Newsletter

Tax administration

Deadline for using e-invoices

On 19^th August 2020, Bac Ninh Department of Taxation issued Official Letter No. 2543/CT-TTHT about the deadline for using e-invoices with the following contents:

According to Circular No. 68/2019/TT-BTC dated 30^th September 2019 of the Ministry of Finance, “From 01^st November 2020, enterprises, business organizations, other organizations, household businesses and individual businesses must apply to use e-invoices.”

According to the Law on Tax Administration No. 38/2019/QH14 dated 01^st July 2020, “Regulations on electronic documents and invoices of this Law come into force from 01^st July 2022; organizations and individuals are recommended to apply these regulations before 01^st July 2022.”

According to the Law on Promulgation of Legislative Documents No. 80/2015/QH13, “In case various legislative documents contain different regulations on the same issue, the superior document shall apply.”

Therefore, the deadline for compulsory use of e-invoice is 01^st July 2022. However, companies are recommended to use the e-invoices before this deadline.

In the meantime, companies can continue to use paper invoices based on the regulations at Decree No. 51/2010/NĐ-CP (Decree 51) dated 14^th May 2010 by the Government, Decree No. 04/2014/NĐ-CP dated 17^th January 2014, which amends and supplements the Decree 51 about using invoices in selling goods and services.

Reduction in land lease fee of 2020 for those affected by Covid-19 pandemic

We highlighted several important points of Decision No. 22/2020/QĐ-TTg (Decision 22) issued on 10^th August 2020 by the Government about reduction in the land lease fee of 2020 for those affected by Covid-19 pandemic:

– The decision is applied for enterprises, organizations, households and individuals that directly lease land from the State, pay annual lease fee and shut down business for 15 days or longer due to the impact of Covid-19 (hereinafter referred to as the land lessees).

– The land lease fee of 2020 shall be reduced by 15%; no reduction will be made on the land lease debts of the years prior to 2020 and late payment interest (if any).

This regulation is also applied to a case where the land lessees have many business activities, but only stop one activity in the land directly leased from the State.

– Document for applying the reduction:

+ An application form for land lease reduction in 2020, using the form provided in the Appendix of the Decision 22.

+ A land lease decision or land lease contract (copy).

Deadline for submitting the documents is 31^st December 2020.

The Decision came into force from 10^th August 2020.

Personal Income Tax (PIT)

Applying new personal deduction for PIT finalization

According to Official Letter No. 2455/CT-TTHT dated 12^th August 2020 of Bac Ninh Department of Taxation, in case a foreign employee terminates the labor contract with a company in July 2020, the company calculates PIT finalization on behalf of that employee before he or she comes back to the home country, and the foreign employee has PIT finalization period in both year 2019 and year 2020, the personal deduction from January 2020 is determined based on the Resolution No. 954/2020/UBTVQH14 dated 02^nd June 2020 (Resolution 945).

When preparing PIT finalization dossier using new personal deduction under Resolution 954, in case the declaration supporting system has not been updated or upgraded, the company shall prepare the finalization dossier in paper and submit it to the tax office.

Corporate Income Tax (CIT)

Reduction in CIT payable of 2020 by 30%

According to Official Letter No. 77768/CT-TTHT (OL 77768) dated 21^st August 2020 by Ha Noi Department of Taxation, in case a company meets the requirements for 30 % CIT reduction stated in the Resolution No. 116/2020/QH dated 19^th June 2020 by the National Assembly, and its fiscal year is different from the calendar year, the CIT reduction for year 2020 shall be determined conformably with the fiscal year.

The OL 77768 is consistent with Official Letter No. 3138/CT-TTHT issued on 23^rd July 2020 by Da Nang Department of Taxation.

Construction in progress expense when terminating the investment project shall not be deductible for VAT and CIT purpose

According to Official Letter No. 77556/CT-TTHT dated 21^st August 2020 by Ha Noi Department of Taxation, input VAT of construction in progress expense when terminating the investment project shall not be deductible.

In addition, since that expense is does not relate or correspond to the revenue and income of the taxable period, it shall be non-deductible for CIT purpose.

Value Added Tax (VAT)

Service rendered together with on-the-spot exporting goods is subject to VAT at 10%

According to Official Letter No. 81088/CT-TTHT dated 04^th September 2020 by Ha Noi Department of Taxation, in case a company provides installation, warranty, maintenance service together with goods delivered to a recipent in Vietnam in on-the-spot export, the services shall be considered as being consumed in Vietnam with VAT at 10%.