Mazars Vietnam Newsletter - Issue April 2019
We would like to bring you tax and legal updates in April 2019 with the following highlights influencing the corporate operations:
Draft Circular guiding Decree 119/2018/ND-CP on E-invoice
The Ministry of Finance (“MOF”) has recently issued the Draft Circular guiding Decree 119/2018/ND-CP on e-invoice which includes a number of notable points as bellows:
- Compulsory item on E-invoice: the Draft Circular propose a change in the way of creation E-invoice’s Template Serial and Serial numbers and hence application of E-invoice shall lead to change of E-invoice template. Language and number on E-invoice must be in accordance with the prevailing Vietnamese regulations without any exception as previously. Electronic signatures of the buyer will be implemented on the agreed basis between the buyer and the seller;
- The issuance date of E-invoices shall be the date that of the E-invoice is signed by the Digital Signatures, instead of issued date and time displayed on the invoice except for the special circumstances approved by the Chief of Tax Department. For the sale of services, E-invoices shall be issued at the full or part completion of the services, regardless the services fee is collected or not;
- The Draft Circular also mentioned to the use and management of stamps, E-stamps for tobacco and alcohol products. Accordingly, the consumer can track the origins of the cigarettes or wine bottles consumed domestically through the electronic application provided by the General Department of Taxation;
- During the transition time up to October 31st, 2020, if the enterprises are not requested for applying E-invoice in accordance with Decree 119/2018/ND-CP, those enterprises can continue applying the paper invoice and E-invoice in accordance with the guidance of Decree 51/2010/ND-CP and Decree 04/2014/ND-CP. In case of being requested for applying E-invoices in accordance with Decree 119/2018/ND-CP, the unused invoices which have been notified in accordance with Decree 51/2010/ND-CP and Decree 04/2014/ND-CP must be destroyed.
Draft Resolution on the Corporate Income Tax (“CIT”) policy for supporting the small and medium enterprises (“SMEs”).
On March 27th, 2019, the Ministry of Finance (“MoF”) introduced the draft Resolution on CIT policy for supporting SMEs with the notable points as follows:
(i) Newly established enterprises from households and individual businesses shall be entitled to additional 02 years of CIT exemption from the generating taxable income compared to the time of normal CIT incentives (if any). Upon the expiration of tax incentive (if any), the SMEs shall apply the tax rates as prescribed in this Resolution and the relevant CIT regulations;
(ii) Preferential tax rates:
- 17% is applied for enterprises with the revenue of preceding year from VND 03 billions to VND 50 billions, and average number of employees who contribute social insurance does not exceed 100 people in year.
- 15% is applied for enterprises with the revenue of preceding year less than VND 03 billions, and average number of employees who contribute social insurance does not exceed 10 people in year.
(iii) The preferential tax rate mentioned above are not applied in the following cases:
- Income from transfer of share, real estate, investment projects, mineral exploration; income from production and trading of goods subject to Special Consumption Tax, etc.;
- Subsidiaries or related parties in which the company do not satisfy the condition as specified in (ii).
(iv) In case the enterprise has annual revenue of less than VND 03 billions, has average number of employees under average number of employees who contribute social insurance does not exceed 10 people in year and can not determine the expenses and income, it can declare and pay CIT based on the percentage of revenue. The stable periods for declaring CIT on revenue is 03 years. The applicable CIT rates of 0.4% to 4% shall be varied depending on the enterprise’s business activities.
Official Letter 999/TCT-CS on losses carried forward of the enterprises applying foreign currency as accounting currency
According to Official Letter 999/TCT-CS issued on March 25th, 2019 by the General Department of Taxation, if the enterprises applied foreign currency as accounting currency, the carried-forward losses shall be the amount in Vietnam Dong, which were declared in the submitted CIT finalization form of the previous year.
Official Letter 1966/TCHQ-TXNK on Import Duties of the leasing, borrowing of goods and Value Added Tax (“VAT”) on goods repairing activities
According to Official Letter 1966/TCHQ-TXNK issued by the General Department of Customs ("TCHQ") on April 4th, 2019:
- If domestic enterprises borrow molds from Export Processing Enterprise (“EPE”) to manufacture components for the EPE, the temporarily-imported molds are subjected to import tax.
- If domestic enterprises provide repairing services to EPE, the repairing activities which is carried out outside of the non-tariff zone shall not be entitled to VAT rate of 0%.
Official Letter 7539/CT-TTHT on VAT and CIT of the purchasing apartment for employees’ accomodation.
According to Official Letter 7539/CT-TTHT issued by Hanoi Tax Department on February 26th, 2019, if the company buys apartments for employees’ accommodation which located outside of the industrial zones however satisfy the industrial zone’s housing standard for workers working in industrial zones, the input VAT shall be fully creditable. In respect of CIT, the depreciation expenses of the apartments which are managed and recorded in the company’s accounting record, shall be deductible for the CIT purpose.
Official Letter 11717/2019/CT-TTHT on Foreign Contractor Tax (“FCT”) of contract liquidation
On March 26th, 2019, Hanoi Tax Department issued Official Letter 11717/CT-TTHT on FCT of contract liquidation. The enterprises declared and paid FCT on behalf of foreign contractors, the contracts are subsequently liquidated the enterprises is entitled to the refunds from the foreign contractors. The enterprise shall re-determines the FCT obligation, and the overpaid amount shall be offset or refunded.
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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