Newsletter

Tax administration

Circular No. 105/2020/TT-BTC (Circular 105) guiding the implementation of the Law on Tax Administration No. 38/2019/QH14 and Decree No. 126/2020/ND-CP

On 03^rd December 2020, the Ministry of Finance has issued Circular No. 105/2020/TT-BTC to guide the implementation of the Law on Tax Administration No. 38/2019/QH14 and Decree No. 126/2020/ND-CP detailing the implementation of the Law on Tax Administration about tax registration.

Circular 105 replaces Circular No. 95/2016/TT-BTC dated 28^th June 2016 and Article 9 of Circular No. 156/2013/TT-BTC dated 06^th November 2013 issued by the Ministry of Finance.

This Circular comes into force on 17^th January 2021.

Taxpayers that have been granted tax code before the effective date of this Circular may continue using their granted tax codes.

For tax registration dossiers, changes of tax registration information, tax code closing, restoration of tax code, that have been submitted to the tax authority before the effective date of this Circular, the tax authority shall continue handling such dossiers under the current law on tax administration.

Official Letter No. 4868 guiding some contents of Decree No. 123/2020/ND-CP on invoices and documents

On 16^th November 2020, the General Department of Taxation issued Official Letter No. 4868/TCT-PC guiding some of the new points of Decree No. 123/2020/ND-CP on invoices. Some notable contents are as follows:

– Paper invoices can be used until 30^th June 2022.

– E-invoices usage is mandatory from 01^st July 2022.

– After 01^st July 2022, taxpayers that need to buy invoices from tax authorities can still buy and use paper invoices.

– PIT withholding document is issued electronically.

– E-invoices with signed date after issued date are accepted. However, tax declaration must follow the date of issuance.

Corporate Income Tax (“CIT”)

The Government will accept contributed expenses to prevent and control Covid-19 as deductible expenses for CIT purpose

According to Resolution No. 178/NQ-CP issued by the Government on 12^th December 2020, the Ministry of Finance shall formulate a Decree to guide contributed expenses to prevent and control the Covid-19 pandemic. In which, such expenses will be considered as deductible expenses for CIT purposes and it shall be applied for the years 2020 and 2021.  The Decree is supposed to be submitted to the Government in January 2021.

Expenses during production suspension due to Covid-19 pandemic shall be deductible for CIT

On 01^st February 2020, Hung Yen Tax Department issued Official Letter No. 7301/CTHYE-TTHT guiding tax policies with main points as follows:

In case a company must suspend production due to Covid-19 pandemic, expenses to maintain the operation during the production suspension such as salaries, allocation of land rent expense, allocation of tools and supplies expense shall be deductible expenses when determining taxable income for CIT purpose in case they comply with the regulations written in Article 4, Circular No. 96/2015/TT-BTC issued by the Ministry of Finance.

Regarding fixed asset depreciation expense, in case the operation of fixed asset is suspended for less than 9 months in the tax year 2020 due to Covid-19 pandemic, the depreciation expense will be treated similarly with depreciation expense during temporary suspension for seasonality as guided in point 2.2, Clause 2, Article 4, Circular No. 96/2015/TT-BTC.

Foreign Contractor Tax (“FCT”)

Sales of scrap on behalf of a foreign company are taxable for FCT purpose

On 01^st December 2020, Dong Nai Tax Department issued Official Letter No. 12168/CT-TTHT guiding the treatment of FCT regarding sales of scrap on behalf of a foreign company.

A company in Vietnam (the processing company) signed a processing contract with a foreign company and had scrap from NG/defective goods. According to the agreement between 2 parties, the processing company shall sell scrap on behalf of the foreign company to another company in Vietnam. In such a case, the processing company shall issue VAT invoice, declare VAT and perform necessary customs procedures as required by the Customs.

Revenue from the sales of scrap on behalf of the foreign company is subject to FCT as prescribed in Clause 1, Article 1, Circular No. 103/2014/TT-BTC dated 06^th August 2014 issued by the Ministry of Finance.

Labor

Decree No. 145/2020/ND-CP (Decree 145) guiding the implementation of some articles of the Labor Code 2019

There are some notable contents according to Decree 145 issued by the Government on 14^th December 2020 as follows:

1. Employment report

The procedure for employment status declaration shall comply with Decree No. 122/2020/ND-CP (Decree 122) dated 15^th October 2020 of the Government guiding on the cooperation in processing application for registration of enterprises, branches and representative offices, declaration of employment and invoice usage registration.

Employers shall submit semiannual and annual reports on changes of its employees by using Form 01/PLI attached to Decree 122 to the provincial Department of Labor, Invalids and Social Affairs and send notifications to the social insurance authorities of the districts where the headquarters, branches and representative offices are located through the National Public Service Portal. The deadline to submit the semiannual report is before 05 June and the deadline for annual report is before 5 December. In case the employers cannot submit the report through the National Public Service Portal, paper reports shall be accepted.

2. Guidance for annual leave in some special cases

• The number of annual leave days of an employee who has worked for less than 12 months mentioned in Clause 2, Article 113 of the Labor Code is calculated as follows:

The number of leave days = [(Annual leave days + extra leave days (if any)) : 12 months] x actual working months in the year.

• In case an employee does not work for a month in full, it will be considered as working for a month in full (01 month) in case the total working days and paid leave days in a month equal to at least 50% of the normal working days of the month.

3. A female employee who is nursing a child under 1-year-old will receive extra salary in the following case:

A female employee who is nursing a child under 1-year-old is entitled to a daily break of 60 minutes. This daily break time will be fully paid. In case she does not take break time and the employer allows her to work, she will receive, in addition to the salary, an extra salary that corresponds to the amount of works done by her during the break time which she is entitled to.

In addition, the Decree also guides some articles of the Labor Code on labor management, labor contract, outsourcing, salaries, working time and rest time, labor regulations and so on.

Decree 145 comes into force on 01^st February 2020.