We would like to bring you tax and legal updates for August 2020 with the following highlights influencing the corporate operations and payroll activities:
1. Decision 22/2020/QD-TTg on land rental fee reduction for the organizations or individuals being affected by Covid-19
On 10 August 2020, the Prime Minister issued Decision 22/2020/QD-TTg on the land rental fee reduction with some key points as below:
- The decision shall be applicable for organizations or individuals whose businesses have been suspended for 15 days or more due to Covid-19. This guidance also applies for the case of having many business lines and only one of the business has been suspended.
- The mentioned above organizations or individuals shall be entitled to the 15% reduction of land rental payable in 2020. The reduction shall not be applied to unpaid land rental fee incurred before 2020 and corresponding late payment penalty (if any).
- In case land rental payable in 2020 is already paid by the lessee who is later given approval for land rental fee reduction by the competent authority, the overpaid amount shall be offset against the rental payable in the subsequent period. In case there is no subsequent period in which payable land rental fee may arise, the overpaid amount shall be offset or refunded per prevailing regulations.
2. Official letter 2220/CT-TTHT providing guidance on Corporate Income Tax ("CIT") and Personal Income Tax ("PIT") treatment of the company’s expenses related to quarantine period of foreign experts
According to Official letter 2220/CT-TTHT issued by Bac Ninh Tax Department on 06 July 2020, since foreign experts entering Vietnam must undergo a quarantine period per regulations, all related expenses paid by the company to quarantine facilities (hotels) shall be deductible for CIT purposes, provided that there is a certificate validating that the expert has completed the quarantine period, a corresponding invoice and payment is made per regulations. In addition, if such expenses are directly made to quarantine facilities (hotels), these amounts shall not be subject to PIT.
3. Official letter 5051/NHNN-QLNH on foreign exchange policy applied to transactions between Export-Processing Enterprises ("EPEs") and local Vietnamese enterprises.
According to Official letter 5051/NHNN-QLNH issued by State Bank of Vietnam on 10 July 2020, foreign currency is allowed to be used only in case of purchases of materials, spare parts, supplies, etc. for direct use by EPEs in the manufacturing, processing, assembling of goods for export. In other cases, such as purchasing uniforms, construction or maintenance services from local enterprises, foreign currency shall not be allowed to be used.
4. Official letter 70284/CT-TTHT on CIT incentives for new investment projects
According to Official letter 70284/CT-TTHT issued by Hanoi Tax Department on 29 July 2020, the period in which CIT incentives are granted shall be based on the operation term of the project stated on its first Investment Registration Certificate. Following the ending of this period, the company shall not be eligible for CIT incentives granted to new investment projects, instead it shall have to make CIT finalisation and payment per regulations.
5. Instruction 05/HD-LĐLĐ on Trade Union Fee (“TUF”) for foreign employees who are subject to compulsory Social Insurance (“SI”) contribution
On 31 March 2020, Ho Chi Minh City Federation of Labour issued Instruction 05/HD-LDLĐ on TUF contributed by the employers whose expatriate employees are subject to compulsory SI contribution as stipulated in Decree 143/2018/ND-CP. In this case, the employers are obligated to pay TUF at the rate of 2% of the employees' salary for SI contribution. In addition, such contribution shall be made on a monthly basis from 01 December 2018, together with SI contribution.
6. Resolution 09/NQ-BCH providing relief from contribution of Trade Union Membership Fee (“TUMF”)
On 06 July 2020, Vietnam General Confederation of Labour approved Resolution 09/NQ-BCH providing relief from TUMF contribution to employee members with salary below the basic salary. The relief shall be applicable for the period in which the mentioned salary is applied and until 31 December 2020.
7. Official letter 2533/BHXH-BT on the temporary suspension of contribution to pension and death benefit fund
According to Official letter 2533/BHXH-BT issued by Vietnam Social Insurance authority on 10 August 2020, eligible employers who have already been entitled to the temporary suspension of contributions to the pension and death benefit fund and still face difficulties caused by the Covid-19 pandemic may continue to be entitled to further temporary suspension until the end of December 2020. The required dossier, application procedures and processes will be subject to prevailing regulations and instructions included in previous documents issued by the Vietnam Social Insurance authority.
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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