Newsletter

Decree No. 84/2016/NĐ-CP on conditions to provide audit service for public interest entity

On 1^st July 2016, the Government issued Decree No. 84/2016/NĐ-CP on standards and conditions for auditors and audit organizations to provide audit service for public interest entities.

According to the Decree, audit organization performing the audit for public interest entities must statisfy the following conditions:

• Having the valid Certificate of eligibility for providing audit service;
• Having the charter capital or contributed capital from 6 billion VND or more and must constantly maintain the equity not less than 6 billion VND;
• Having at least 10 qualified auditors, including the Director or General Director, who meet the requirements specified in the article 6 of this Decree;
• Having at least 24 months of operation in audit field in Vietnam;
• Having issued audit report on financial statements for at least 200 entities (customers) which are counted from 1^st October of the previous year to 30^th September of the year submitting the dossier;
• Having the quality control system that meets the requirements under prevailing regulations and having done the requirement about occupational liability insurance;
• Not being the subject specified in Article 7 of this Decree;
• Submitting the dossier for registration fully and on

This Decree comes into force from 1^st July 2016.

Decree No. 100/2016/NĐ-CP pvoviding guidances on the amendment Law of the Law on value-added tax (VAT), the Law on special consumption tax and the Law on tax administration

On 1^st July 2016, the Government issued Decree No. 100/2016/NĐ-CP providing guidances on some articles of the amendment Law of the Law on VAT, the Law on special consumption tax and Law on tax administration. As stated in the Decree, there are some notable points as follows:

• Reduce the late payment interest to 0.03% per day on the late tax payable (the former late payment interest is 0.05% per day) from 1^st July 2016;
• Add tobacco, alcohol and beer imported and then exported to the case that are not the subject for applying VAT rate of 0%;
• With goods, that are subjects for special consumption tax, are sold to related-party trading companies then:

– The taxable price must not be smaller than 7% in comparison with the average price of goods that directly purchased by trading establishments from the manufacturer or importer.

Decree No. 100/2016/NĐ-CP comes into force from 01^st July 2016. However, Clause 2, Article 3 of the Decree comes into force from 01^st September 2016.

Circular No. 95/2016/TT-BTC providing guidances on tax registration

On 28^th June 2016, the Ministry of Finance issued Circular No. 95/2016/TT-BTC guiding on tax registration with some contents as follows:

• The dossiers, the procedures for tax registration; for changing tax registration information.
• Invalidating tax codes, reactivate tax codes, business suspension.
• Tax registration when reorganize or restructure an enterprise
• Responsibility for managing and using tax codes.

-Enterprises established and operated under the Law on Enterprise (LOE) shall apply for tax registration and enterprises registration as prescribed in LOE and its current guiding regulations.

– Enterprises not established and operated under the LOE, organization, business individuals and households and the related contents of tax administration, tax registration of enterprises, who are established under the LOE, that have not been prescribed in LOE or guiding regulations shall apply tax registration as prescribed in the Law on Tax Administration and Circular No. 95/2016/TT-BTC.

According to the Circular, the timeline for tax registration is prescribed as follows:

• For organization: within 10 working days as from the date:

– recorded on the License, Decision of Establishment, Business Registration Certificate (BRC) or equivalent license issued by the authority.

– recorded on BRC issued by countries which shared land borders with Vietnam to purchase, sell and exchange of goods in border market, border – gate and market in border-gate economic zones.

– an organization has the responsibility to deduct and pay tax on behalf of foreign contractors, foreign sub-contractors, organizations pay tax on behalf of individuals according to contract, business cooperation documents.

– an organization signs the contract with foreign contractors, foreign sub-contractors who apply direct method to declare and pay taxes.

– an organization signs the petroleum contract or agreements.

• For individuals:

– when an individual submits tax declaration dossiers for the first time

– within 10 working days from the date written on the BRC

Circular No. 95/2016/TT-BTC comes into force on 12^th August 2016 and replaces Circular No. 80/2012/TT-BTC on 22^nd May 2012 issued by the Ministry of Finance.

Circular No. 99/2016/TT-BTC providing guidances on the administration of value-added tax (VAT) refund

On 29^th June 2016, the Ministry of Finance issued Circular No. 99/2016/TT-BTC guiding on the administration of VAT refund. Accordingly, the timeline for handling VAT refund is as follows:

• For tax refund dossier (TRD) which is refunded first and checked later:

– In case taxpayers do not meet the condition to get VAT refund or do not have enough information to determine whether they are eligible for VAT refund, the tax authority sends a notification to taxpayers within 3 working days from the day they receive complete TRD.

– In case taxpayers meet the condition to get VAT refund as stipulated by law, the tax authority shall promulgate a decision on the tax refund within 6 working days from the day they receive complete TRD.

• For TRD which is checked first and refunded later: the tax authority shall inspect the documents at the office of the taxpayer and promulgate a decision on the refund within 40 working days from the day they receive complete TRD.
• Provincial-level State Treasury shall refund tax to tax payer within 3 working days from the day they receive the payment request issued by tax authority.

Circular No. 99/2016/TT-BTC comes into force from 13^th August 2016 and replaces Circular No. 94/2010/TT-BTC, Decision No. 2404/QĐ-BTC and Circular No. 150/2013/TT-BTC.

Official Letter No. 3420/TCT-TNCN providing guidances on issuing tax code for dependent

On 1^st August 2016, the General Department of Taxation issued Official Letter No. 3420/TCT-TNCN on issuing tax code for dependent.  There are some notable points as follows:

• Dossier to submit for tax code of dependents who are above 15 years old must have a copy of their ID card.
• With the dependent who temporary does not have ID card, and therefore does not have dependent tax code, the General Department of Taxation shall research for a suitable solution.
• During the period when the tax code for dependents has not yet been granted, taxpayer will temporary apply deduction for the dependent.
• Taxpayer must complete the dossier to tax authority after the dependent receive his ID card

Official Letter No. 10315/BTC-TCT guiding on implementing Law No. 106/2016/QH13

On 25^th July 2016, the Ministry of Finance issued Official Letter No. 10315/BTC-TCT providing guidances on implementing Law No. 106/2016/QH13 about amendments on some articles of the law on value-added tax (VAT), the Law on special consumption tax and Law on tax administration.

According to Clause 3, Article 3, Law No. 106/2016/QH13,

If taxpayers miss the deadline to pay tax, they must pay outstanding tax payable and late payment interest with the rate of 0.03% per day on the unpaid tax.

With unpaid tax which incurred before 1^st July 2016 and has not yet been paid to the State budget, the late payment interest rate applied for the period from the day it incurred to 30^th June 2016 is 0.05% per day (or the appropriate rate as stipulated by law for each period), and is 0.03% per day for the period from 1^st July 2016 onward.

Official Letter No. 3241/TCT-KK providing guidances on declaration for returned export goods

On 20^th July 2016, the General Department of Taxation issued Official Letter No. 3241/TCT-KK providing guidances on the case in which export goods have been returned by customers after the seller received tax refund for these goods. There are some notable points as follows:

• In case a company has returned goods and already declared with tax authority before tax authority issues tax inspection decision, the company shall submit supplement declaration for the period which has been requested for tax refund.
• The company must return refunded tax corresponding to returned export revenue to the State budget as well as late payment interest on this amount.

Official Letter No. 3251/TCT-CS on determining allocation rate of corporate income tax (CIT)

On 20^th July 2016, the General Department of Taxation issued Official Letter No. 3251/TCT-CS on determining allocation rate of CIT. Based on Article 12, 13, Circular No. 78/2014/TT-BTC dated 18^th June 2014, and Article 16, Circular No. 151/2014/TT-BTC dated 10^th October 2014 issued by the Ministry of Finance,

For an enterprise that has dependent cost-accounting production establishments (branch) operating in provinces other than the province where an enterprise locates its headquarter, the enterprise has the responsibility to declare and pay tax separately in two provinces. According to Article 13, Circular No.78/2014/TT-BTC dated 18^th June 2014, the ratio to allocate expense between headquarter and branch is as follows:

Official Letter No. 6967/TCHQ-TXNK providing guidances on VAT of import goods

On 22^nd July 2016, the General Administration of Customs issued Official Letter No. 6967/TCHQ-TXNK guiding on VAT refund of import goods. There are notable contents as follows:

A company imported raw materials and supplies and paid full amount of taxes (VAT and import tax) for these materials, and then put these materials into production. If the company declares incorrect production norm in comparison with actual consumption, it will affect the import tax that will be refunded to the company only, and will not affect VAT imposed under Article 39, the Law on tax administration and Article 33, Decree No. 83/2013/ND-CP dated 22^nd July 2013.

Official Letter No. 45692/CT-HTr on tax policies

On 08^th July 2016, the Hanoi Tax Department issued Official Letter No. 45692/CT-HTr on tax policies. There are some notable points as follows:

In case a company is an export processing enterprise (EPE), and has the right to import, export and distribute goods in Vietnam, the company should take note on the following points (from 25^th December 2015):

• The company is responsible for changing tax registration information with the tax authority in order to declare and pay VAT as regulated.
• The company must open accounting ledgers to record separately revenue and expense related to transactions of purchasing and selling goods in Vietnam and arrange storage to divide goods and material used for manufacturing as an EPE or establish a branch apart from the processing enterprises and processing zone to perform this operation.
• When the company sells goods in domestic market and other EPEs, the company should use VAT invoice, declare and pay tax as stimulated in the regulations.
• When the company exports goods to foreign countries, the company performs export procedures as other local enterprises providing export goods or services and applies VAT rate of 0% if it meets the requirements as prescribed in Circular No. 219/2013/TT-BTC dated 31^st December 2013.

Official Letter No. 48761/CT-HTr providing guidances on tax policies

On 22^nd July 2016, the Hanoi Department of Taxation issued Official Letter No. 48761/CT-HTR on tax policies. Pursuant to Article 4, Circular 96/2015/TT-BTC dated 22^nd June 2015 and Point g, Clause 2, Article 2, Circular No. 111/2013 / TT-BTC dated 15^th August 2013 issued by the Ministry of Finance,

A company signed labor contract with a foreigner on the condition that the company pays tuition fee from pre-school to high school for his children in Vietnam. The actual tuition fee is VND 200 million and paid by cash. Although the company obtained the eligible VAT invoice with full name, address and tax code of the company, this expense paid by cash will not be deductible for corporate income tax purpose. On the contrary, this tuition fee will be excluded from taxable income from salaries and wages of the foreigner.