NEWSLETTER MAY 2020
Tax administration
Instructions for some contents of Decree No. 41/2020/ND-CP about extension for tax payment
On 20th May 2020, the Ministry of Finance issued Official Letter No. 5977/BTC-TCT about the implementation of Decree No. 41/2020/ND-CP. The highlighted point in the OL is that the extended corporate income tax (CIT) payable shall not exceed 20% of the total CIT payable of the whole year based on the CIT finalization 2019. In case taxpayers declare and submit the supplemented CIT finalization which increases the CIT payable to the tax office before the extended deadline of CIT payment; or the tax office conducts the CIT inspection and releases the conclusion before the extended deadline of CIT payment, the extended CIT payable shall be determined according to the abovementioned regulation; in which, the total CIT payable of the whole year is based on the supplemented CIT finalization or the conclusion of the CIT inspection.
The OL also mentions some instructions for value added tax (VAT) payment extension.
Corporate income tax (CIT)
30% tax rate cut for 2020 CIT
On 19th June 2020, the National Assembly approved the resolution to cut tax rate for companies having revenue less than VND 200 billion.
The resolution comes into force 45 days from the signing date.
Detailed guidelines shall be released after the resolution comes into force.
Personal Income Tax (PIT)
Increase of the personal deduction for PIT purpose
On 02nd June 2020, the Standing Committee of the National Assembly issued the Resolution No. 954/2020/UBTVQH14 in order to adjust the personal deduction for PIT purpose as follows:
– Deduction for the taxpayer: increase from VND 9 million/month to VND 11 million/month (VND 108 million/year to VND 132 million/year);
– Deduction for each dependant: increase from VND 3.6 million/month to VND 4.4 million/month
The resolution comes into force from 01st July 2020 and is applied for tax year 2020.
Price of related party transactions
On 02nd June 2020, the Ministry of Finance issued draft Decree about price of related party transaction in order to get the opinion from companies. The draft has some highlighted contents as follows:
– Accept to use the commercial database to conduct the comparability analysis.
– Increase and apply limitation for interest expense from 20% to 30% of EBITDA except for ODA loans, preferential loans from government,…
– Adjust the standard arm’s length range: increase by 10% compared to that stated in Decree 20/2017/ND-CP dated 24th February 2017 by the Government.
Solution for reducing the difficulties for businesses in the Covid-19
On 29th May 2020, the Government issued Resolution No. 84/NQ-CP, which includes some solutions to support companies in the difficulty by Covid-19. Accordingly, there are some highlighted contents as follows:
– Reduce the registration fee for car manufactured or assembled in Vietnam until the end of 2020 in order to encourage domestic goods consumption;
– Renew the work permit for experts, managers, technicians who are foreigners working in the companies, issue new work permit for experts, managers, technicians who are foreigners replacing for individuals that cannot or do not immigrate to Vietnam;
– Allow companies to consider the donation for Covid-19 prevention as deductible for CIT purpose.
Labor, salary, insurance, union fee
Compulsory social insurance contribution to the labor accident, occupational disease fund
On 27th May 2020, the Government issued Decree No. 58/2020/NĐ-CP (Decree 58) to suggest companies with high risk of labor accident, occupational disease to apply the rate of 0.3% over the salary funds on which social insurance premiums are based for the contribution to the labor accident, occupational disease fund (instead of 0.5% as usual). In order to apply the rate of 0.3%, the companies must meet the conditions stated in the Decree 58, such as no administrative violations received, submitting periodical reports about labor accident properly and adequately in 3 years, … Also, the company must obtain the decision which allows them to apply the lower rate.
Time to apply the lower rate is 36 months from the time when that decision comes into force. Within 60 days before the decision expires, companies that still want to apply the lower rate should prepare document to extend the decision.
The Decree comes into force on 15th July 2020.