Mazars in Vietnam Newsletter - Issue June 2020

We would like to bring you tax and legal updates for June 2020 with the following highlights influencing the corporate operations and payroll activities:

Operational Updates

1. Official letter 40839/CT-TTHT guiding Corporate Income tax ("CIT") on the PIT for the worldwide income of the employees

On 25 May 2020, Hanoi Tax Department issued Official letter 40839/CT-TTHT guiding CIT on the PIT paid for the worldwide income of the employee. According to the Official letter, such PIT paid shall be treated as deductible expenses for CIT purposes if it complies with deductible conditions and the payment obligation by the Vietnamese company is clearly stated in the secondment agreement.

2. Official letter 44393/CT-TTHT providing guidance on the use of invoice for sales of vouchers

On 01 June 2020, Hanoi Tax Department issued Official letter 44393/CT-TTHT providing guidance on the use of documents for sales of vouchers. According to the Official letter, the seller shall issue a receipt instead of an invoice upon receiving payment, and the buyer shall prepare a payment voucher accordingly. An invoice shall be issued once the buyer uses the voucher for the actual purchase of goods or services.

3. Official letter 1486/TCT-DNL providing guidance on invoices issuance and VAT declaration for supply of telecommunication, broadcasting and information technology services

On 14 April 2020, GDT issued Official letter 1486/TCT-DNL providing guidance on invoices issuance and VAT declaration for supply of telecommunication, broadcasting and information technology services. According to the official letter, the supplier shall have a period of 7 days starting after the subscription end date to issue invoices. VAT declaration shall be made for the cycle of service delivered.

4. Official letter 1564/TCT-CS providing guidance on New investment project for CIT incentive purpose

On 20 April 2020, GDT issued Official letter 1564/TCT-CS providing guidance in case the company leases entire factory from another enterprise of the same business lines and the lessor ends its main business activities subsequently. According to the Official letter, the lease shall be deemed as the case of inheritance of the lessor's assets, business premises and business lines. Hence, the company shall not be qualified for CIT incentives granted to New Investment projects as provided in Point 5, Article 10, Circular 96/2015/TT-BTC.

5. Official letter 1746/TCT-CS providing guidance on input VAT applied to exported goods

On 04 May 2020, GDT issued Official letter 1746/TCT-CS providing guidance in case the Company, instead of making VAT declaration for the qualified input VAT of exported goods, declare such amount as deductible expense for CIT purpose. In this case, the input VAT amount wrongly deducted for CIT purposes shall be rejected and the corresponding additional CIT payable shall be collected with penalty as the prevailing regulations. Upon payment of collected CIT and penalty, the Company shall make supplementary declaration per regulations.

Payroll Updates

6. Official letter 2014/TCT-DNNCN guiding Personal Income Tax ("PIT") applied to temporary residence card and visa fees paid on behalf of employees, as well as employees' donation to funds for natural disaster prevention and control

On 18 May 2020, General Department of Taxation ("GDT") issued Official letter 2014/TCT-DNNCN guiding PIT applied to the mentioned cases as below:

  • Regarding temporary residence card and visa fees: These fees shall not be subject to PIT provided that the payment is of the employer's obligation. In case such payment is a benefit provided for employees, it shall be deemed as employment income and subject to PIT accordingly.
  • Regarding employees' donation to disaster prevention funds: Such donation to the funds established in line with Decree 94/2014/NĐ-CP shall be deductible for PIT purposes.

7. Official letter 1330/CT-TTHT guiding the application of PIT in case the Company's Trade Union provides holidays for employees

On 28 May 2020, Bac Ninh Tax Department issued Official letter 1330/CT-TTHT guiding the application of PIT in case the Company's Trade Union provides holidays for employees. According to the official letter, holiday benefits received by employees shall not be subject to PIT even in case the list of such employees are provided in the contract with travel agency.

8. Official letter 2011/TCT-DNNCN guiding PIT, CIT applied to donation from individuals and enterprises to Non-Governmental Organisations ("NGOs")

According to Official letter 2011/TCT-DNNCN issued by GDT on 18 May 2020, donations to foreign NGOs established under the law of Vietnam in forms of charitable donation, humanitarian aid and donation to promote education shall be deductible for CIT and PIT purposes.

Our support

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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