Newsletter

Tax Administration

Notice on use of electronic invoices (e-invoices) in Hanoi

On 29 October 2021, Hanoi Tax Office issued a Notice on implementation of E-invoice in Hanoi (following Decision No. 1830/QD-BTC issued by the Ministry of Finance on 20 September 2021).

Accordingly, Hanoi Tax Office shall issue a notice to each business regarding the specific date it must switch to using the new E-invoice after the the necessary technology infrastructure has been established.

Hanoi Tax Department notes the following guidelines regarding the process of switching from the old model e-invoices (stipulated in Decree No. 51/2010/ND-CP) to the new model (stipulated in Circular No. 78/2021/TT-BTC):

– Businesses need to upgrade to the new E-invoice software in accordance with Decision No. 1450/QD-TCT dated 7 October 2021 issued by the General Department of Taxation.

– All businesses must use the E-invoice model by the General Department of Taxation, all other E-invoice models or paper VAT invoices are not acceptable.

– All data regarding the e-invoices that an enterprise has issued must be submitted to the General Department of Taxation for archiving (in addition to being saved at the enterprise).

– The new e-invoices include: Invoices with or without serials (issued by tax authority).

– After receiving the e-invoice notice from tax office, an enterprise must register its e-invoice information using Form 01/DKTD-HDDT in Appendix IA of Decree No. 123/2020/ND-CP. Within 01 working day, the enterprise will receive an acceptance/rejection notice. The enterprise may start using its new E-invoice after receiving an acceptance notice from the tax authority.

– Immediately after its new E-invoice is accepted, the enterprise must stop issuing old E-invoices and destroy any remaining paper VAT invoices.

Invoice

Instructions for issuing invoices for goods and services subject to Value Added Tax (‘VAT”) reduction

On 29 October 2021, the General Department of Taxation issued Official Letter No. 4153/TCT-CS guiding invoice issuance for goods and services subject to VAT reduction. Accordingly, 30% VAT reduction (when applicable) will be deducted directly on each VAT/sales invoice.

Specifically, for VAT invoices, in column “VAT rate”, the tax rate should written as 5% x 70% or 10% x 70% (as appropriate); item “VAT amount” and “Total price” shall show the actual amounts (after 30% reduction).

For sales invoices, the “Total” item should show the value of goods before reduction; the “Total price of goods and services” item should show the actual amount (after 30% reduction), in addition, the seller must specify the 30% reduced VAT amount in words.

The Official Letter has illustrative examples for each case (VAT invoice and sales invoice).

Corporate Income Tax (“CIT”)                         

CIT and PIT policies on Covid-19 prevention and control expenses

On 27 October 2021, the General Department of Taxation issued Official Letter No. 4110/TCT-DNNCN regarding Covid-19 prevention and control expenses. Details are as follows:

Regarding Covid-19 quarantine (at the request of a competent state agency) expenses in Vietnam or abroad (in case of an overseas business trip) including meal, accommodation, Covid-19 testing fees, transportation from the place of entry to Vietnam or the place of residence to the medical isolation facility, basic needs allowance during medical isolation, etc., and expenses regarding Covid-19 testing/purchasing of Covid-19 test kits, safety equipment for employees to prevent infection at work, accommodation and meal expenses for employees working “3-on-the-spot” shall be deductible when calculating CIT and not included in the employees’ income when calculating PIT.

The Ministry of Finance (General Department of Taxation) notes that the above expenses must reflect the actual incurring amounts with sufficient invoices and evidence documents.

Personal Income Tax (“PIT”)

Personal income tax on income from the reduction of contributions to the Insurance Fund for Labor Accidents and Occupational Diseases

On 25 October 2021, the General Department of Taxation issued Official Letter No. 4102/TCT-DNNCN on PIT policy for income received from reduction of contributions to the Insurance Fund for Labor Accidents and Occupational Diseases. Details are as follows:

In case an employer, as a Covid-19 prevention and control measure, in accordance with the provisions of Decision No. 23/2021/QD-TTg regarding support for employees and employers facing difficulties due to the Covid-19 pandemic dated 07 July 2021 by the Prime Minister, pays its employees the entire amount obtained from reduction of contributions to the Insurance Fund for Labor Accidents and Occupational Diseases, such allowance shall not be included in the employee’s taxable income.

Processing of individuals with two personal tax numbers

On 14 October 2021, Hai Phong Tax Office issued Official Letter No. 2655/CTHPH-TTHT regarding an individual who has two personal tax numbers and determining where to submit his/her PIT finalization returns. Details are as follows:

In case the individual has two (02) tax numbers (accidentally used both personal ID card and citizen card to register his or her personal tax number), he or she must cancel the tax number that was issued later, and use only the first number to declare his/her PIT. The individual can come to the tax office that issued the second tax number to cancel the number and update his taxation registration information.

In case the individual has changed his/her job and does not register family deduction with his/her current income payer, at the same time, does not sign a labor contract with his/her current income payer, or signs a labor contract with term of less than 3 months, or a service contract in which 10% PIT has been withheld upon payment, the individual may submit his/her PIT finalization returns at the tax office where he/she resides.

Labor, Social Insurance

Amending a number of policies to support employees and employers facing difficulties due to the Covid-19 pandemic

On 8 October 2021, the Government issued Resolution No. 126/NQ-CP amending and supplementing Resolution No. 68/NQ-CP dated 1 July 2021 regarding a number of policies to support employees and employers facing difficulties during the Covid-19 pandemic. Details are as follows:

Conditions to receive support due to temporary suspension of labor contracts and unpaid leave were updated as follows:

– Employees working under labor contracts, participating in mandatory social insurance at the time of suspension of labor contracts or being put on unpaid leave;

– Employees under temporary suspension of labor contract, or were put on unpaid leave within the term of their labor contract for at least 15 consecutive days from 1 May 2021 to 31 December 2021 (the starting date of suspension of labor contracts, or the date the employees were put on unpaid leave may start anywhere from 1 May  2021 to 31 December 2021);
– Employees under one of the following cases:

+ Have been hospitalized, quarantined due to Covid-19, unable to go to work at the request of a competent state agency in an effort to prevent and control the Covid-19 pandemic;

+ Could not work because of their employer’s temporary operation suspension at the request of a competent state agency in an effort to prevent and control the Covid-19 pandemic;

+ Employers whose head office, branches, representative offices, production and/or business locations locate in areas implementing pandemic prevention and control measures according to Directive 16 or employers who had to rearrange production to prevent and control the Covid-19 pandemic.
Amount of One-off support:
– From consecutive 15 days to under 01 month: VND 1,855,000/person;
– From 01 month or longer: VND 3,710,000/person.

Enterprises law

Criteria for defining small and medium enterprises

Criteria for defining small and medium enterprises have changed from 15 October 2021 according to Decree No. 80/2021/ND-CP as follows:

– For trading and service enterprises:

– For other enterprises (agriculture, industrial, construction, etc.)

Average number of employees that participate in mandatory social insurance, yearly revenues and Total equity are determined as follows: