Law on Tax Administration No. 38/2019/QH14

On 13th June 2019, the National Assembly issued the Law on Tax Administration No. 38/2019/QH14, with some highlighted contents as follows:

– Deadline for submitting PIT finalization dossiers is extended:

Currently, the deadline for submitting the annual PIT finalization dossiers is the 90th day from the end of calendar year. However, as regulated at Clause 2, Article 44 of the Law on Tax Administration in 2019, this deadline for individuals who directly submit the PIT finalization dossiers to tax office is the last day of the 4th month from the end of the calendar year.

– Expanding taxpayers’ rights:

In comparison with the Law on Tax Administration in 2006, several rights of taxpayers are widened including the right to obtain information (timeline for handling tax refund, denied tax refund amount and the legal basis for denial) about their tax refunds, or taxpayers will not be subjected to tax administration penalties and late payment interest if they declared and paid taxes based on the decisions issued by the tax offices at that time, and so on.

– New tax administration regulations in e-commerce activities and tax management with a focus on transfer pricing are introduced in the new law.

The Law on Tax Administration No. 38/2019/QH14 comes into force from 01st July 2019.


Official Letter No. 9985/CT-TTHT (OL 9985) : Foreign contractor tax (FCT) on brokerage fee paid to foreign contractor

On 19th June 2019, Binh Duong Department of Taxation issued OL 9985, which handles the case that a Vietnamese company hires a foreign company to provide the brokerage service in order to sell its goods abroad. In this case, the brokerage fee that the foreign company received is earned outside Vietnam and shall not be subject to FCT according to Clause 4, Article 2 of Circular No. 103/2014/TT-BTC dated 6th August 2014 by the Ministry of Finance. On the other hand, in case the foreign company provides the brokerage service for Vietnamese company to sell its goods in Vietnam, the income of the foreign enterprise is subject to FCT. Tax rate for FCT is regulated at Article 12, Article 14 of Circular No. 103/2014/TT-BTC.


Official Letter No. 884/CT-TTHT (OL 884) : tax treatment on consulting expenses paid to foreign contractor

On 04th June 2019, Bac Ninh Department of Taxation issued OL 884, guiding tax treatment on consulting fee of a specific case, in which a Vietnamese company paid consulting fees (HR consulting, consulting fee for building business process and fee for training staff) to a foreign contractor, as well as PIT treatment for expenses paid to experts assigned to work in Vietnam under consulting contract. The main contents are recapped as follows:

– Corporate income tax (CIT): In this case, if the Company has enough documents to prove that the consulting services have been performed and related to its business and supported by adequate documents as regulated at Clause 1, Article 6, Circular No. 78/2014/TT-BTC, these expenses are considered as deductible expenses for CIT purpose.

– Personal income tax (PIT): Taxable income of foreign experts is the total income that experts received during their working time in Vietnam, which includes (1) accommodation fee, meals, transportation fee and so on paid by Vietnamese company (if any) and (2) income from salary and wages paid by the foreign contractor corresponding to their working time in Vietnam.

The experts shall declare and pay PIT on their income incurred in Vietnam according to Article 18, Circular No. 111/2013/TT-BTC dated 15th August 2013 by the Ministry of Finance (Circular 111). Vietnamese company has a responsibility to inform the foreign contractor about the PIT obligation of experts, and also inform the tax office of the list of foreign experts working at the company based on Article 27 of Circular 111.