Learn about the latest financial year and the regulations related to the financial year in procurement
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Learn about the latest financial year and the regulations related to the financial year in procurement
Nhấn VÀO ĐÂY để chuyển bài viết sang bản tin tiếng Việt
What is a financial year?
The financial year is understood as the period of accounting and reporting for a business. In Vietnam, the financial year is referred to as the budget year. It is generally based on the Gregorian calendar and typically starts on January 1st and ends on December 31st each year. Alternatively, it may differ from the Gregorian calendar as permitted by the Ministry of Finance for business application.
In cases where a business's financial year deviates from the norm, it must be registered with the tax authority. For businesses participating in procurement activities as contractors, they also need to declare the financial year in the General Information section of the Contractor/Investor Profile (details as shown in the screenshot below).
How is the latest financial year determined in procurement?
In tender invitation documents, there are always requirements related to finances, including determining the latest financial year. So how is the latest financial year determined? For contractors who declare and register on the national procurement system with a financial year from January 1st to December 31st, there are two scenarios and the determination is as follows:
- If the tender opening is before December 31st, the latest financial year will be the year prior to that. For example, if the tender opens on November 15th, 2022, the latest financial year will be 2021.
- If the tender opening is after December 31st, the latest financial year will be the year prior to the current year. For example, if the tender opens on February 27th, 2023, the latest financial year will be 2022.
What documents do contractors need to provide for the latest financial year?
In almost all tender invitation documents, there are two requirements related to the latest financial year:
- Evidence of fulfilling tax obligations for the latest financial year in comparison to the bidding closing date.
- Average annual revenue for a specified number of years (as required) up to the latest financial year.
Recently, we have noticed that many tender invitation documents require contractors to provide a "Confirmation from the tax authority regarding the fulfillment of tax obligations or confirmation from the tax authority regarding the absence of tax arrears". We believe that this is a mechanistic approach from the inviting party and does not comply with the regulations and guidelines set forth by the Ministry of Planning and Investment for tender invitation documents. Specifically, determining tax obligations or submission of financial reports only requires one of the following documents:
- Tax settlement inspection minutes
- Self-declared tax return (for value-added tax and corporate income tax) with confirmation from the tax authority on the submission date
- Evidence of electronic tax settlement declaration by the contractor
- Confirmation document from the tax authority (confirming annual submissions) regarding the fulfillment of tax obligations
- Audit report (if available)
In regards to tax obligations, the purpose here is to demonstrate that the contractor has a healthy financial situation and does not have any tax arrears until the end of the latest financial year. However, the requirement for contractors to obtain confirmation from the tax authority is a separate issue. As we know, tax authorities make such affirmations in relation to tax inspection and verification, which does not happen regularly. In some cases, due to objective reasons, contractors may unexpectedly have a small "outstanding" tax amount. If they request the tax authorities to confirm this, the contractor will be labeled as having "tax arrears" and will be evaluated as inadequate in terms of experience and capacity.
This article analyzes the determination of the latest financial year and expresses the viewpoint that there is no need to obtain confirmation from the tax authority regarding the fulfillment of tax obligations. We hope this article is useful for contractors who are concerned about this issue. DauThau.info is always there to provide helpful information to interested contractors. If you need assistance, please contact us.
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