Mazars Vietnam Newsletter - Issue May 2019

We would like to bring you tax and legal updates in May 2019 with the following highlights influencing the corporate operations:


Decree 38/2019/ND-CP guiding implementation of base salary for state officers and military force

On 09 May 2019, the Government has promulgated Decree 38/2019/ND-CP providing adjustment of basic salary for officials, public servants and armed forces. According to this Decree, the monthly basic salary (also known as general minimum salary) will be increased from VND 1,390,000 to VND 1,490,000 from 01 July 2019.

Official Letter 1352/TCT-DNNCN on Corporate Income Tax (“CIT”) of severance allowance

According to Official Letter 1352/TCT-DNNCN issued by the General Department of Taxation on 11 April 2019, the paid severance allowance which exceed the calculated amount in accordance with the Labour Code shall not be deductible for CIT purpose.

Official Letter 1385/TCT-CS on the Value Added Tax (“VAT”) on borrowings of goods

According to Official Letter 1385/TCT-CS issued by the General Department of Taxation on 16 April 2019, if an enterprise borrows goods and equipment for its business purpose and at the maturity date the enterprise did not return the borrowed goods, however making payment instead, the lender must issue VAT invoice and declare the tax as regulated. The VAT payable is determined as at the time when the lender transfers the ownership or the right to use such goods and equipment to the borrower.

Official Letter 1544/TCT-CS on Foreign Contractor Tax (“FCT”) on hedging contract for insurance

According to Official Letter 1544/TCT-CS issued by the General Department of Taxation on 19 April 2019, if a Vietnamese company enters into a hedging contract for insurance against volatility of materials’ price with a foreign contractor, the income of foreign contractor shall be subject to FCT at tax rates of 5% and 5% for VAT and CIT respectively.

Official Letter 11949/CT-TTHT on VAT regarding the customer introduction and seeking services

According to Official Letter 11949/CT-TTHT issued by Hanoi Tax Department on 27 March 2019, if a company enters into a service contract for seeking and introducing the customers who are export processing enterprises (“EPE”) to other suppliers who are EPEs in Vietnam as well, such service shall be considered as the rendered and consumed within non-tariff zone (exported service) and hence is entitled to VAT rate 0%.

Official Letter 13704/CT-TTHT on the loss of the overseas investment

According to Official Letter 13704/CT-TTHT issued by Hanoi Tax Department on 29 March 2019, if a company had an overseas investment to establish an subsidiaries and then discontinued the project with a loss, such loss shall not be deductible for CIT purpose.

Official Letter 1593/TCT-DNNCN on Personal Income Tax (“PIT”) policies regarding foreign business individuals

According to Official Letter 1593/TCT-DNNCN issued by the General Department of Taxation on 22 April 2019, the business individuals who are a tax resident and has permanent business premises in Vietnam without establishing enterprises must register for a tax code and then declare and pay tax as per prevailing tax regulations applied to resident household, individual doing business in Vietnam.

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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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