Newsletter

Tax Policy

Export processing enterprises supplying goods to domestic market

On 6 November 2023, Binh Duong Tax Department issued Official Letter No. 27077/CTBDU-TTHT on tax policy as follows: Export processing enterprises that sell goods to the domestic market (export or entrusted export to the domestic market) are not allowed to use foreign currency in the territory of Vietnam. Therefore, all transactions, payments, quotes, valuations, and price written in contracts of export processing enterprises when selling goods to the domestic market must be written in VND.

Invoice

Issuance of invoice each time when applying enforcement measures to stop using invoices

On 3 November 2023, the General Department of Taxation issued Official Letter No. 4905/TCT-QLN on issuing invoices each time as follows: In case the company is applying enforcement measures to stop using invoices, if the company has a written request to use the invoice to have a source of payment for workers’ salaries, payment of expenses to ensure continuous production and business, the company is allowed to continue using the invoices each time they arise, with the condition that the company must immediately pay at least 18% of the revenue on the used invoice to the State budget.

Handling deductible VAT of EPE having goods distribution activities in Vietnam

According to Official Letter No. 15691/CTHDU-TTHT dated 13 November 2023 issued by Hai Duong Tax Department, for a company that is an export processing enterprise, with additional registration of VAT deduction method for goods distribution activities in Vietnam and that has never performed this activity, in case input VAT amount has not been fully deducted and is not eligible for tax refund, the company can account it as deductible expenses for CIT purposes as long as it meets the regulations in Article 4, Circular No. 96/2015/TT-BTC dated 22 June 2015 of the Ministry of Finance.

Personal Income Tax treatment on payments to employees after leaving

On 13 November 2023, Hai Duong Tax Department issued Official Letter No. 15692/CTHDU-TTHT with notable content as follows: a company signed an indefinite term labor contract with employee in accordance with the provisions of the Labor Code, and two parties agree to terminate the labor contract, however, the company has completed the settlement procedures, paid wages and benefits to the employee after termination date of the labor contract. Based on the time of income paid to employees,  taxable income is determined as follows:

–  For salary, unused annual leave, and other amounts similar to salary and wages, the Company calculates PIT using a progressive tax table before paying to employees;

– Severance allowance and other allowances paid according to the provisions of the Labor Code are not included in taxable income for PIT purposes from the employee’s salary and wages;

–  In terms of other income that the company pays to its employees not regulated in the provisions of the Labor Code, if this expense is greater than VND 2 million, the company withholds PIT according to the instructions in Point i, Clause 1, Article 25 of Circular No. 111/2013/TT-BTC dated 15 August 2013 issued by the Ministry of Finance.