Newsletter

Official Letter No. 14676/CT-TTHT (OL 14676): VAT policy on cash receipts from parent company

This OL issued by Hanoi Department of Taxation handles the case a company receives money from the parent company for its business activities.

+ If the company receives the money without providing service (repair/guarantee/promotion/advertising services etc.) for the parent company, the company shall not declare and pay VAT according to the regulation at Clause 1, Article 5, Circular No. 219/2013/TT-BTC dated 31^st December 2013 by the Ministry of Finance. The company records the receipts to other income upon receipt, following the regulation at Clause 15, Article 7, Circular No. 78/2014/TT-BTC dated 18^th June 2014 by the Ministry of Finance.

+ If the company receives the money and provides some services to parent company such as repair/guarantee/promotion/advertising services, the company shall issue an invoice and pay VAT according to the regulation at Clause 1, Article 5, Circular No. 219/2013/TT-BTC dated 31^st December 2013 by the Ministry of Finance.

Official Letter No. 16034/CT-TTHT (OL 16034): PIT treatment of termination payments

This OL issued by Hanoi Department of Taxation clarifies taxable income and non-taxable income for termination payments made to employees when the employee and the company agreed to terminate the labor contract (applied for the labor contract having a term of 3 months or longer).

– Severance allowance, job-loss allowance and other payments made by the employer as required by Labor Law and Law of Social Insurance are not taxable income for PIT purpose.

– Wages, allowances and other benefits are taxable. The company is required to withhold PIT by applying the progressive tax rate.

– If the Company pays financial support that is not required in accordance with Labor Law and Law of Social Insurance after the termination of labor contract, the company is required to withhold PIT using the tax rate of 10% for the amount exceeding VND 2,000,000 each payment.

Official Letter No. 22456/CT-TTHT (OL 22456): documentation requirements for expenses incurred in foreign countries for CIT

This OL issued by Hanoi Department of Taxation states the tax treatment of expenses incurred oversea when the company assigns its employees to travel to another country for its business purpose. If these expenses are supported by sufficient invoices and documents which are conformable with the regulations of the country expenses incurred, these expenses are deductible expense for CIT purpose as long as the documents are translated into Vietnamese, according to Clause 4, Article 5 of Circular No. 156/2013/TT-BTC.

Official Letter 1549/TCT-CS (OL 1549): VAT refund policy for a company whose charter capital has not been fully contributed

OL 1549 issued by the General Department of Taxation states the VAT treatment of a business entity which has an investment project. If its registered charter capital has not been fully contributed, the business entity is not eligible for VAT refund for the investment project. The company is allowed to carry forward the remaining deductible VAT of the investment project to the subsequent periods.