Mazars Vietnam Newsletter - Issue August 2018

We would like to bring you tax and legal updates in August 2018 with the following highlights influencing the corporate operation:


Resolution 107/NQ-CP on implementation of reforming wage and salary policies for civil servant and employees of enterprise

On 16 August 2018, the Government has issued Resolution 107/NQ-CP on implementation of reforming wage and salary policies for civil servants and employees working in enterprises. Accordingly, missions and tasks have been assigned to the Ministry of Finance before 2021, including:

-         Review and propose amendments and supplementations to the Law on Personal Income Tax to increase the applicable tax rate for individuals whose income is excessively high. Of note, the resolution has not mentioned to which extend the income shall be considered excessively high;

-         Review and propose amendments and supplementations to the Law on Corporate Income Tax in which part of the company’s profit after tax would be dedicated for the remuneration of the member’s council and supervisors.

Official Letter 48090/CT-TTHT on useful life of finance leased fixed assets

On 10 July 2018, Hanoi Tax Department issued Official Letter 48090/CT-TTHT on useful life of financial leased fixed assets. If a company leases fixed assets under a finance lease agreement, in which the company would buy the leased assets at the end of the lease agreement, then the useful life of these fixed assets shall be determined under the same principle as purchased fixed assets in accordance with Article 10, Circular 45/2013/TT-BTC. On the other hand, if the company commits that it would not buy the fixed assets at the end of the agreement, the useful life shall follow the term of the agreement.

Official Letter 6519/VPCP-KGVX on 2019 public holiday schedules for public sector

On 11 July 2018, the Government Office issued Official Letter 6519/VPCP-KGVX on 2019 public holiday schedules for civil servant and employees of administrative agencies, political organizations, socio-political organizations as follows:

- For Calendar New Year’s holiday: 31 December 2018 would be a day off (compensated working day on 05 January 2019), making a long holiday from 29 December 2018 to end of 01 January 2019.

- For Lunar New Year’s holiday: the holiday shall start from 04 February 2019 to 08 February 2019.

- For Victory Day (30/04) and International Labor Day (01/05): the holiday shall start from 29 April 2019 to 01 May 2019. The compensated working day shall be 04 May 2019.

Offices and organizations who do not have fixed weekend days-off including Saturday and Sunday shall arrange their owned holiday schedules.

Official Letter 4190/TCHQ-TXNK on tax exemption for imported goods of Non-Governmental Organization (“NGO”)

On 17 July 2018, the General Department of Customs (“GDC”) issued Official Letter 4190/TCHQ-TXNK guiding the eligibility of tax exemption in case the NGO imports goods to Vietnam. According to the explanation of the GDC in the Official Letter, since the framework agreement was signed between the NGO and Vietnam Union of Friendship Organizations (VUFO) which is not an authorized organization to represent the State or the Government of Vietnam, the agreement shall not be considered an international treaty or international agreement signed by the Government of Vietnam. Therefore, goods imported by the NGO shall not be eligible for exemption of import duty and Value Added Tax ("VAT") as per the signed agreement.

The Official Letter 2637/TCT-CS on the deductibility of rental expense of asset under dispute

According to Official Letter 2637/TCT-CS issued by General Department of Taxation (“GDT”) on 04 July 2018, in case the company pays rental fee for assets which are under dispute, the relevant rental expense shall not be deductible for CIT purpose.

Official Letter 2195/TCT-CS on issuing invoice when lending of goods

Referring to a case being guided in Official Letter 2195/TCT-CS of the GDT dated 04 June 2018, the company signs a contract to buy aquatic products with owner of fishing boat and, as part of the agreement, the company lends some equipment and tools to the fishing boat owner, then the company must issue invoice to the boat owner for such the equipment and tools being lent.

Official Letter 8434/BTC-TCHQ on handling of the Special Sales Tax (“SST”) being adjusted at import stage

On 16 July 2018, the Ministry of Finance issued Official Letter 8434/BTC-TCHQ to provide guidance in case the company had been imposed/collected additional SST under the post-clearance audit. Accordingly, the tax adjustment is not considered an overpaid tax amount, and hence shall not be refunded by the customs authority. Additionally, the additional SST paid shall also not be creditable against output SST but would become expenses of the company (deductible for CIT purpose).

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