Mazars Vietnam Newsletter - Issue March 2019

We would like to bring you tax and legal updates in March 2019 with the following highlights influencing the corporate operation and payroll amendments:

Operational update

Decree No. 13/2019 / ND-CP on science and technology enterprises

On February 1st, 2019, the Government issued Decree No. 13/2019/ND-CP ("Decree 13") which is effective from March 20th, 2019 and replaces Decree No. 80/2007/ND-CP on Science and Technology Enterprises ("STEs"). This Decree provides detailed instructions on the procedures for obtaining STE certificates. This is also the basis for granting investment incentives, support and other incentives for STEs. Especially, the Corporate Income Tax incentive of 4 year tax exemption and 50% reduction of tax payable in the subsequence 9 years will only be granted for the enterprise that has revenue generating from scientific and technological results accounts for at least of 30% of total revenue.

Official Letter 784/TXNK-CST on the exemption of the Import Duty for imported raw material used for export production

On January 16th, 2019, the General Customs Department issued the Official Letter 784/TXNK-CST on the exemption of the Import Duty for imported raw material used for export production. Accordingly, after the production process, if the finished products are subsequently exported to bonded warehouses, the imported raw material shall still be eligible for exemption of Import Duty.

Official Letter 6351/CT-TTHT on the deductibility of expenses related to foreign employees work in Vietnam without work permits

On February 15th, 2019, Hanoi Tax Department issued Official Letter 6351/CT-TTHT on the deductibility of expenses related to foreign employees work in Vietnam without work permits. Accordingly, if the company employed foreign employees to work in Vietnam without work permits, the expenses and Value Added Tax ("VAT”) related to such employees shall be ineligible for being CIT deductible expenses and creditable input VAT.

Official Letter 68/TCT-CS on disallowance of issuing e-invoice attached with the list of sold goods and services in paper

On January 5th, 2019, the General Department of Taxation issued Official Letter 68/TCT-CS on e-invoices. Accordingly, e-invoice is a convergence of digital information of sales of goods and provisions of services which is not limited by number of lines per invoice, and hence e-invoice is not allowed to be issued with attached list of sold goods and services.

Official Letter 226/GSQL-GQ2 on the customs procedures upon liquidation of imported tools and spare parts of export processing enterprises ("EPEs")

According to Official Letter 226/GSQL-GQ2 issued by General Customs Department on January 22nd, 2019, the imported tools and spare parts which are ineligible for being considered as fixed assets or consumable materials for the EPEs’ operation, these goods shall be classified as imported under code A12 – import for sale or production. The EPEs must record and monitor these goods in their accounting book and prepare the finalization reports on the use of goods according as per the Customs regulations. In case of liquidation, the following forms can be applied, including export, sale, gift, donation, destruction in Vietnam.

PIT

Official Letter 85039/CT-TTHT on determining the assessment year of expatriate

On December 27th, 2018, Hanoi Tax Department issued Official Letter 85039/CT-TTHT on determining the assessment year of expatriate. Accordingly, an expatriate came to Vietnam for one week in February 2017 for business trip purpose, subsequently returned to Vietnam for working under a labour contract and stayed in Vietnam consecutively to 2018, such individual’s tax assessment year shall be from his arrival date in Vietnam for business purpose in February 2017.

Official Letter 5361/TCT-DNNCN on PIT of the termination allowances

On December 27th, 2018, the General Department of Taxation issued Official Letter 5361/TCT-DNNCN on PIT of the termination allowances. Accordingly, expatriate employee who is assigned on secondment to work in Vietnam whilst their employment contract is still maintained with the foreign party, such employment relationship between the employee and foreign company shall not be subject to the Vietnamese Labour Code. The termination allowances paid by the foreign company shall not be considered as severance allowance under the Vietnamese Labour Code.

In case the termination allowance is the severance allowance in accordance with the foreign Labour Code and does not excess the regulated cap amount, such termination allowance shall be exempted from PIT.

Our support

We do trust the above points are notable and sufficient, but should you have any question or need a deeper discussion on this issue, please do not hesitate to contact us.

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