Decree No. 41/2018/NĐ-CP (Decree 41): administrative penalty on financial statements preparation

According to Decree 41, a company can be imposed a penalty ranging from VND 10 million to VND 20 million when it does not prepare sufficient financial statements as required.

Moreover, the penalty amount will be adjusted when it violates the regulations relating to financial reporting as follows:

–  Failing to prepare statutory financial statements: from VND 20 million to VND 30 million

– Information presented in the financial statements is not true and fair in presentation: from VND 20 million to VND 30 million

–  Falsifying the financial statements: from VND 40 million to VND 60 million

This Decree also states some penalties for violations on accounting vouchers.

Decree 41 takes effects from 1st May 2018.


Circular No. 25/2018/TT-BTC (Circular 25): detailed guidance of Decree No. 146/2017/ND-CP dated 15th December 2017 on deductible expenses for corporate income tax (CIT)

On 16th March 2018, the Ministry of Finance issued Circular 25 amending and supplementing several regulations relating to deductible expense for CIT:

– In case a company transfers a part or its total capital in the form of “assets transfer” to another company, the company receiving the assets is allowed to depreciate and record depreciation expenses for transferred assets, but only for transferred assets that meet the requirements for depreciation as deductible expenses. Depreciation expenses are calculated over the net book value of the assets at the time of transfer in the accounting book of the transferring company.

– Expenses for purchasing life insurance for employees exceeding VND 3 million/month/person and/or expenses for purchasing life insurance that are not written in the internal regulations of the Company (labor contract, collective labor agreement, financial regulation, bonus regulation etc) are regarded as non-deductible expenses.

– For CIT purpose, the maximum allowed contribution to the pension insurance for employees is VND 3 million/month/person. However, (1) this expense must be clearly written in the internal regulations of the Company and (2) the Company must fulfill its responsibility on compulsory insurances for employees.

Circular 25 comes into force from 1st May 2018.


Official Letter No. 8382/CT-TTHT (OL 8382): tax treatment of lease transfer

OL 8382 handles a case where an EPE transfers a lease contract of the land and factory to a local company. According to this OL, if this transfer of lease contract complies with the current regulations and is approved by the competent authorities, tax treatment will be as follows:

– VAT: this activity is taxed at VAT of 10%.

– Invoice: the EPE must issue a VAT invoice for this activity.

– CIT: taxable income is determined at the time the EPE hands over the property (in this case the land and factory) to the local company.


Official Letter 10384/CT-TTHT (OL 10384): VAT invoice requirements for expenses paid on behalf of a client

OL 10384 dated 19th March 2018 handles the case where a company provides services to a client,  and the company pays some expenses on behalf of its client as noted in the sales contract.

This OL states that when the company pays these expenses, the company should request the suppliers to issue VAT invoices to the client (the client’s name and tax code on the invoice). Then, the Company shall not declare nor deduct input VAT for the goods and services paid on behalf of the client. At the time of receipt from its client, the company shall prepare a payment voucher to record receipt of the money only. The company shall not issue a VAT invoice.

Just in case if the supplier has already issued a VAT invoice using the company’s name and tax code, the company should request the supplier to void it and reissue a new VAT invoice using the client’s name and tax code. If above procedure is not completed by the supplier, when receiving the payment from the client, the company is required to issue a VAT invoice to its client and declare VAT as regulated by VAT law.


Official Letter 12423/CT-TTHT (OL 112423): tax treatment on establishment costs paid by an authorized party in Vietnam

This OL handles the case that a company, before its establishment, entrusts another company in Vietnam (authorized party) to pay establishing expenses on its behalf. According to this OL, in this case, if the VAT invoices for these expenses are issued using the name and tax code of the authorized party, the company does not need to amend the information of the purchaser in the VAT invoices. The VAT invoices are acceptable to treat such expenses as deductible expenses for CIT purpose if they comply with the regulations in Article 4 of Circular 96/2015/TT-BTC. The company is required to declare and deduct input VAT for these VAT invoices following the regulations stated at Point b, Clause 12, Article 14 of Circular No. 219/2013/TT-BTC. The company shall pay back to the authorized parties via bank transfer for VAT invoices over VND 20 million.