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Our September 2019 publication of our monthly Tax and Accounting Updates looks at amendments to methods for customs values for import and export taxes, and covers our regular review of recent Official Letters released by the Tax Authorities.

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Vietnam Tax & Accounting Updates - Key Changes for the Month of September 2019




On 30 August 2019, the Ministry of Finance issued Circular 60/2019/TT-BTC, amending regulations on determining customs values for imported and exported goods detailed in Circular 39/2015/TT-BTC dated 25 March 2015. 

Significant amendments and supplements from this Circular include

a) For exported goods, the Circular provides guidance on the method of determining selling prices for each case, including selling prices up to export border gates; selling prices of identical or similar goods; selling prices in particular case without contracts or invoices (Clause 3 Article 1).

b) Under the new regulations, where the exported goods are not delivered at the border gate, but delivered at an inland location, the customs value must include (i) Domestic transportation charges and expenses related to transporting export goods from the place of delivery to the export border gate, (ii) Insurance fees (if any), and (iii) other costs related to exported goods arising from the place of delivery to the export border gate (if any) (Clause 3 Article 1).

c) For imported goods, the Circular amended the guidance on customs valuations by the transaction value method (Clause 5 Article 1), and inference method (Clause 7 Article 1).

d) For imported goods that are machinery and equipment with control software, the customs value will include the value of the software (except software upgrades and replacement) and the cost paid for the right to use the control software (Clause 5, Article 1).

The Circular takes effect from 15 October 2019.



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


Per Diem Payments to Owner/Director of Single Member Limited Liability Company (“LLC”)

On 8 July 2019, the Hanoi Department of Taxation (“HDT”) issued Official Letter 6989/CT-TTHT regarding per diem payments to the Owner/Director of single member LLC.

Under the provisions of Point d, Clause 2.6, Article 4 of Circular 96/2015/TT-BTC, salaries of owners of a single member LLC are not deductible expenses, regardless whether the individual participates in administration of the business.

However, the Official Letter states that where the Director, who is also the owner of a single member LLC, undertakes business travel then the actual expenses incurred for the Company’s business activities, and which are in compliance with Article 4 of Circular 96/2015/TT-BTC, will be deductible for Corporate Income Tax (“CIT”).


First Tax Year Personal Income Tax (“PIT”) Finalisation Requirements and Deadlines for Foreign Individuals

On 19 July 2019, HDT issued Official Letter 56770/CT-TTHT providing guidance on PIT for foreign individuals working in Vietnam.

Under the provisions of Point a, Clause 1, Article 6 of Circular 111/2013/TT-BTC, if a foreign individual resides for 183 days in 12 consecutive months from their first arrival date in Vietnam, he/she is regarded as a tax resident.

However, the first tax year is not based on the calendar year, but it is determined as 12 consecutive months from the first day of arrival in Vietnam. The second tax year onwards follows the annual calendar year.

For example, if a foreign individual arrives in Vietnam to work in July 2017, and where this person has been residing for 183 days or more, then he/she would be regarded as a tax resident. In this situation, the first tax year would be from 1 July 2017 to 30 June 2018 and the second tax year from 1 January 2018 to 31 December 2018. The deadline for finalisation of PIT for the first tax year is 90 days after 12 consecutive months with PIT based on the progressive rates.

From the second tax year, if the foreign individual is still determined to be a tax resident, he/she will continue to apply progressive PIT rates is determined according to Point e.2, Clause 2, Article 26 of Circular 111/2013/TT-BTC.


Conditions for Recording Allowances for Employees as Corporate Income Tax (“CIT”) Deductible Expenses

On 10 July 2019, the General Department of Taxation (“GDT”)issued Official Letter 2761/TCT-CS on conditions for enterprises to record allowances for employees as CIT deductible expenses.

According to the GDT, allowances paid to employees will be deductible expenses if they meet the general conditions specified in Clause 1 and Clause 2.6, Article 4 of Circular 96/2015/TT-BTC.

Expenses of an enterprise are required to meet the following three general conditions: (1) actual expenses and in relation to production and business; (2) having legal invoices and supporting documents; (3) having proof of payment via bank for payments over VND 20 million.

In addition, the payment of salaries, allowances and bonuses must be entitlements paid as specified in at least one of: (1) labour contract, (2) collective labor agreement, (3) financial regulations, or (4) bonus scheme of the company.

Foreign employees’ receiving tuition allowances for children, from kindergarten to high school, must ensure the payments are specified in the labour contract as a part of salary or allowances paid by the employer.


Foreign Contractors Tax (“FCT”) on Intellectual Property (“IP”) Rights Transfers and Customer Referral Activities of Foreign Enterprises

On 8 July 2019, HDT issued Official Letter 53580/CT-TTHT on FCT for IP rights transfers and customer referral activities of foreign enterprises.

Where a foreign company receives income from IP rights transfers and for referring customers to Vietnamese enterprises, the income will be subject to FCT. The FCT rate (for VAT and CIT) is applied to each activity separately as prescribed in Article 12 and Article 13 of Circular 103/2014/TT-BTC.

Where the company cannot separate the revenue for each specific activity, the highest tax rate on the contract must be applied. Specifically, the VAT rate for the customer referral activity is 5% and the CIT rate on the IP rights transfers is 10%.

For IP rights transfers by foreign companies to Vietnamese enterprises, if they comply with the provisions of the IP Law 50/2005/QH11 and 36/2009/QH12, they are exempted from VAT and only subject to CIT of 10%.



For further information contact:


Matthew Lourey, Managing Partner

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Jason Turnbull, Partner

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Do Thi Thao, Manager - Accounting

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