Official Letter No. 88336/CT-TTHT (OL 88336) on welfare expense paid to employees by cash

According to the OL 88336 issued on 25th November 2019 by Hanoi Department of Taxation, in case the company has the regulation to pay allowance for company trip directly to its employees by cash and such expenses meet the requirement of welfare expenses for employees as stated in Article 4 Circular No. 96/2015/TT-BTC dated 22nd June 2015 by the Ministry of Finance, and the total welfare expenses including this allowance of the company does not exceed average one-month salary in the tax year, the allowance shall be considered as deductible expenses for CIT purpose.


Official Letter No. 84145/CT-TTHT (OL 84145): tax declaration for service price adjustment

OL 84145, which was issued on 07th November 2019 by Hanoi Department of Taxation, gives a guidance for tax declaration in case of having adjustment in service price. The company signed a service contract and already completed rendering services to clients and declared and paid VAT and CIT for this income. After that, the company and its clients agreed to reduce the service price and issue the amendment invoice. In this case, the company shall declare the amended sales revenue, VAT output and corresponding CIT in the tax period that the amendment invoice incurs.


Official Letter No. 8641/TCT-DNNCN (OL 8641) : PIT treatment for overtime salary

On 12th November 2019, the General Department of Taxation issued OL 8641 with the following contents:

When calculating the overtime salary, the company must be aware of the permitted overtime hours for employees according to the current regulations: the maximum overtime hours is 200 hours per year; and 300 hours for special cases according to Article 106 of Labor Code issued in 2012. Overtime hours which are over the abovementioned regulations is illegal.

For the overtime hours which do not exceed the number of hours stated in Article 106 of Labor Code, the additional payment for working at night or working overtime which is over the payment for an ordinary working day will be exempted from personal income tax.


Official Letter No. 81365/CT-TTHT (OL 81365): FCT for software copyright

A foreign company has income of software copyright by providing the software to a company in Vietnam. The company in Vietnam downloads the software from the internet and pays fee to the foreign company based on the number of downloads.

According to the OL 81365 issued on 29th October 2019 by Hanoi Department of Taxation, FCT treatment for this specific case is as follows:

– For VAT: Income from the software copyright is not subject to VAT according to Clause 21, Article 4 Circular No. 219/2013/TT-BTC and Clause 1, Article 6, Section 1, Chapter II of Circular No. 103/2014/TT-BTC (Circular 103) issued by the Ministry of Finance.

– For CIT: Income from software copyright is subject to CIT according to regulation at Clause 3, Article 7, Section 1, Chapter II of Circular 103 with tax rate of 10%.

Official Letter No. 88465/CT-TTHT (OL 88465) : documents of purchasing goods or services from business households, business individuals for tax purpose

According to OL 88465 issued by Hanoi Department of Taxation on 25th October 2019, in case the company purchases assets or services from non-business households or non-business individuals; or from business household or business individuals who earn revenues less than VND 100 million/ year, the company is allowed to prepare the List of purchase, as guided in Point 2.4, Clause 2, Article 4, Circular No. 96/2015/TT-BTC. In case the company purchases goods or services from business household or business individuals who earn revenues over VND 100 million/year, in order to consider the expense as deductible expense for CIT purpose, the company must obtain invoices from the business households or business individuals and also meet the requirements stated in Article 4 of Circular No. 96/2015/TT-BTC by the Ministry of Finance.