Newsletter

Official Letter No. 1091/TCT-TNCN about PIT policy for foreigners

On 27^th March 2017, the General Department of Taxation issued Official Letter No. 1091/TCT-TNCN regarding personal income tax (PIT) policy applied to foreign expatriates in case a general director of a Vietnamese company is non-resident of Vietnam:

– For remuneration paid by the Vietnamese company which he/she receives while working in Vietnam, PIT is calculated at 20% on taxable income.

– For salaries paid by a parent company in Japan, salaries received for the portion of work done for the parent company is non-taxable income in Vietnam, while salaries received for the portion of work done for the Vietnamese company is taxable in Vietnam.

Official Letter No. 1121/TCT-CS about VAT refund of dissolved companies

According to Official Letter No. 1121/TCT-CS issued by the General Department of Taxation on 27^th March 2017, in case a company is in the process of dissolution and has deductible input value added tax (VAT), it shall be considered for VAT refund.

Official Letter No. 1156/TCT-CS about VAT

On 29^th March 2017, the General Department of Taxation issued Official Letter No. 1156/TCT-CS about VAT.

EPEs (export processing enterprises), which have been licensed to trade goods and conduct other activities related to trading goods in Vietnam (import-export right), must open accounting books to separately record sales/expenses from trading goods domestically in Vietnam. In addition, EPEs need to register with the tax authority to declare and pay VAT separately for these transactions.

Official Letter No. 8081/CT-TTHT about tax policy

On 6^th March 2017, Hanoi Taxation Department issued Official Letter No. 8081/CT-TTHT about tax policy.

In case a company receives advance payment/deposit to guarantee contract, and services have not yet been rendered at the time of receiving money, the company does not need to issue VAT invoice for such advance payment/deposit.

In case the company receives money before or while providing services to its clients, VAT invoice should be issued for such amount.

Official Letter No. 13430/CT-TTHT about tax policy

On 31^st March 2017, Hanoi Taxation Department issued Official Letter No. 13430 about tax policy.

In case a company gives presents to its clients for business purposes, such expenses will be considered as deductible expenses for corporate income tax (CIT) purpose if they meet the requirement of current commercial laws.

In case the company offers presents that are physical goods to its clients, the company must issue VAT invoices with full disclosure for such goods as well as the appropriate VAT amount likewise sales transactions.

In case the company offers presents to an individual, the company does not need to withhold personal income tax if the presents are not an intellectual or registration-required-assets.

Official Letter No. 1224/TCT-CS about VAT

On 31^st March 2017, the General Department of Taxation issued Official Letter No. 1224/ TCT-CS about VAT.

In case a branch of a company uses the bank account of its head office in transactions with its clients, the branch can record deductible VAT when:

• Meet the requirements of laws about authorization in using bank account of the head office;
• The branch has already informed its clients of using the bank account of its head office;
• It is noted in the contract/appendix to contract about using bank account of its head office under authorization

A branch, which has not registered/disclosed the using its company’s bank account, shall be penalized as guided at Point 2, Article 8 of Decree No. 129/2013/ND-CP issued by the Government.

Official Letter No. 1110/ TCT-CS about tax policy

On 27^th March 2017, the General Department of Taxation issued Official Letter No. 1110/TCT-CS answering about tax policy.

In case a company sold its land use right and assets attached to such land at a loss, and received payment by cash, the tax authority shall examine to determine whether the transaction was made on arm’s length basis. According to Point 2, Article 25 of Circular 156/2013/TT-BTC dated 6^th November 2013 issued by the Ministry of Finance, the tax authority can impose tax on the transactions which do not follow the arm’s length principle.