Mazars Vietnam Newsletter - Issue February 2020
We would like to bring you tax and legal updates in February 2020 with the following highlights influencing the corporate operations:
Official Letter 5200/TCT-DNNCN on valid supporting documents for deductible expenditures
According to Official Letter 5200/TCT-DNNCN issued by General Department of Taxation (“GDT”) on 12 December 2019, there is no provision that recognize the assignment letter as a valid supporting document for salary expenses. It is recommended that the company should maintain employment contract with expatriates to ensure the deductibility of the foreign employees' remuneration.
Official Letter 96153/CT-TTHT on issuing invoices in case of selling gift vouchers
According to Official Letter 96153/CT-TTHT issued by Hanoi Tax Department on 25 December 2019, the supporting documents for the purchasing gift voucher which would be exchanged for goods shall be receipt vouchers. However, the supporting documents for purchasing gift voucher which would be exchanged for services shall be the financial invoice as prescribed under current regulations.
Official Letter 98138/CT-TTHT on Value Added Tax ("VAT") of imported medicines related to aid programs
On 31 December 2019, Hanoi Tax Department issued Official Letter 98138/CT-TTHT guiding the application of VAT on imported medicines related to aid programs. More specifically, medicines initially imported for commercial purposes and later supplied for use in aid programs, if such medicines are not covered in the aid programs and without confirmation from the Ministry of Finance or Department of Finance, such goods shall be treated as gift. In this case, the supplier must issue invoices, make VAT declaration and payment accordingly per regulations. Input VAT of such goods shall be creditable if satisfied the regulated conditions. In case the company acts as an intermediary who imports and then provides such medicines to other organizations for free supply to patients, the respective input VAT shall be deemed non-business related and hence non-creditable.
Official Letter 998/CT-TTHT providing guidance in case goods are returned from household businesses
According to Official Letter 998/CT-TTHT issued by Hanoi Tax Department on 09 January 2020, goods returned from household businesses shall be handled in the same way as goods returned from customer who does not registered VAT invoice. More specifically, the issued invoices shall be returned and both parties shall prepare and maintain a minutes on returning of VAT invoice.
Official Letter 1971/CT-TTHT on the provision for devaluation of real estates
According to Official Letter 1971/CT-TTHT issued by Hanoi Tax Department on 15 January 2020, since it is not specified in Circular 48/2019/TT-BTC, the provision for devaluation of real estates shall not be allowed.
Official Letter 2883/CT-TTHT on the application of VAT in case Export Processing Enterprises ("EPEs") lease premises
According to Official Letter 2883/CT-TTHT issued by Bac Ninh Tax Department on 16 December 2019, if the leased premises are not listed under business locations in the Investment Registration Certificate, the related rental and other expenses related to the premises operation shall be subject to VAT at rate of 10%.
Official Letter 97499/CT-TTHT on CIT deductible expense of the provision for the advance to supplier
According to Official Letter 97499/CT-TTHT issued by Hanoi Tax Department on 30 December 2019, in case the company make advance payment to supplier, however the project is terminated, both parties could not reach an agreement on the actual amount of works done and the supplier refuse to issue invoices for the settled advance payments, such advance payment shall not be deductible expenses or eligible for making provision.
Official Letter 3143/CT-TTHT on the declaration of employment income paid before the establishment of the company
According to Official Letter 3143/CT-TTHT issued by Bac Ninh Tax Department on 24 December 2019, if the company paid income to individual during the pre-establishment period, the company must withhold tax and then declare and pay tax on the first moth/quarter in which it is established.
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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