NEWSLETTER AUGUST 2017
Circular No. 23/2017/TT-BLDTBXH (“Circular 23”): online procedures to issue work permit for foreigners working in Vietnam.
On 15th August 2017, the Ministry of Labor – Invalids and Social Affairs issued Circular 23 with the following contents:
– At least 07 working days before the day on which a foreign employee plans to start working for an employer, the employer must declare and summit application via web portal of the work permit issuing authority in order to obtain a work permit for the foreign employee as guided in Article 10 of Decree No.11/2016/ND-CP
– Within 05 working days from the day of receiving declaration and application dossier for work permits which are conformable with the regulations, the work permit issuing authority shall give a response by email to the employer.
– After receiving a response indicating that the application dossier for work permits is conformable with the regulations, the employer shall submit the original dossier in person or by postal service to the work permit issuing authority for verification, reconciliation and retention purposes as regulated by law.
– No later than 8 working hours from the receipt of the original dossier, the work permit issuing authority must send results to the employer. The employer may receive results in person or by postal service addressed to the employer’s registered address.
– In case the original dossier does not match with the declaration and application for work permits sent via web portal, the work permit issuing authority shall give a written response in person or send an email or directly notify such issue to the employer.
The Circular comes into force from 2nd October 2017.
Official Letter No. 3840/TCT-CS (“OL 3840”): Value-Added Tax (VAT) paid on behalf of foreign contractors
On 24th August 2017, the General Department of Taxation issued OL 3840 with the following point:
This OL discusses a case where a company uses service rendered by a foreign contractor that does not possess a legal entity in Vietnam and pays VAT and CIT on behalf of the foreign contractor (foreign contractor tax). When the service expense is determined non-deductible for calculation of taxable income in accordance with Clause 1, Article 6 of Circular No. 78/2014/TT- BTC, the Company is not allowed to declare VAT paid on behalf of the foreign contractor as deductible VAT.
Official Letter No. 54785/CT-TTHT (“OL 54785”): tax policy on brokerage fee
On 14th August 2017, Hanoi Department of Taxation issued OL 54785 with the following content:
Where a company provides brokerage service between Japanese schools and students in Vietnam and such service is operated in Vietnam, the brokerage fee that the Company receives from Japanese schools and students is subject to 10% VAT.
Official Letter No. 3867/TCT-TNCN (“OL 3867”): PIT policy on visa fees paid by employers
On 25th August 2017, the General Department of Taxation issued OL 3867 with the following contents:
When an employer pays costs to obtain a temporary residence card and/or visa for foreigners on behalf of its foreign employees, this expense becomes taxable salary and wage of employee and the employee is required to declare and pay PIT as regulated by law.
However, this OL states that in case a company hires foreigners and the company bears responsibility to obtain work permit for its foreign employees, the expense relating to work permit issuance paid by the company is not subject to PIT of the employee.
Official Letter No. 58067/CT-TTHT (“OL 58067”): tax policy on copyright usage fee
On 28th August 2017, Hanoi Department of Taxation issued OL 58067 with the following contents:
In case of a foreign contractor signing contract to allow a company to use its copyright images for the company’ products, the related copyright usage fee paid by the company in conformable with the regulations on intellectual property is subject to foreign contractor tax (FCT) (10% VAT (if deductible method is used) or 5% VAT (if direct method is used) in addition to 10% CIT).