NEWSLETTER NOVEMBER 2021
Tax Administration
Updates under Circular No. 80/2021/TT-BTC dated 29 September 2021 by the Ministry of Finance on the Law on Tax Administration
On 12 November 2021, the General Department of Taxation issued Official Letter No. 4384/TCT-CS introducing new contents under Circular No. 80/2021/TT-BTC dated 29 September 2021 by the Ministry of Finance, guiding the Law on Tax management. The Official Letter has the following notable contents:
| Content | Updates under
Circular 80/2021/TT-BTC |
Current regulations |
| Tax payment currency and exchange rates | Actual exchange rate according to the Law on Accounting, amending regulations on tax declaration and payment of tax in foreign currencies. | Separate regulations on applying exchange rates to calculate taxes. |
| Late payment interests calculation period | From the following day of the day late tax payment interest incurs until the day before the day the taxpayer completes payment to the State’s budget.
|
From the following day of the deadline of tax payment to the day the taxpayer completes payment to the State’s budget |
| Adjustment to reduce late tax payment | In case of submitting revised tax returns, or incurs a reduction in tax payable after a tax audit/investigation, the taxpayer is allowed to make adjustment to reduce late tax payment interest payable, in correspondent with the reduced tax payable. | In case a taxpayer submits revised tax returns that reduce tax payable, taxpayer has to pay late payment interest calculated until the day of submitting the revised returns. |
| Value-added Tax (VAT) | ||
| Allocation of tax of dependent units to provinces other than where the taxpayer is headquartered | An enterprise submits tax returns only to its direct tax management body and allocates tax payable to each province. | Must submit tax returns to both the tax office that directly supervises its Head office and the tax office of each province that receives tax payment. |
| Declare VAT on real estate transfer/ construction in provinces other than where the taxpayer is headquartered | – Declare VAT on rate of 1% on revenue (VAT excluded) from real estate transfer and construction activities in each province.
– The taxpayer is not required to declare paid VAT on VAT returns, the tax authorities shall keep track of payment vouchers of the taxpayer to offset VAT paid in other provinces and VAT payable of the head office. |
– Declare VAT on rate of 2% on revenue (VAT excluded) from real estate transfer and construction activities in each province.
– The taxpayer declares VAT paid in other provinces in VAT returns of the Head office. |
| Declare VAT for infrequent sales outside of headquartered province | Regulations discarded, no longer required. | Follows certain regulations. |
| Ratio for allocating VAT payable of production companies | Production costs | Production costs or sales of comparable products in the same province as production locates. |
| VAT refund for investment projects | The tax office directly supervises the taxpayer of the investment project is responsible for receiving and processing VAT refund applications. | VAT of an investment project is declared and refunded where the Head office locates or where the project locates. |
| Corporate Income Tax (CIT) | ||
| Ratio for allocating CIT to provinces other than where the taxpayer is headquartered | Allocate based on the ratio (%) of the expenses of each production location to Total expenses of the taxpayer (excluding expenses of activities subject to CIT incentives). Expenses used to determine the allocation ratio are expenses incurred in the tax period. | Expenses used to determine the allocation ratio are those on the enterprise’s CIT finalization returns of the prior tax period. |
| Personal Income Tax (PIT) | ||
| PIT from salaries paid at the head office to employees working at dependent units or locations in other provinces | Allocate income from salaries the employee received from working in each province based on the actual PIT withheld of said employee. In case the employee is transferred or rotated, whichever province where the employee resides on the date of income payment shall receive the PIT payment. | No regulations on allocation.
|
| Declaration | Submit Form No. 05/KK-TNCN and Annex table determining the amount of PIT payable to each province (Form 05-1/PBT-KK-TNCN issued in Appendix II of this Circular) to the tax office that directly supervises the enterprise; make payment of PIT on income from salaries to the State’s budget of each province where the employee works according to the provisions of Clause 4, Article 12 of this Circular. | Submit PIT returns and pay withheld PIT to the State’s budget where the withheld PIT arises. |
| Tax inspection | ||
| Regulations on imposing tax payable | The tax authority shall notify the taxpayer to provide explanation and supplement documents no more than 02 times. After that, if the taxpayer fails to declare and provide additional explanations or declare but fails to provide evidence for the declared tax amount, the tax authority shall impose a tax payable given sufficient grounds. | Tax office may only impose tax payable or transfer the inspection (to a competent authority) at the taxpayer’s Head office. |
| Deadline for addition explanation and supplement documents | 10 working days from the date the tax office issues the Notice. | 10 working days from the date the taxpayer receives the tax office’s Notice or reply (via post office). |
Decree No. 102/2021/ND-CP amending and supplementing several Decrees on penalizing administrative violations relating to tax, VAT invoice and customs
On 16 November 2021, the Government issued Decree No. 102/2021/ND-CP amending and supplementing several Decrees on penalizing administrative violations relating to tax, VAT invoice and customs. The Decree has some highlights as follows:
– The deadline for penalizing administrative violations relating to VAT invoices is 02 years (currently 01 year).
– Adding regulations on fine for issuing VAT invoices without sufficient (required by law) contents: Could be fined from VND 4,000,000 to VND 8,000,000.
– Further stipulating administrative fine for failing to preserve VAT invoices leading to missing, burning or damaging of VAT invoices that have been issued but have not yet been declared (the relevant parties must produce a memo of the loss, burned or damaged invoices): Could be fined from VND 4,000,000 to VND 8,000,000.
– A fine ranging from VND 5,000,000 to VND 10,000,000 shall be imposed for losing, burning or damaging VAT invoices that have been issued and declared.
The above amounts apply to individuals and business households. In case of an organization, the fines shall be doubled.
This Decree takes effect from 1 January 2022.
Renew the list of supporting industry products prioritized for development
On 23 November 2021, the Ministry of Industry and Trade issued Circular No. 19/2021/TT-BCT amending and supplementing Circular No. 55/2015/TT-BCT dated 30 December 2015 regulating procedures for confirmation of incentives and post-inspection of incentives for projects producing products on the list of supporting industry products prioritized for development.
The Circular issues a new list of supporting industry products prioritized for development (replacing Appendix 1 of Circular No. 55/2015/TT-BCT), including products of the following industries:
- Textile
- Leather – Shoes
- Electronics
- Manufacturing and assembling automobiles
- Mechanical engineering
This list is the basis to consider tax incentives for investment projects of supporting industry products according to Tax Law No. 71/2014/QH13 and Decree No. 111/2015/ND-CP.
The Circular takes effect from 12 January 2022.
Invoice
Currency and exchange rate written on invoices of goods and services sold in foreign currency
On 11 November 2021, Hanoi Tax Office issued Official Letter No. 45702/CTHN-TTHT Currency and exchange rate written on invoices of goods and services sold in foreign currency. Details are as follows:
In case the tax office has yet to notify the Company regarding e-invoice usage registration according to Decree No. 123/2020/ND-CP: when selling goods and services and collecting payments in foreign currencies, the Company shall issue invoices according to Point e, Clause 2, Article 16, Circular No. 39/2014/TT-BTC. After the company’s registration of e-invoice has been accepted by the tax office according to Decree No. 123/2020/ND-CP, the Company shall issue invoices according to Point c, Clause 13, Article 10, Decree No. 123/2020/ND-CP.
The company shall pay taxes and make other payments to the State budget in VND, except for cases where taxes are paid in foreign currencies, as prescribed by law. Revenues, expenses, and prices for calculating taxes collected in foreign currencies shall be converted to VND at the actual exchange rate as guided in Circular No. 200/2014/TT-BTC.
Personal Income Tax (“PIT”)
PIT treatments for payment of expenses for obtaining temporary residence cards and visas
On 23 November 2021, Hanoi Tax Office issued Official Letter No. 48921/CTHN-TTHT on PIT treatments for payment of expenses for obtaining temporary residence cards and visas. Details are as follows:
– In case expenses for obtaining/renewing temporary residence cards and visas for foreign employees are paid by the Company so that the foreign employees are eligible to work for the Company in Vietnam, such expenses are the Company’s responsibility, thus they shall not be included in the employee’s taxable income.
– In case expenses for obtaining/renewing temporary residence cards and visas for foreign employees are paid by the Company on behalf of the employees and are the employees’ benefits, these expenses shall be included in the employees’ taxable income.
– In case expenses for obtaining visas for employees working at a Vietnamese company to go on a business trip abroad qualify as business trip expenses in accordance with the financial regulations or internal regulations of the Company, observing Article 2 of Circular No. 111/2013/TT-BTC dated 15 August 2013, such expenses shall not be included in the employee’s taxable income.