NEWSLETTER DECEMBER 2016
Official Letter No. 5568/TCT-CS about Value Added Tax (VAT)
On 2nd December 2016, the General Department of Taxation issued Official Letter No. 5568/TCT-CS on issuing invoices for transferred assets. The main point of the letter is as follows:
Entity A contributes capital to entity B in forms of assets, tools, goods or cash, entity A must prepare following dossiers (i) Capital contribution agreement (ii) Asset valuation report issued by the Capital Transfer Council or an organization who is licensed for asset valuation (iii) original documents of the assets. In case the asset is land use right, entity A must do procedure at the competent authority to transfer the land use right from entity A to entity B.
Entity A does not need to issue VAT invoice for this transaction in case it follows the requirements as regulated.
Official Letter No. 5593/TCT-CS about VAT
On 2nd December 2016, the General Department of Taxation issued Official Letter No. 5593/TCT-CS about VAT. The content of the letter is as follows:
A company signed purchase contract to import goods from overseas (under the delivery term CIF Vietnam), in which goods were delivered into Vietnam territory. After that, the company sold these goods to Vietnamese companies (under the delivery term CIF Vietnam) and goods were delivered into Vietnam territory. In such case, the company must pay VAT for imported goods and must use VAT invoices when selling goods to Vietnamese companies as regulated. The information in VAT invoice should include selling price (VAT excluded), surcharge and other fee (if any), VAT amount, and total payment amount (VAT included).
Official Letter No. 5690/TCT-CS about issuing VAT invoice
On 8th December 2016, the General Department of Taxation issued Official Letter No. 5690/TCT-CS about VAT invoice. The main point of the letter is as follows:
According to current regulations, buyer’s signature in VAT invoice is not required for self-printed invoices of an organization operating in supermarket or shopping mall, which have been established under the law. Some medical organizations asked the tax authority whether they must obtain buyer’s signatures on their VAT invoices, the tax authority will consider the actual situation to guide them. In case a medical organization provides health care services to clients with service fee more than VND 200,000 per time, and the clients do not request it to issue VAT invoices (or clients do not provide information of name/tax code/address to write VAT invoices, if any), the organization also needs to issue VAT invoices with a note “client does not receive invoice” or “client does not provide information of name/address/tax code” written in the invoice.
Official Letter No. 5742/TCT-TNCN about the obligation to pay PIT for individual who delegates PIT finalization to company but terminates the labor contract
On 12th December 2016, the General Department of Taxation issued Official Letter 5742/TCT-TNCN providing guideline on obligation to pay PIT for individual who delegates PIT finalization to company (employer) but terminates the labor contract.
In case the company, which has been authorized by the individual to finalize his taxes, fails to preserve and provide to the tax authority evidence proving the individual is eligible for dependent deduction, the company will take responsibility for paying the additional tax amount to the State Budget.
Official Letter No. 5765/TCT-TNCN about PIT
On 13th December 2016, the General Department of Taxation issued Official Letter No. 5765/TCT-TNCN about PIT.
A foreigner working in Vietnam receives 2 sources of income: one from Vietnam and one from overseas. An employer who pays income and the foreigner (employee) have the responsibility to declare and pay PIT on income from Vietnam and income from overseas.
In case the foreigner receives net income, this income must be converted to taxable income (income that includes tax) in accordance with the guidance of Clause 4, Article 7 of Circular No.111/2013/TT-BTC dated 15th August 2013 issued by the Ministry of Finance.
If an employer applies tax equalization policy by withholding an amount of presumptive tax before paying salary to its employees and pays the actual PIT on behalf of its employees, the income to be grossed up into taxable income for PIT purpose will not include the withheld amount of presumptive tax.
Official Letter No. 5918/TCT-TNCN about PIT on the payment upon termination of labor contract
On 20th December 2016, the General Department of Taxation issued Official Letter No. 5918/TCT-TNCN about PIT on the payment after two parties (employer and employee) agree to terminate the labor contract (with indefinite term). The tax treatment on that payment is guided as follows:
– Income from salary payable to employees is subject to PIT with progressive tax rate.
– Income from retirement allowance payable to employees who retires under the guidance of the Social Insurance Law and the Labor Code will not be included in taxable income from salaries and wages.
– Income from financial supports that an employer pays additionally to employees (other than those guided in the Social Insurance Law and the Labor Code) after terminating labor contract will be withheld at the rate of 10% on gross payment if the payment is equal or more than VND 2 million.
Official Letter No. 74113/CT-TTHT on determining the relationship and caretaking responsibility between tax payer and dependents
On 2nd December 2016, Hanoi Department of Taxation issued Official Letter No. 74113/CT-TTHT on determining the relationship and caretaking responsibility between tax payer and dependents.
When registering dependent deduction for dependents who are helpless and for whom he has to raise, the tax payer must submit evidence in accordance with Point d4 and Point g4, Clause 1, Article 9 of Circular No. 111/2013/TT-BTC.
In case the dependent does not live together with the tax payer, the tax payer must apply with Form No.09/XN-NPT-TNCN from the People’s Committee (commune level) where the dependent lives. In case the People’s Committee (commune level) cannot confirm a certificate prepared in accordance with Form No. 09/XN-NPT_TNCN, it is considered that the dossiers for dependent deduction for the tax payer is not sufficient.