Official Letter No. 14848/CT-TT&HT (OL 14848): VAT treatment of additional tax paid

On 04th September 2018, Binh Duong Department of Taxation issued OL 14848, which regulates that the VAT paid according to the tax assessment decision made by the customs office due to mistakes in customs declaration dossier shall be declared and be deducted in VAT declaration if such payment is conformable with VAT deduction requirements per Article 15 of Circular No. 219/2013/TT-BTC and Clause 10, Article 1 of Circular No. 26/2015/TT-BTC.

Official Letter No. 16144/CT-TT&HT (OL 16144): flat-rate travel allowance paid to employees

On 13th September 2018, Binh Duong Department of Taxation issued OL 16144, which handles a case that a company pays flat-rate travel allowance to its employees to cover travel expenses. If the expense is stated in the labor contract or the collective labor agreeement and is supported by cash payment or payment confirmation issued by the bank, according to the company’s internal regulation, such expense shall be treated as deductible expense for CIT.

The flat-rate allowance exceeding the amount allowed per the law needs to be treated as taxable income of the employees. The company must withhold PIT from employees’ taxable income.

Official Letter No. 16145/CT-TT&HT (OL 16145): declaration of related party transactions

OL 16145 issued by Binh Duong Department of Taxation on 13th September 2018 regulates that the company having related party transactions has the responsibility to declare the information about related parties and related party transactions using the form No. 01 in the appendix of Decree No. 20/2017/ND-CP dated 24th February 2017 along with CIT finalization.

The company must prepare, retain and provide the transfer pricing documentation package according to the regulations per Clause 4, Article 10 of Decree No. 20/2017/ND-CP and Article 4 of Circular No. 41/2017/TT-BTC dated 28th April 2017. The company must prepare the transfer pricing documentation package before declaring CIT finalization and must be ready to provide it to the tax office when receiving a notice for submission.

Official Letter No. 17478/CT-TT&HT (OL 17478): CIT treatment of finance lease for CIT incentives

OL 17478 issued by Binh Duong Department of Taxation on 26th September 2018 stated that the finance lease assets shall be considered as increase in assets when calculating and receiving CIT incentives for expansion project. When the company leases assets in the form of finance lease, the company must depreciate the leased assets same as if it had owned them, in accordance with Clause 6, Article 9 of Circular No. 45/2013/TT-BTC dated 25th April 2013 issued by the Ministry of Finance, and Point 1.4, Clause 1, Section B, Part I of VAS 06 “Leases”.

Official Letter No. 17618/CT-TT&HT (OL 17618): VAT and PIT treatment on gifts to customers

On 28th September 2018, Binh Duong Department of Taxation issued OL 17618, which handles a case where a company sends gifts to its customers together with the sales of goods or service for promotion. In this case, the gifts are mentioned in the sales contract or in the internal regulation on financial allowance, goods, and services for promotion in conformable with Law of Commerce.

– If the company registers to perform a promotion program by paying out in cash, the value used for VAT is zero (which means that the company does not need to declare and pay VAT). The company shall prepare payment vouchers to record the promotion expense.

– If the company registers to perform a promotion program by providing goods or service, the company is required to issue invoices, declare, calculate and pay VAT in the same way of normal sales of goods and services.

– In addition, if the customer is individual, it must declare and withhold PIT as regulated.

Decree No. 119/2018/ND-CP (Decree 119): regulation on electronic invoices (e-invoices)

On 12th September 2018, the Government issued Decree 119, which regulates the use of e-invoices for sales of goods and services, with the following contents:

Enterprises, family business owners and individuals conducting business shall complete the implementation of the e-invoice by 1st November 2020.

Enterprises that have already implemented e-invoice system prior to November 1, 2018 are allowed to continue to use existing e-invoice.

Business enterprises are allowed to use paper invoices (externally printed/internally printed invoices or invoices issued by the tax authority) until 1st November 2020, but they need to inform the tax office before 1st November 2018. In addition, business enterprises which use paper invoices until 1st November 2010 must submit a form that details the invoice usage along with the VAT declaration to the tax office.

Decree No.51/2010/ND-CP and the Decree No. 04/2014/ND-CP shall be repealed from 1st November 2020.

Decree No. 119/2018 ND-CP shall enter into force on 1st November 2018.