Newsletter

Corporate income tax (“CIT”)

Investment project located at sub-division Tan Hong – Hoan Son and the expanded area of Que Vo Industrial Zone, Bac Ninh Province is not subject to CIT incentives

According to Official Letter No.3143/CT-TTHT dated 24^th December 2019 and Official Letter No. 3154 dated 26^th December 2019 and Official Letter No. 146 dated 31^st January 2020 issued by Bac Ninh Department of Taxation, the company which has investment project located in the subdivision Tan Hong – Hoan Son and the expanded area of Que Vo Industrial Zone, Bac Ninh Province is not subject to CIT incentives according to the regulation at Clause 3, Article 16, Decree No.218/2013/ND-CP.

Tax incentive for projects located in the area with tax incentive and without it

According to Official Letter No.78/CT-TTHT issued by Bac Ninh Department of Taxation on 16^th January 2020, in case the investment project of the company locates in the industrial zone which has areas with and without tax incentives, the incentives for income from the investment project are determined based on the actual location of the project.

No regulation states that an appointment letter of foreign employees is valid evidence

On 12^th December 2019, the General Department of Taxation (GDT) issued Official Letter No.5200/TCT-DNNCN, which states the opinion of the GDT: According to the current regulation about CIT, no regulation recognizes the appointment letter as an evidence to consider salary and wages paid to foreign employees as deductible expense for CIT purpose.

Value Added Tax (VAT)

Invoice for apartment management service fee and other fees, which contains name of the apartment owner, is not deductible for VAT purpose

On 16^th December 2019, Hanoi Department of Taxation issued Official Letter No.93847/CT-TTHT about invoice for apartment management service fee. Accordingly, in case the company rents an apartment from an individual, and pays the management service fee and other fees to the building management board, but the invoice contains the name of apartment owner, instead of the company’s name, the invoice does not meet the requirement for VAT deduction as well as the deductibility for CIT purpose.

For electricity fee and water fee, invoice containing name of apartment owner shall be regulated at Clause 2.15, Article 4, Circular No.96/2015/TT-BTC.

Personal Income Tax (PIT)

PIT on expenses paid for guests coming from abroad

On 13^th December 2019, Bac Ninh Department of Taxation issued Official Letter No.3343/CT-TTHT about PIT policy for non-resident individual. In case the company has expenses (air tickets, hotel, transportation) for foreign individual (clients of the company) coming to Vietnam for factory tour and seeking for the market expansion opportunity, the expenses for the individual is not his/her income, and he/she does not have PIT liability in this case.

PIT on compensation penalty for house rent contract

According to Official Letter No.359/CT-TTHT issued by Bac Giang Department of Taxation about PIT, in case the company terminates the house rent contract (for foreigner) before the expiry date of the contract, the compensation paid to the lessor shall not be calculated as taxable income of the foreigner.

PIT rate 10% is applied to expenses for employees after terminating the labor contract

On 21^st January 2020, Hanoi Department of Taxation issued OL No.3342/CT-TTHT, which handles the case that the company pays allowance, which is not included in the Labor Code, the Law of Social Insurance and the terminated labor contract, to employees with labor contract for 3 months or more when they terminate the labor contract. In this case, the company must withhold PIT with the rate of 10% from the total allowance to employees (over VND 2 million).

Invoice

Issuing invoice for sale of service vouchers

On 25th December 2019, Hanoi Department of Taxation issued Official Letter No.96153/CT-TTHT about issuing invoice for gift voucher.

Where the company purchases gift vouchers from suppliers and give the vouchers to its clients or employees:

– In case the gift vouchers are used for buying goods from the supplier which issued the voucher, the company needs to prepare payment voucher, and does not need to obtain invoice.

– In case the gift vouchers are used for using service, the company must request the supplier to issue invoice.

Expense for gift vouchers is considered as deductible expense for CIT purpose if it meets the requirements stipulated in Article 4, Circular No.96/2015/TT-BTC.

E-invoice does not attach list of goods and service

According to Official Letter No.1397/CT-TTHT issued by Hanoi Department of Taxation about e-invoice, when the company issues e-invoice to client, the company must ensure the information stated in the e-invoice can be accessed and used adequately. In case the company does not show all goods and services on the e-invoice, but attaches a list that contains items not included in the e-invoice, that e-invoice is not valid, according to the regulation on e-invoice.

General Tax Policies

Foreign Direct Invesmemt company (FDI) is not allowed to rent the house it purchased

According to Official Letter No. 18/CT-TTHT issued on 06^th January 2020 by Bac Ninh Department of Taxation, FDI company is not allowed to rent the house it purchased.

Social Insurance

Interest rate for unpaid insurance fee

According to the Notice No. 63/TB-BHXH dated 8^th January 2020 issued by Vietnam Social Security,  the average interest rate in 2019 shall be 5.80% pa.

According to Official Letter No.1622/BHXH-BT dated 7^th May 2013, the announced average interest rate by Vietnam Social Security is used to calculate interest for unpaid insurance or late payment.