We would like to bring you tax and legal updates for September 2020 with the following highlights influencing the corporate operations and payroll activities:
1. Official Letter 3231/TCT-CS providing guidance on Value added Tax ("VAT") applied to processing services provided by Export-Processing Enterprises ("EPEs") to local enterprises
According to Official Letter 3231/TCT-CS issued by GDT on 10 August 2020, applicable VAT rate for processing services provided by EPEs to local enterprises shall depend on whether the nature of the services is related to trading activities or not (i.e. which includes the purchase and sales of goods and others directly related to those activities in Vietnam). If such services are considered as trading activities, the processing services must be separately recorded, separately declared and paid VAT, issued VAT invoices with the applicable rate of 10%. If such services are not considered as trading activities, the relevant customs procedures must be carried out for receiving and delivering material, processed goods and the sale invoices for EPEs shall be used.
2. Official Letter 20440/CT-TTHT guiding the deductible expenses regarding the education and health care donation
According to Official Letter 20440/CT-TTHT issued by Binh Duong Tax Department on 31 August 2020, the Company's donations for education, healthcare, remedying the consequences of natural disasters or building charitable homes for the poor through the business associations shall be allowed for CIT deduction, provided that such donation can be validated by receipt vouchers issued by the associations, lists with detailed names of donators and confirmation from the organisation receiving donations.
3. Decree 109/2020/ND-CP extending the deadline for payment of Special Consumption Tax ("SCT") for automobile manufacturing and assembly in Vietnam
On 15 September 2020, the Government issued Decree 109/2020/ND-CP extending the deadline for payment of SCT for automobile manufactured or assembled in Vietnam with some key points as below:
- Extend the deadline for payment of SCT payable incurred during the periods from March to October 2020 as follows:
- For the periods from March to May 2020, the deadline shall be extended to 5 more months, meaning the deadlines for SCT payment shall be on 20th of September, October and November 2020, respectively;
- For the periods from June to October 2020, the deadline for SCT payment shall be on 20 December 2020
- Taxpayers must submit the application with provided form enclosed in this Decree one-time for all such concerned periods together with the SCT return dossier or no later than 30 September 2020.
- Other notable points:
- In case taxpayers amend its original tax returns for the periods whose SCT payment deadlines are extended which results in the additional SCT payable and submit to the tax authority before the extended deadline, the payment deadline shall also apply to the addition tax payable arising due to such amendment
- The branches or dependent units prepare and submit SCT declaration on their own to managing tax authority shall also be eligible for deadline extension of SCT payment. If the branches or dependent units do not manufacture or assemble automobile, such branches or dependents units are not eligible for deadline extension of SCT payment.
4. Official Letter 3363/TCT-DNNCN providing guidance on Personal Income Tax ("PIT")-related forms
According to Official Letter 3363/TCT-DNNCN issued by General Department of Taxation ("GDT") on 17 August 2020, the application of the commitments indicating that employees' incomes are below taxable level and employees' authorizations for the Company to carry out PIT Finalisation on their behalves are allowed to be incorporated into the Company's internal human resource management software in form of a list, provided that the software presents all the names of such employees and sufficient information as required at Form No. 02/CK-TNCN as prescribed in Circular 92/2015/TT-BTC. The Company needs to certify that the information provided therein is true and accurate, is liable for the authenticity of the above-mentioned information, and also needs to obtain the confirmed signatures of the employees in the list.
5. Official Letter 3569/TCT-DNNCN on supporting documents for employees' charitable donation to be accounted as an allowable deduction from PIT taxable income
According to Official Letter 3569/TCT-DNNCN issued by GDT on 28 August 2020, in order for an employees' charitable donation through the Company in form of a deduction from employees' salaries to be treated as an allowable deduction from PIT taxable income, the following supporting documents would be required, including the list of involved employees being validated by the Company, documents indicating that withheld money is transferred directly to the Company Trade Union's bank account and payment voucher from such bank account to the beneficiaries.
6. Official Letter 3275/TCT-DNNCN guiding PIT applied to employees' donation to funds for natural disaster prevention and control
According to Official Letter 3275/TCT-DNNCN issued by GDT on 11 August 2020, employees' donation to funds for natural disaster prevention and control established in line with Decree 94/2014/ND-CP shall be treated as an allowable deduction for PIT computation purposes.
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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