Newsletter

Tax administration

Policies on Tax exemption/reduction, tax deadline extension in 2022

On 30 January 2022, the Government issued Resolution No. 11/NQ-CP on a Program on Socio-economic Recovery & Development, and implementation of Resolution No. 43/2022/QH15 on financial and monetary policies.

Accordingly, in 2022, the Government will implement the following key policies to help businesses recover and improve after the Covid-19 pandemic:

– Reduce VAT rate of goods and services currently subject to 10% VAT rate by 2% (according to Resolution No. 43/2022/QH15);

– Allow donations and contributions to pandemic reliefs to be recorded as reasonable expenses (according to Resolution No. 43/2022/QH15);

– Reduce environmental protection tax on jet fuel by 50% (according to Resolution No. 13/2021/UBTVQH15);

– Reduce land and water surface rents by 30% for 2022;

– Apply new import-export tax rates according to Decree No. 101/2021/ND-CP;

– Reduce registration fee for domestically manufactured or assembled automobiles by 50% (according to Decree No. 103/2021/ND-CP);

– Extend deadlines for payment of CIT, PIT, VAT, Special-consumption tax (SCT) and land-use rents in 2022;

– Reduce interest rate by 2% pa. for 2 years (2022 – 2023) for commercial loans to enterprises in the following industries: Aviation, logistics and warehousing, tourism, education, agriculture, seafood, industrial processing, software publishing, etc.;

The Government will implement the following support policies for laborers: support house rental for 3 months (from VND 500,000 – 1 million/month) for laborers working in industrial parks, EPE zones, key economic regions (applied to the first 6 months of 2022); offer loans to purchase, lease-purchase social housing, workers’ housing; loans to support job creation, and so on.

List of provinces and cities where electronic invoices (e-invoices) are requried from April 2022

On 24 February 2022, the Ministry of Finance issued Decision No. 206/QD-BTC on implementation of e-invoices in 57 provinces and cities. Accordingly, these 57 provinces and cities according to the appendix attached to Decision 206 (except for some cases where the conditions cannot be satisfied as prescribed) must switch to using e-invoices from April 2022. The implementation of e-invoices in the 57 provinces and cities shall observe regulations on e-invoices set forth in the Law on Tax Administration, Decree No. 123/2020/ND-CP issued 19 October 2020 by the Government regarding invoices, and Circular No. 78/2021/TT-BTC issued on 17 September 2021 by the Ministry of Finance.

Guidelines for 2021 Corporate Income Tax (“CIT”) and Personal Income Tax (“PIT”) finalization by Bac Ninh Tax Office

On 4 March 2022, Bac Ninh Tax Office issued Official Letter No. 535/CTBNI-TTHT guiding CIT and PIT finalization for the 2021 tax period. The Official letter provides detailed instructions for a number of cases as follows:

– Revenue for calculating CIT for goods exported by sea, air, railway, inland waterway, through trans-shipment ports, etc., shall be recognized after customs declarations have been completed and the goods have passed through customs check-points, on-board the outgoing (export) vessel.

– Regarding goods and services given as gifts: their values are not revenue for CIT calculation, but VAT invoices must be issued in accordance with the law on VAT invoices. Costs of goods and services gifted to customers in service of production and business activities shall be deductible when determining corporate taxable income. However, costs of goods and services gifted to customers not in service of production and business activities are not deductible.

– In case, due to the impact of the Covid-19 pandemic, an enterprise must suspend operation of some fixed assets for less than 9 months in the CIT period of 2021, then later put them to use (for production and business purposes) again, the suspension shall be treated as suspension due to periodic production.

– Expenses for repair of leased assets: if specified in a contract that the lessee is responsible for repairing during the lease period, the repair costs are accounted and allocated as business expenses for a period of at most 3 years.

– PIT consulting expense for a foreign employee does not serve production and business purposes, is not considered as benefit-in-kinds of the said employee, and is not deductible when calculating CIT.

– Expenses for medical consulting and examination of foreign employees are deductible in case they do not exceed 01 month actual average salary for the year of CIT calculation.

In addition, the Official Letter also provides guidelines on:

– Determination of CIT preferential treatments;

– Determination of tax offset, loss carried forward when calculating CIT.

– CIT rate for the tax period of 2021;

– Related party transactions;

– Subjects who must declare CIT finalization for 2021;

– Regulations on CIT payable on a quarterly basis compared to CIT payable upon finalization;

– Dossiers of CIT finalization;

– Deadlines for CIT finalization, where to submit CIT finalization returns;

– Reminders on PIT finalization;

– Methods for submitting CIT and PIT finalization returns, and so on.

Value-added tax (“VAT”)

VAT rate of 8% does not apply to adjusted invoices made after 1 February 2022

On 2 March 2022, Hanoi Tax Office issued Official Letter No. 6778/CTHN-TTHT guiding VAT reduction according to Decree No. 15/2022/ND-CP. Details are as follows:

In case a company provides services to customers and collects payment before 1 February 2022, and upon collecting payment, the company has issued VAT invoice of 10% tax rate, however on 1 March 2022, the customer stops using the service and the company must refund any unused service payment, then the company shall issue an invoice with VAT rate same as that at the time of collecting payment.

In case from 1 February 2022 to the 31 December 2022, the company provides services subject to VAT reduction according to the provisions of Decree No. 15/2022/ND-CP dated 28 January 2022 by the Government, and issues 8% VAT invoices according to Article 9 of Decree No. 123/2020/ND-CP dated 19 October 2020 by the Government, and then the company must adjust the invoices issued as above after 31 December 2022, the adjusted invoice shall use 8% VAT rate.

Services subject to 2% VAT reduction must be invoiced separately

On 3 March 2022, Hanoi Tax Office issued Official Letter No. 7059/CTHN-TTHT detailing a number of VAT policies after Decree No. 15/2022/ND-CP. Detals are as follows:

For services subject to 2% VAT reduction under Decree No. 15/2022/ND-CP, the tax office requires that the service must be invoiced separately. If not, the whole invoice shall apply 10% VAT rate.

Also, for installation services, if the service is completed and accepted before 1 February 2022, 2% VAT reduction shall not be applied even if the corresponding invoice is issued after 1 February 2022.