Newsletter

Official Letter No. 4079/CT-TTHT (OL 4079): requirement to change depreciation method of fixed assets

On 13^th March 2019, Binh Duong Department of Taxation issued OL 4079, clarifying the requirement when a company changes the depreciation method of fixed assets as follows:

The company itself determines the depreciation method and useful life of fixed assets and informs such information to the tax office before applying the chosen depreciation method.

In case the company wants to change the depreciation method of fixed assets which are already in use, the company must explain the reason to change the depreciation method. The depreciation method of fixed asset can be changed only once during its useful life and the change must be informed to the tax office in writing.

Official Letter No. 9343/CT-TTHT (OL 9343): wire transfer fee

On 13^th March 2019, Hanoi Department of Taxation issued OL 9343 on tax treatment of wire transfer fee to remit money from a company’s bank account in Vietnam to oversea bank. The fee is charged by the bank in Vietnam, in order to remit money to the oversea bank.

If the bank fee relates to business activities of the company and is supported by invoice/documents that contain name, address, tax code of the company (in case the oversea bank does not provide an invoice, the eligible document can be the bank statement from the bank the company makes the wire transfer transaction in Vietnam) and is paid via non-cash payment method, the banking fee shall be deductible expense for CIT purpose, according to the regulations on VAT,

In case the abovementioned documents are electronic data, the data must be accurate and reliable. The data should be stored and can be accessed when necessary, according to the Law on E-transaction No. 51/2005/QH11 dated 29^th November 2005.

For expenses which incur in foreign countries, the documents of the expense must be conformable with the regulation of the local countries where expenses incur and the documents must be translated into Vietnamese, according to Clause 4, Article 5 of Circular No. 156/2013/TT-BTC dated 06^th November 2013 issued by the Ministry of Finance.

Official Letter No. 864/CT-TT&HT (OL 864): PIT on capital transfer

On 04^th March 2019, Hai Duong Department of Taxation issued OL 864 which handles the case that Mr. X is a residential individual in Vietnam and he has income from capital transfer. In this case, PIT of Mr. X shall be treated as follows:

– Time to determine the taxable income is when the capital transfer contract comes into force.

– Deadline to submit the PIT dossier for individual who has income from capital transfer is 10 days from the date that the capital transfer contract comes into force.

– Deadline for PIT payment is the date mentioned in the tax payment notice from tax office.

Official Letter No. 10419/CT-TTHT (OL 10419): tax declaration for representative office

On 30^th March 2019, Hanoi Department of Taxation issued OL 10419 guiding tax declaration for representative office.

In case a Company plans to open its representative office, the company should register and obtain a tax code (13 digits) for the representative office, according to Article 8 of Decree No. 78/2015/ND-CP dated 14^th September 2015. Then, the representative office declares and pays taxes as follows:

– License fee: the representative office shall follow Article 2 of Circular No. 302/2016/TT-BTC dated 15^th November 2016 issued by the Ministry of Finance.

– VAT: If the representative office does not perform sale activities and does not have sales, the company shall declare VAT of the representative office together with the company, according to Clause 1, Article 11 of Circular No. 156/2013/TT-BTC issued by the Ministry of Finance on 06^th November 2013.

– PIT: If the employees of the representative office sign labor contracts with the company and receive salary from the company, it is not necessary for the representative office to declare and pay PIT. The company shall deduct, declare and pay PIT, according to Clause 1 and Clause 2, of Article 16 of  Circular No. 156/2013/TT-BTC dated 06^th November 2013 issued by the Ministry of Finance.

– CIT: If the representative office is a dependent accounting unit, it does not need to submit CIT declaration dossier. The company has responsibility to declare CIT of the representative office together with its head office.