Tax administration

Application of Advance Pricing Arrangement (APA) in tax management of enterprises with related party transactions

On 18 June 2021, the Ministry of Finance issued Circular No. 45/2021/TT-BTC guiding the application of APA in tax management of enterprises with related party transactions. Details are as follows:

– Subject of application: Organizations producing, trading goods/services that pay corporate income tax under declaration method, have transactions with related party, and have been requested to apply APA.

– Transactions to which a taxpayer can request application of APA must be:

+ Actually occurred transactions that will continue to arise during the APA implementation period.

+ Transactions which nature can be verified in order to determine tax obligations, can be analyzed, compared, to which comparable subjects can be chosen according to regulations set forth in Article 6 and 7 of Decree No. 132/2020/ND-CP, based on information and data in conformity with Point b, Clause 6, Article 42 of the Law on Tax Administration.

+ Transactions that are not subject to tax disputes.

+ Transactions that are conducted transparently, not for the purpose of evading taxes or taking advantage of the tax treaties.

– APA implementation process:

+ Consultation prior to filing an APA application is no longer mandatory.

+ APA application process still includes: submission of application dossier, evaluation, negotiation, and APA implementation.

+ A timeline for the above process was not specified by the Circular.

This Circular takes effect from 3 August 2021.


Value-added Tax (“VAT”)

Use of invoice and VAT issue of Export-processing enterprise (EPE) 

On 25 June 2021, Hanoi Tax office issued Official Letter No. 23122/CTHN-TTHT regarding the use of invoice and VAT of service provided overseas by EPE. Details are as follows:

In case an EPE provides design services, market research and production management consulting services abroad (outside the territory of Vietnam), such transactions are not subject to VAT under regulation set forth in Clause 20, Article 4 of Circular No. 219/2013/TT-BTC dated 3 December 2013 by the Ministry of Finance.

For the above service transactions, the enterprise shall issue commercial invoices as prescribed in Clause 7, Article 3 of Circular No. 119/2014/TT-BTC dated 25 August 2014 by the Ministry of Finance.


Personal Income Tax (PIT)

PIT declaration in case of no PIT taxable income payments

On 1 July 2021, the General Department of Taxation issued Official Letter No. 2393/TCT-DNNCN on PIT declaration.

Only organizations or individuals who pay incomes subject to PIT must file PIT returns. Organizations or individuals who do not pay incomes subject to PIT in a tax period do not need to file PIT returns for such period (month/quarter).


Social insurances and union fees

Reduce social insurance premiums for labor accidents and occupational diseases

On 1 July 2021, the Government issued Resolution No. 68/NQ-CP on supporting labors and employers facing difficulties due to the Covid-19 pandemic.

For employees (except military personnels, employees of administrative agencies, agencies of the State/Party, public non-profit agencies who receive salaries from the State budget) subject to labor accident and occupational disease (LAOD) insurance, employers may pay LAOD insurance premiums at 0% of its payroll for a period of 1 year from 1 July 2021 to 30 June 2022. The entire balance that an employer saves from reduction of premiums must be used to support its labors/employees in dealing with the Covid-19 pandemic.


Extending deadline for Union fee payment

On 22 June 2021, Ho Chi Minh City Confederation of Labor issued Guidance Letter No. 13/HD-LDLD regarding changes in union fee payment due to the effect of the Covid-19 pandemic:

Accordingly, the deadline to make payment of union fee for businesses affected by the Covid-19 pandemic is extended as follows:

– Subject: enterprises whose number of social insurance participants put on temporary leave equals or exceeds 50% of the total social insurance participants prior to the Covid-19 pandemic.

– Extended deadline:  Could be extended to 31 December 2021.

– After 31 December 2021, the enterprise must pay the entire postponed union fees to its direct supervising union.

– Application dossier, process of implementation:

A detailed list of required application dossier and process of implementation is provided in the Guidance Letter.

The Guidance Letter takes effect from 22 June 2021.