NEWSLETTER APRIL 2016
Official Letter providing guidance on deadline of Form 06/GTGT
On 07 April 2016, General Department of Taxation issued Official Letter No. 1434/TCT-KK in order to answer inquiries of some local tax authorities on the deadline for receiving form 06/GTGT. This form is used in the procedure to register voluntary application of credit method for VAT deduction for the period of 2016 – 2017.
According to this Official Letter, the taxpayer who submits form 06/GTGT after the original deadline of 30 January 2016 will be penalized for administrative violations as instructed in Circular No. 166/2013/TT-BTC issued by Ministry of Finance on 15 November 2013. This Official letter informs the local tax authority to notify each taxpayer in its local area to submit form 06/GTGT at latest by 30 April 2016 in order to voluntary apply credit method. If the taxpayer misses this deadline of 30 April 2016, the tax payer is allowed to use only direct method from 30 April 2016.
Official Letter on tax policy for business expansion from 2009 to 2013
On 07 April 2016, Ministry of Finance issued Official Letter No. 4769/BTC-TCT providing guidance on tax incentives for regular investment activities.
According to this Official Letter, regular investment activities are defined as regular additions to machinery and equipment of the original project enjoying tax incentives, funded by one of the following sources; (1) fixed assets depreciation fund, (2) profit after tax for re-investment, and (3) registered investment capital. The regular investment activities are activities that do not increase the registered production capacity of the project entitled to corporate income tax (CIT) incentives.
The important points are summarized as follows:
– In the period from 2009 to 2013, if an enterprise had regular investment activities, such investing activities shall not be considered as business expansion and the enterprise is allowed to enjoy CIT incentives for its profits earned during this period.
– If the investing activities meet all of the aforesaid criteria to be treated as regular investing activities, the enterprise is allowed to amend CIT declaration. Even in the case where decisions to recapture tax have been issued and/or the enterprise is in an appeal process, over-paid tax can be offset against the tax liabilities in the following tax periods or the enterprise can claim for a refund.
– From the tax period of 2014, regular investment activities which meet the criteria stated above qualify for CIT incentives per this Official Letter and criteria does not follow the Point G of Article 5 in Circular No. 151/2014/TT-BTC dated 10 October 2014.
Official Letter on tax incentives for income generated from plant leasing activities
On 11 April 2016, Hanoi Tax Department issued Official Letter 18355/CT-HTr providing guidance on tax policy regarding to income generated from plant leasing activities.
According to this Official Letter, if an enterprise enjoys CIT incentives in a geographical area eligible for investment incentives and its operation of leasing or sub-leasing the factory is authorized in the Investment Certificate, income from plant leasing activities is entitled to CIT incentives as regulated in Circular No. 96/2015/TT-BTC issued by Ministry of Finance on 22 June 2015.
In case the enterprise generates income from leasing or sub-leasing the factory accompanied by land leasing, this kind of income is not entitled for CIT incentive.
Official Letter on treatment of trade union fees paid retrospectively for CIT purpose
On 14 April 2016, General Department of Tax issued Official Letter No.1564/TCT-DNL on deductible expenses for CIT purpose.
Pursuant to Decree No. 191/2013/NĐ-CP dated 21 November 2013 and Circular No. 96/2015/TT-BTC dated 22 June 2015 issued by Ministry of Finance, if an enterprise pays trade union fees for 2013 and 2014 retrospectively to the Confederation of Labor by establishing a union in 2015 in accordance with the guidance of Law on Trade Union and Decree No. 191/2013/ND-CP, the deduction of such expenses for 2013 and 2014 in addition to the fee paid for 2015 are treated as deductible expense for CIT purpose in 2015.
Circular No. 05/2016/TT-NHNN on foreign loan registration
The State Bank of Vietnam issued Circular No.05/2016/TT-NHNN (Circular No.05) on 15 April 2016, revising several contents of Circular No.03/2016/TT-NHNN dated 26 February 2016.
One of the important points is as the following:
Circular No. 05 clearly defines the term of foreign loans made in the form of the contract to import goods with deferred payment. The period of such loans is determined from the first drawdown date to the last payment date.
The first drawdown date of the foreign loan granted by deferral of payment of imported goods is defined as follows:
– 90th day from the issuance date of the transportation document (B/L…) if the bank requires the transportation document
– 45th day from the checking completion date stated on the custom declaration form if the bank does NOT require the transportation document
The last payment date is defined as follows:
– The last scheduled payment date stated in the payment term per the contract
– The actual last payment date if the payment does not follow the payment schedule or the contract does not stipulate the payment term.
Law No.106/2016/QH13 providing amendments and supplements to certain articles of Law on Value Added Tax (VAT), Law on Special Excise Duty and Law on Tax Administration
On 06 April 2016, the Congress issued Law No.106/2016/QH13 providing amendments and supplements to certain articles of Law on VAT, Law on Special Excise Duty and Law on Tax Administration.
A notable change is the amendment of Clause 1 and Clause 2 of Article 13 of Law No.13/2008/QH12 which was initially amended and supplemented by Law No.31/2013/QH13. This Law allows an enterprise which pays VAT under credit method to carry forward its input VAT if its monthly or quarterly input VAT still remains. This Law also abolishes regulation on VAT refund when “input VAT is not completely deducted after 12 months or 4 quarters from the first month or quarter input VAT is incurred”. VAT refund will no longer be allowed where a taxpayer accumulates input VAT outstanding for 12 months or more.
A business establishment whose exported goods/services incur an input VAT of at least VND 300 million which has not been deducted in the month or quarter shall still receive VAT refund for that month or quarter unless they have violated any tax and customs regulations for 2 consecutive years and are classified as “high tax risk” entities. In addition, where a business establishment that has registered to pay VAT using credit-invoice method has a new investment project which is still in its investment stage, VAT on goods/services purchased serving the investment has not been deducted, and the remaining tax is at least VND 300 million, VAT shall still be refunded.
Law no.106/2016/QH13 comes into force on 01 July 2016, except for Clause 4, Article 3 which will become effective on 01 September 2016.
Law No.107/2016/QH13 on import and export duties
On 06 April 2016, the Congress issued Law No. 107/2016/QH13 on import and export duties.
The scope of this Law includes taxable goods, taxpayers, basis for tax calculation, time for tax calculation, tariff schedules, anti-dumping duty, countervailing duty, safeguard duty imposed upon exports and imports, tax exemption, tax reduction, and refund of export and import duties.
This Law comes into force on September 01, 2016. Law No. 45/2005/QH11 becomes null from the effective date of this Law. The Government is expected to elaborate the Articles and Clauses of this Law.