Vietnam Tax Update October 2017


Our October 2017 Tax Update publication takes a look at the Vietnam Government’s continuing move to online services, with further guidance released for online Work Permit applications for foreign staff seeking to work and be tax compliant in Vietnam. We also look at a collection of Official Letters from the tax authorities that provide guidance to companies operating in Vietnam.

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GUIDANCE FOR ONLINE WORK PERMIT APPLICATIONS

On 15 August 2017, the Ministry of Labour, War Invalids and Social Affairs (“MoLISA”) released Circular 23/2017/TT-BLDTBXH guiding the issuance of Work Permits to foreign workers in Vietnam through online applications.

For online Work Permit applications, the employer needs to access the website http://dvc.vieclamvietnam.gov.vn to submit the application form and scans of required documents. The online process is in English and Vietnamese, and allows a faster process than the manual submission, however the original (notarised) documents must still be submitted by post or submitted directly to the Department for verification and approval.

Key Dates for the Online Process

Key dates when considering online applications, and ensuring documents are in order:

• Obtaining approval for employing foreign workers at least 20 days before the planned date of employment;

• Submission of the application for the Work Permit at least 7 working days before the planned date on which foreign worker is to commence; and

• For foreign workers eligible for Work Permit exemptions, lodging at least 5 working days before the planned date on which foreign workers commence.

Although there are benefits to the online process, as there is still a requirement for submitting original documents it may be easier at this stage for employers to continue with face-to-face lodgements to ensure unexpected rejections do not arise.


OFFICIAL LETTERS RELEASED

Official Letters are releases showing the Tax Authorities’ interpretation and application of Vietnam’s Taxation Laws, providing guidance to taxpayers in Vietnam.

Exemption from Issuing VAT Invoices for Equipment used for Capital Contributions

On 11 August 2017, the General Department of Taxation (“GDT”) released Official Letter 3581/TCT-CS, in which it confirmed that contributing assets as capital when establishing an enterprise shall be exempt from the issuance of VAT invoices and are exempt from the need to declare and pay value added tax (“VAT”), in accordance with Clause 7, Article 5 of Circular 219/2013/TT-BTC.

The documents for capital contribution in this instance require a written record of the capital contribution, a written record of the valuation of the assets, and documents confirming the origin and ownership of the assets contributed.

Personal Income Tax (“PIT”) Incurred by a Non-Tax Resident in Vietnam

Official Letter 55021/CT-TTHT regarding the PIT payment obligations of a Non-Tax Resident in receipt of income inside and outside of Vietnam, but related to their Vietnam activities.

The specifics of the letter reconfirmed that a Chief Representative of a Representative Office who is a Non-Tax Resident of Vietnam and receives income for this role from within and outside Vietnam, shall be subject to PIT in Vietnam on the total receipts regardless of the location of payment and receipt, in accordance with Article 18, Chapter III of Circular 111/2013/TT-BTC.

Tax exemption under a relevant Double Tax Treaty may be applied if all necessary conditions are met.

VAT Refunds on Exported Goods and Services

On 17 August 2017, GDT released Official Letter 3719/TCT-CS regarding refunds of VAT on exported goods and services.

The Official Letter reiterated that enterprises shall be entitled to receive a refund of VAT where the credit VAT balance of the taxpayer is at least VND 300 million, after deduction of all VAT inputs from its domestic transactions.

In addition, the refund requested shall not exceed 10% of the revenue from such exported goods and services in accordance with the regulations in Circular 130/2016/TT-BTC.

PIT on Income Paid to Foreign Employers Departing Vietnam Permanently

On 14 July 2017, HDT released Official Letter 47758/CT-TTHT regarding the PIT implications on taxable income paid to foreign employees after they depart Vietnam (ie, return to their home country).

In the event of any additional payments to foreign employers (or former employees) after they depart Vietnam, as the foreign individual will be likely determined to be Non-Tax Resident, the applicable PIT rate will 20% on the taxable income.



For further information contact:

Matthew Lourey, Managing Partner

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Phan Thi Thu Thuy, Senior Manager - Accounting

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Nguyen Thi Thuy, Business Manager

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