Mazars Vietnam Newsletter - Issue September 2018

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

OPERATIONAL UPDATES

Directive 25/CT-TTg on solutions for production and export boosting

 On 31 August 2018, the Prime Minister issued Directive 25/CT-TTg on productions and export boosting solutions, which consist of some notable points as follows:

-         Propose approach to refund Value Added Tax (“VAT”) of the exported goods based on value ratio of the natural resources, minerals, and energy costs value to the production cost;

-         Propose amendments to Decree 134/2016/ND-CP to exempt Import Duty of imported raw materials for export production which are outsourced to another party;

-         Propose new Corporate Income Tax (“CIT”) incentives for processing of forestry products in area with difficult or extremely difficult socio-economic conditions.

 

Official letter 2781/TCT-KK on deadline for declaring input VAT invoices

 

According to the Official Letter 2781/TCT-KK issued by the General Department of Taxation (“GDT”) on 13 July 2018, in case the company forgot to declare some input VAT invoices, the missing invoices shall only be eligible for declaring before the relevant authorities announce the decision to conduct tax inspection at the Company for the period where the invoices incurred .

 

Official Letter 35509/CT-TTHT on allowances paid directly to employees of the agents and distributors

 

According to Official Letter 35509/CT-TTHT dated 29 May 2018, in case the Company pays support allowances directly to employees of the agents and distributors, these payments shall be deductible expenses if the following supporting documents are in place:

- The conditions and amounts of the support allowances for employees of the agents and distributors are clearly specified in the contracts with the agents and distributors;

- The Company has a list of all the employees who are qualified for the support allowances in accordance with the conditions and amounts of the signed contracts as mentioned above.

The Company is also required to withhold, declare and pay Personal Income Tax (“PIT”) before making payment to such employees.

 

Official Letter 54475/CT-TTHT on invoices for fixed asset liquidation of Export Processing Enterprise (“EPE”)

 

According to Official Letter 54475/CT-TTHT issued by Hanoi Tax Department on 03 August 2018, in case an EPE liquidates its fixed assets to domestic market, if the Company already declared and paid Import Duty and VAT for the assets (under the form of changing fixed assets’ purpose for domestic consumption) to customs authority, the Company shall contact the tax authority to obtain the VAT invoice. The payable VAT shall be the difference between the output VAT as on the invoice and the VAT paid to the customs authority.

 

Official Letter 57077/CT-TTHT on profit remittance to foreign investor

 

According to Official Letter 57077/CT-TTHT issued by Hanoi Tax Department on 15 August 2018, in case the Company has fulfilled its financial obligations to the Government and submitted audited financial statements and CIT finalization to the direct managing tax authority, the Company can remit its accumulated profit over the years to the foreign investor, subject to the following rules:

-         Submit a notification on profit remittance to foreign investor clearly presenting the profit remittance of each respective year;

-         The profit eligible to be remitted shall be self-determined by the Company in accordance with Circular 186/2010/TT-BTC;

-         The Company can do the remittance after 07 working days from the submission date of the notification.

 

PAYROLL UPDATES

 

Official Letter 2848/TCT-TNCN and Official Letter 20055/CT-TTHT on PIT refund for foreign individuals

 

According to Official Letter 2848/TCT-TNCN issued by General Department of Taxation on 20 July 2018 and Official Letter 20055/CT-TTHT issued by Hanoi Tax Department on 17 April 2018, in case the foreign individual had already left Vietnam and would like to authorize a Vietnamese organization to conduct tax finalization and obtain the tax refund amount to the organization’s bank account on his behalf, the authorization letter which is made at foreign country and in foreign language must be legalized to be fully recognized in Vietnam. In addition, a commitment by the authorized organization to return the tax refund amount to the foreign individual must be prepared and submitted together with the tax refund dossier.

 

Official Letter 3016/LĐTBXH-BHXH on salary to calculate compulsory insurance

 

On 30 July 2018, the Ministry of Labour, War Invalids and Social Affairs issued the Official Letter 3016/LĐTBXH-BHXH on the salary which is used to calculate the compulsory insurance contribution as from 01 January 2018. Accordingly, the shift allowance and attendance allowance which are not fixed amount shall not be considered as other extra payment subject to compulsory insurance contribution.

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