We would like to bring you tax and legal updates for July 2021 with the following highlights influencing the corporate operations and payroll activities.
1. Official letter 1111/TCT-DNL providing guidance on Value Added Tax (“VAT”) and Corporate Income Tax (“CIT”) of enterprise’ expenses related to machine and medical equipment for hire
On 15 April 2021, GDT issued Official letter 1111/TCT-DNL providing guidance on VAT and CIT of enterprise’s expenses related to machine and medical equipment for hire with you any charge. . In addition to the tax regulation, the taxpayers are binding to comply with the other regulations in Vietnam as well. In this case, the business activities of trading reagents and diagnosing machines hiring out to state medical facilities have not been regulated yet then the relevant input VAT is not creditable and relevant expenses is non-deductible expenses for CIT purpose.
2. Official letter 1713/TCT-KK providing guidance on VAT refund dossier for investment project (“IP”) in a different province/city
On 26 May 2021, GDT issued Official letter 1713/TCT-KK responding to Yen Bai Tax Department, guiding VAT refund dossier for IP established in a different province/city. Specifically, in case an enterprise has an IP in a province/city being different from where its headquarters is located and such IP is in the stage of investment but has not been put into operation, has not yet registered tax code, a separate tax declaration dossier for this IP shall be prepared as follows:
- If enterprise applies for tax refund for the Quarter 04/2020 and the period before, , the refund request will still be processed at according to the provisions of old regulation as per the Circular 156/2013/TT-BTC, i.e. the tax refund can be applied at headquarters.
- From the tax period of January 2021 or Quarter 01/2021 onwards, the taxpayer is obligated to declare, pay tax and apply for tax refund according to provision of Decree 126/2020/ND-CP and its guiding documents, i.e. at the province where the IP located.
3. Official letter 10585/CTBDU-TTHT providing guidance on CIT treatment on annual leave encashment of employee
According to Official letter 10585/CTBDU-TTHT dated 22 June 2021 issued by Binh Duong Tax Department, annual leave encashment for employees not taking full leaves of the year if satisfied all conditions about deductible expense under regulations about CIT and regulations of the Labour Code shall be included into deductible expense when calculating CIT.
4. Official letter 22087/CTHN-TTHT guiding responsibility of providing bank account information to tax authority
According to Circular 22087/CTHN-TTHT dated 21 June 2021 issued by Hanoi Tax Department, in case an enterprise applies for tax registration concurrently with enterprise and business registration, when there is a change in tax registration information, the company must notice this change to business registration authority as prescribed in Article 36 of Law on Tax Administration 38/2019/QH114 (“Law 38/2019”) .
Regarding the responsibility of providing bank account information of taxpayer, according to the regulations of Law 38/2019 and its guiding documents, the commercial bank where taxpayers opened accounts, shall be responsible for providing information about spend accounts of the taxpayers to tax authority according to their requests, including: name of account holder, account number related to the tax code being granted by tax authority, account opening date, account closing date.
1. Official letter 2393/TCT-DNNCN on declaring Personal Income Tax (“PIT”)
According to Official letter 2393/TCT-DNNCN dated 01 July 2021 issued by General Department of Taxation (“GDT”), only organizations and individuals paying PIT taxable income to their employees shall be obligated to declare PIT. In return, organizations and individuals not paying taxable income are not regulated by the Laws on PIT. Hence, organizations and individuals not paying taxable income in any month/ quarter are not required to declare PIT for the corresponding month/ quarter.
Additionally, for determination of monthly/ quarterly PIT declaration basis, employers and organizations paying income from salary and wage but having no revenue generated from selling goods and services shall declare PIT on quarterly basis.
For regulation changes and tax matters, we can provide you with assistance on:
- Registration, declaration of Personal Income Tax, Corporate Tax, VAT and Foreign Contractor Tax.
- Tax refunds assistance and representation.
- Consultancy on utilizing opportunities provided by transfer pricing.
- Customs Advisory: Compliance & Reporting; FTA and C/O; Harmonised System code classification and valuation; Inventory control; International trade arrangement; and Others.
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