Newsletter

Tax Administration

Identification of related parties

On 20 July 2021, the General Department of Taxation issued Official Letter No. 2687/TCT-TTKT on verifying related parties. Details are as follows:

In case an enterprise borrows loans that account for at least 25% of its owner’s equity and more than 50% of its total medium and long-term loan balance, the enterprise shall be subject to Decree No. 20/2017/ND-CP and Decree No. 132/2020/ND-CP.

Late submission of tax returns due to social distancing

On 29 July 2021, the Tax Department of Hanoi City issued Official Letter No. 29592/CTHN-KK on submission of tax returns during implementation of Order No. 17/CT-UBND. Details are as follows:

In case a taxpayer, who is an individual whose address (permanent and temporary residence)/an organization whose head office is located in a quarantined area due to COVID-19 in accordance with an order by a competent state authority, cannot submit their tax returns in time due to social distancing, the taxpayer shall not be fined under administrative violation.

The content of Official Letter No. 29592/CTHN-KK above is similar with that on Official Letter No. 6770/CTTPHCM-KK dated 19 July 2021 issued by the Tax Department of Ho Chi Minh City.

Enterprises are not required to issue VAT invoices on raw materials and goods borrowed with sufficient evidence documents

On 26 May 2021, the Tax Department of Long An province issued Official Letter No. 1604/CT-TTHT on issuance of VAT invoices when borrowing raw materials and goods. Details are as follows:

In case an enterprise borrows raw materials and/or goods from another company for production and business purposes, before returning the raw materials and/or goods:

If the company has contracts and supporting documents supporting the borrowing and returning of raw materials and goods, the company is not required to issue VAT invoice as prescribed in Clause 2, Article 3 of Circular No. 119/2014/TT-BTC. In case of borrowing and returning without sufficient evidence documents, the company must issue VAT invoice as prescribed in Clause 7, Article 3 of Circular No. 26/2015/TT-BTC.

Corporate Incom Tax (“CIT”)

Expenses incurred related to the Covid-19 pandemic

On 22 July 2021, the Tax Department of Bac Ninh province issued Official Letter No. 2076/CTBNI-TTHT on expenses incurred related to the Covid-19 pandemic for corporate income and personal income tax purposed. Details are as follows:

In case a company implements anti-pandemic requirements of the Provincial People’s Committee to ensure safe production:

Regarding expenses incurred by the company to implement prevention measures, such as accommodation for employees staying and working on company’s premises; expenses for Covid testing before work, periodic testing, expenses for testing before the employees return to their hometown, and so on, determination of deductible expenses (when calculating CIT) and taxable personal income (when calculating PIT) are as follows:

– Deductible expenses when calculating CIT: The abovementioned expenses shall be deductible provided that they have sufficient VAT invoices and non-cash payment vouchers.

– Income subject to PIT: If the expense vouchers do not specify the beneficial individual(s)’s name, and the expenses incurred collectively for a body of employees, such expenses are not personal taxable income.

Labor

Employee salaries during business stoppage due to the Covid-19 pandemic

On 15 July 2021, the Department of Labor Relations and Earnings issued Official Letter No. 264/QHLĐTL-TL on employee salaries during business stoppage due to the Covid-19 pandemic. Details are as follows:

In case an employee must stop working due to the direct impact of the Covid-19 pandemic, his or her salary during work stoppage shall be governed by Clause 3, Article 99 of the Labor Code, specifically:

1. a) In case of work stoppage of 14 working days or less, salaries during work stoppage shall not be lower than the minimum wage.
2. b) In case of work stoppage of more than 14 working days, salaries during work stoppage shall be agreed upon by the employer and the employees, but salaries during the first 14 days shall not be lower than the minimum wage.

Social insurances and union fees

Changes in regulations of mandatory social insurances 

On 7 July 2021, the Ministry of Labor, War Invalids and Social Affairs issued Circular No. 06/2021/TT-BLDTBXH amending Circular No. 59/2015/TT-BLDTBXH on a number of articles on mandatory social insurance. Some important contents include additional subjects of mandatory social insurances, supplementing regulations on monthly salary on which illness benefits are calculated, supplementing regulations on one-time maternity-payment in case the mother is not eligible for the maternity benefits, amending regulations on illness benefits for employees who take leave due to illness requiring long-term treatment and so on.

This Circular takes effect from 1 September 2021.