Newsletter

Tax administration

Official Letter guiding Decree No. 125/2020/ND-CP (Decree 125) on administrative penalties applied for taxes and invoices

On 12^th November 2020, the General Department of Taxation issued Official Letter No. 4818/TCT-PC (OL 4818) which clarifies some new regulations in Decree 125, such as: Scope, subjects of the administrative penalties for violation in taxes and invoices; interpretation for some phrases using in the administrative penalties for violation in taxes and invoices; sanctioning principles for organizations or individuals commits multiple administrative violations; mitigating factors, aggravating factors; time limits for imposition of tax and invoice-related administrative violations; principles of determination of penalties when applying mitigating factors, aggravating factors; supplementary penalties; remedies; time for collecting the unpaid taxes; and some exceptions of the Decree 125.

OL 4818 also contains the new administrative penalty rates applied for some specific kinds of violations in taxes and invoices such as: violations against regulations on time limits for tax registration, notification of temporary business suspension, time limits for submission of tax returns, the compliance with decisions on tax inspection and examination,…; violations against internally printed invoice and creation of e-invoices; externally printed invoices; violations against the act of giving and selling invoices; violations against the issuance of invoices…

The authority to impose tax or invoice-related administrative penalties is also stated in this OL.

Official Letter guiding some new points of Decree No. 126/2020/ND-CP (Decree 126) about details for the Law on Tax Administration

Official Letter No. 5189/TCT-CS (OL 5189) dated 07^th December 2020 by the General Department of Taxation introduces some new points of Decree 126 guiding the Law on Tax Administration. Among 17 new points of this OL, there are some important regulations, such as the tax administration in the temporary business suspension; tax registration, declaration and calculation; tax imposition; responsibility of organizations or individuals for providing information of the taxpayers; application of advance pricing agreement (APA) to companies having related-party transactions, …

Value Added Tax (VAT)

Company increasing unit price for exported goods that had been granted customs clearance shall not be subject to VAT rate 0%

Official Letter No. 3617/CT-TTHT (OL 3617) dated 07^th December 2020 by Long An Department of Taxation handles the case that a company signed a processing service contract with an overseas client, and after delivering processed goods, 2 parties decided to increase the processing unit price of some goods but the company did not adjust the unit price stated in the customs declaration since the price was increased after the goods had been granted customs clearance. Accordingly, additional amount that client paid to the company shall not be subject to VAT rate 0% applied for sales from export, as regulated at Clause 2a, Article 9, Circular No. 219/2013/TT-BTC. When the company receives payment, the additional amount should be recorded as other income, and they must declare and pay CIT as regulated at Clause 7, Circular No. 78/2014/TT-BTC dated 18^th June 2014 by the Ministry of Finance.

Personal Income Tax (PIT)

PIT and CIT treatments for expats’ expense in the Covid-19 quarantine period

On 26^th November 2020, the General Department of Taxation issued Official Letter No. 5032/TCT-CS about PIT and CIT treatments for expats’ expense in the Covid-19 quarantine period, with the following contents:

– PIT taxable income: In case the expats, after immigrating to Vietnam, must quarantine for the Covid-19 pandemic, and expense during the quarantine period is paid by the company, the expense shall be considered as benefit of the expats. Therefore, the expense shall be treated as taxable income from salary and wages for the expats.

– Deductible expense for CIT purpose:

+ Hotel fee in the quarantine period for the expats paid by the company shall be considered as deductible expense for CIT in case the labor contract signed between expat and the company states that the company has responsible for paying the house rent and the hotel fee is supported by valid invoice and documents and is paid in accordance with regulations for non-cash payment method.

+ The air ticket expense for expats shall be treated as deductible expense for CIT purpose in case it follows the regulation at Clause 4, Circular No. 96/2015/TT-BTC dated 22^nd June 2015 by the Ministry of Finance.

+ Covid-19 testing expense for expats shall be considered as benefits paid directly to the employees in case it meets the requirement stated at Point 2.30, Clause 2, Article 6, Circular No. 78/2014/TT-BTC dated 18^th June 2014 by the Ministry of Finance (adjusted and supplemented by Article 4 of Circular No. 96/2015/TT-BTC dated 22^nd June 2015 by the Ministry of Finance). In this case, the company shall treat the expense as deductible expense for CIT purpose in case it is supported by valid invoice, documents and is paid in accordance with regulations for non-cash payment method.

Labor

Regulations in details about age for retirement of the employees

On 18^th November 2020, the Government issued Decree No. 135/2020/ND-CP in order to clarify the Article 169 of the Labor Code about retirement age:

Accordingly, from 01^st January 2021, the retirement age of employees under ordinary working conditions is as follows:

– The retirement age is 60 years 3 months for male employees and increases by 3 months each successive year until the retirement age reaches 62 in 2028.

– The retirement age is 55 years 4 months for female employees and increases by 4 months each successive year until the retirement age reaches 60 in 2035.

An employee, in any of the following circumstances, may retire at the age earlier but not exceeding 5 years before the above-mentioned statutory retirement age unless otherwise prescribed by law.

a. He/she has at least 15 years doing laborious, toxic and dangerous occupations or highly laborious, toxic and dangerous occupations on the lists of the Minister of Labor, War Invalids and Social Affairs

b. He/she has at least 15 years working in highly disadvantaged areas.

c. His/her degree of disability is at least 61%

d. He/she has at least total 15 years doing the occupations specified in point a and working in the areas specified in point b.

This Decree comes into force as of 01^st January 2021.