financial transactions: Banks and other financial institutions require the 10-digit code for identification and verification purposes when businesses open accounts or conduct financial transactions.
• Administrative procedures: Obtaining various licenses and permits, such as business licenses, often requires businesses to provide their 10-digit tax code.

13-digit tax code:

• Issued to branches and representative offices: This code distinguishes these units from the main business entity and facilitates the management of their tax obligations.
• Used for tax declarations, payments, and refunds: Similar to the 10-digit code, the 13-digit code allows branches and representative offices to fulfill their tax obligations independently.
• Financial transactions: Branches and representative offices may require their 13-digit tax code for opening bank accounts and engaging in financial activities within their scope of operation.

Tax Code Usage for Businesses

Individuals

Personal tax code (MSTCN):

• Essential for paying personal income tax: Individuals declare their income and pay personal income tax using their personal tax code.
• Enables family deductions: Individuals with an MSTCN can claim deductions for dependents, reducing their taxable income and tax liability.
• Benefits from tax exemptions: Individuals with an MSTCN may qualify for various tax exemptions, such as those offered for donations or specific income sources.
• Required for tax finalization: Submitting final tax declarations and claiming tax refunds require individuals to have a registered MSTCN.
• Access to online tax services: The MSTCN allows individuals to access convenient online services for checking their tax status, viewing tax history, and performing other tax-related tasks through the General Department of Taxation’s website.

Tax Code Usage for Individuals

Legal Basis:

Several legal instruments govern the issuance and use of tax codes in Vietnam:

• Circular 95/2016/TT-BTC: Provides detailed regulations on tax codes, including their structure, issuance, and usage.
• Decree No. 78/2015/ND-CP: Stipulates that the enterprise code and the tax code are the same identifier.
• Enterprise Law 2020: Defines the use of tax codes for businesses.
• Law on Tax Administration: Establishes the legal framework for tax administration, including the issuance and use of tax codes.

NT International Law is Here to Help:

NT International Law Firm has addressed the question of what tax codes are and their significance. If you have any further questions or concerns regarding corporate and tax law, please contact our law firm immediately for expert legal advice.

If you require any legal assistance, please feel free to reach out to us via phone at 090 252 4567 or through email: info@ntpartnerlawfirm.com. At NT INTERNATIONAL LAW FIRM, our team is committed to offering you prompt and personalized advice.

You also might be interested in:

• The 2015 Civil Code in English
• The 2020 Law On Enterprises in English