We would like to bring you tax and legal updates for April 2021 with the following highlights influencing the corporate operations and payroll activities.
1. Official letter 153/TCT-CS providing guidance on Corporate Income Tax ("CIT") on the payment for life insurance that the company provides to its clients as promotional gifts
On 14 January 2021, General Department of Taxation ("GDT") issued Official letter 153/TCT-CS providing guidance on CIT on the payment for life insurance the company provides to its clients as promotional gifts under a promotion program already registered to the Department of Industry and Trade. In this case, the insurance contract is engaged directly by the client and the insurance company, the company will cover the insurance fee for the first year of contract and the invoice is still issued directly to the client according to the insurance contract. Since there is no invoice addressed to the company, such expenses shall not be treated as deductible expenses for CIT purpose.
2. Official letter 599/TCT-KK providing guidance on Value Added Tax ("VAT") declaration, notification of invoice issuance and invoice use report for business locations located outside the headquarters’ province/city
According to Official letter 599/TCT-KK issued by GDT on 10 March 2021, VAT declaration, notification of invoice issuance and invoice use report for business locations located outside the headquarters’ province/city shall be as follows:
- If the tax payer can separately account the tax obligation of each business location, or has the belong to the cases where separately declaration is required as per the Decree 126/2020/ND-CP, the tax payer is required to use its own tax code for carrying out tax declaration, declare notification on use of invoice and report on use of invoice at the managing tax authority of the business location;
- If the tax payer has centralised accounting records at the headquarters, the declaration of VAT, notification on use of invoice and report on use of invoice shall be carried out at the managing tax authority of the headquarters.
3. Official letter 1938/BTC-TCT guiding the effectiveness of Circular 156/2013/TT-BTC and other Circulars providing guidelines on the old Law on Tax administration
According to Official letter 1938/BTC-TCT issued by the Ministry of Finance on 26 February 2021, while circulars providing guidance on the implementation of Law on Tax Administration 38/2019/QH14 and Decree 126/2020/ND-CP dated 19 October 2020 of the Government have not yet been released, except for those contents that are already provided in details at the mentioned two documents, Circular 156/2013/TT-BTC and other circulars providing guidelines on the old Law on Tax administration as listed in this Official letter continue to take effects until there are other legal documents in place.
4. Official letter 13/TCT-CS providing guidance on invoice issuance for asphalt businesses
According to Official letter 13/TCT-CS issued by GDT on 04 January 2021, due to the specific nature of the business, the possibility of successful deliver of the product to customers may be subject to adverse weather conditions (e.g. rainy weather or mixing plant breakdown). Therefore, upon delivering the goods, the company can consider this as mobile sales, then the internal delivery note cum the and stock transfer order and transport can be used.
5. Official letter 71/TCT-CS providing guidance on Foreign Contractor Tax (“FCT”) in case a foreign company transfer goods assigned for processing and contract signed with a Vietnam company to another foreign company
According to Official letter 71/TCT-CS issued by GDT on 08 January 2021, in case a foreign company generates income from transfer of goods which are assigned to processing vendor in Vietnam and contract signed with a Vietnam company to another foreign company, such income is subject to FCT in Vietnam.
1. Official letter 317/CTBNI-TTHT and Official letter 352/CTBNI-TTHT providing guidance on Personal Income Tax ("PIT") on quarantine expenses paid by the company on behalf of expatriates
On 11 March 2021 and 16 March 2021, Bac Ninh Tax Department issued Official letter 317/CTBNI-TTHT and Official letter 352/CTBNI-TTHT providing guidance on PIT treatment of quarantine expenses paid on behalf of expatriates, including accommodation expenses paid for quarantine facilities, food and travel expenses and COVID-19 testing expenses. Accordingly, these expenses shall be included in employment taxable income for PIT purposes of the expatriates. In case these expatriates already have accommodation in Vietnam and such accommodation expenses are paid by the company, those expenses corresponding to the time in the quarantine facilities shall not be included in employment taxable income for PIT purposes of the expatriates.
We do trust the above points are notable and sufficient, but should you have any questions or need a deeper discussion on this issue, please do not hesitate to contact us.