Newsletter

Trial production costs with sufficient evidence

On 27 January 2022, Bac Ninh Tax Office issued Official Letter No. 199/CTBNI-TTHT guiding the accounting of trial production costs and whether those are deductible when calculating CIT. Details are as follows:

In case a company incurs production costs of trial products, if such expenses satisfy all conditions specified in Clause 1, Article 6 of Circular No. 78/2014/TT-BTC issued by the Ministry of Finance on 18 June 2014, they shall be deductible when calculating CIT.

The company must have adequate evidence documents on the whole process of trial production (production plan, decision on trial production of new products; purchase of raw materials, start of production, stocking of finished trial products; assessment of trial products; recall (sale, liquidation) of trial products; evidence documents on forced destruction of unqualified trial products and inappropriate trial-production raw materials that cannot be re-used or sold. The company is responsible for the accuracy and truthfulness of these documents and must provide such documents to the tax authority or other competent authorities upon request.

Payment of unused paid-leaves

On 30 December 2021, Hai Phong Tax Office issued Official Letter No. 3549/CTHPH-TTHT regarding CIT treatment of payment of unused paid-leaves to employees. Details are as follows:

The Ministry of Labor, War Invalids and Social Affairs only stipulates payment of unused paid-leaves to employees who have quit or lost their jobs. In case the company pays unused paid leaves to employees in other cases, such expense shall not be deductible when calculating CIT.

Selling expenses incurred abroad

On 19 January 2022, Binh Duong Tax Office issued Official Letter No. 22455/CTBDU-TTHT on selling expenses incurred abroad. Details are as follows:

In case a company incurs selling expenses abroad, if relevant regulations are met, such expenses shall be deductible when calculating CIT. In addition, according to Clause 4, Article 5, Circular No. 156/2013/TT-BTC by the Ministry of Finance, the language used in any tax evidence documents must be Vietnamese. Therefore, if a document is in a foreign language, it must be translated to Vietnamese; the taxpayer must sign and stamp the documents and is responsible for the accuracy of the translated version.

Personal Income Tax (“PIT”)

Allocation of PIT to branches located in provinces different from that of Head Office

On 28 January 2022, Hai Phong Tax Office issued Official Letter No. 303/CTHPH-TTHT on PIT policies. Details are as follows:

In case a company registers to declare and pay tax with Binh Duong Tax Office, directly signs labor contract, withholds and pays PIT from salaries of employees working at Hai Phong Branch and in other shops in Hai Phong, the company shall follow below:

– In case Hai Phong Branch directly pays income to the company’s employees in Hai Phong, the Branch is responsible for declaring, withholding and paying PIT to Hai Phong Tax Office under the branch tax code.

– In case the Company pays incomes directly to employees in Hai Phong: for tax periods starting from 1 January 2022 onward, the Company shall withhold and declare PIT on income from salaries by Form 05/KK-TNCN and Appendix 05-1/PBT-KK-TNCN “Determining PIT payable to Provinces” (issued in Appendix II of Circular No. 80/2021/TT-BTC) to Binh Duong Tax office under the company’s tax code; at the same time, it shall pay PIT payable to the State’s budget of Hai Phong City, as specified in Clause 4, Article 12 and Point a.1 Clause 3 Article 19 of Circular No. 80/2021 /TT-BTC dated 29 September 2021 by the Ministry of Finance.