1. Official letter 3409/CT-TTHT guiding the determination of deductible expenses in the period when the Company incurs land rental fee but has not yet implemented construction activities
According to Official letter 3409/CT-TTHT issued by Ho Chi Minh City ("HCMC") Tax Department dated 3 April 2020, in case the Company has leased a land but has not yet implemented construction activities, the incurred expenses related to the land leased shall be deemed as non-deductible for Corporate Income Tax ("CIT") purposes.
2. Official letter 26515/CT-TTHT guiding the application of CIT in case of employing expatriates without a work permit
On 23 April 2020, Hanoi Tax Department issued Official letter 26515/CT-TTHT guiding the application of CIT in case of employing expatriates without a work permit. Specifically:
- In case the expatriate is required to have a work permit per regulations: Employee expenses shall not be CIT deductible. The respective input VAT shall not be creditable.
- In case the expatriate is under internal transfer and is not required to have a work permit per regulations: the related expenses shall be deductible for CIT purposes if other conditions of CIT regulations are satisfied.
3. Official letter 5977/BTC-TCT providing guidance on deferral of CIT and VAT as specified in Article 3 Decree 41/2020/ND-CP
On 20 May 2020, MOF issued Official letter 5977/BTC-TCT providing guidance on deferral of CIT and VAT as specified in Article 3 Decree 41/2020/ND-CP. Specifically:
- The remaining taxes payable declared in 2019 CIT finalization returns shall be deferred. However, the deferral shall only be granted for the amount not exceeding 20% of the total taxes payable for 2019;
- The deferral of CIT payment shall be granted in accordance with the enterprise’s fiscal year;
- The additional CIT payable incurred during the deferral period, by due self-adjusted declaration or through a tax audit/ inspection, and below the aforementioned 20% threshold shall also be deferred;
- Extra-provincial VAT payable (if any) shall be also granted a deferral.
4. Official letter 1524/TCT-DNNCN guiding the Personal Income Tax ("PIT") applied to income received when working on annual leave
According to Official letter 1524/TCT-DNNCN issued by General Department of Taxation ("GDT") on 17 April 2020, if the employees are required to work on annual leave by the employer and receive overtime premium, the overtime premium paid for a normal working day shall be exempt from PIT.
5. Official letter 16468/CT-TTHT providing guidance in case an expatriate deemed as tax resident in Vietnam receives foreign rental income
On 31 March 2020, Hanoi Tax Department issued Official letter 16468/ CT-TTHT providing guidance in case an expatriate deemed as tax resident in Vietnam receives house rental income in overseas. Specifically:
- On PIT, Value Added Tax ("VAT") declaration": if such income is above VND 100 million in a calendar year, the expatriate shall make PIT and VAT declaration per the current regulations. The declaration shall be submitted to the tax authority which governs the person's employment income.
- On Business License fee: The individual is also required to declare and pay Business License fee.
- On foreign tax credit: According to the applicable DTA, the individual can credit the tax paid oversea for the maximum of the PIT payable which is calculated in accordance with Vietnamese regulation.
6. Official letter 3466/CT-TTHT guiding PIT and CIT on expenses paid for expatriates upon the termination of labor contracts to return home country
According to Official letter 3466/CT-TTHT issued by HCMC Tax Department on 06 April 2020, expatriates' and their family’s repatriation expenses such as airfares, baggage fees made by the Company shall be subject to PIT. Only such expenses made for the expatriates in accordance with labour contracts shall be deemed deductible for CIT purposes.
7. Official letter 20657/CT-TTHT providing guidance on PIT applied for the employee income covered from Trade Union fund (“TUF”)
According to Official letter 20657/CT-TTHT issued by Hanoi Tax Department on 08 April 2020, employees' income covered by the Company’s Trade Union shall be exempted from PIT, provided that such payment is in accordance with the regulation on TUF.
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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