This April 2017 monthly publication of Domicile’s Tax Updates looks at recently issued tax and other similar updates from Vietnam’s authorities which have an impact on businesses in Vietnam. As always, please contact us if you would like further information on any of the items discussed in our publication.
RESOLUTION 34 - REDUCTION IN UNEMPLOYMENT INSURANCE CONTRIBUTIONS FOR EMPLOYERS
On 7 April 2017, the Vietnamese Government issued Resolution No. 34/NQ-CP which resolved to decrease the level of Unemployment Insurance premiums that employers are obligated to contribute for employees from 1% to 0.5%.
This Resolution will take effect upon ratification by the National Assembly in May 2017, and will last until 31 December 2019.
The Government has announced that this decrease is due to the Unemployment Insurance fund being fully funded from contributions and surpluses are expected to remain into the near future.
OFFICIAL LETTERS RELEASED
On 5 April 2017, the General Department of Taxation (“GDT”) released Official Letter number 1284/TCT-DNL concerning invoice issuance for customer conference gifts.
In this Official Letter, the tax authority confirms that an enterprise is responsible for preparing and issuing invoices for trade promotion, advertising, samples, goods and services used for donation, exchange, or paid as salaries.
Accordingly, goods or services used as gifts or paid as salaries must have VAT invoices (or sale invoices) bearing all necessary information and VAT calculation methods as if they are sold to customers.
In the case where an enterprise holds a customer conference with a “purposeful program”, maintains customer lists, and gives gifts to attendees, after the conference ends the enterprise is permitted to issue one VAT invoice with total value of customer gifts. This invoice is required to clearly state “Customer conference gifts”.
Value Added Tax ("VAT")
On 31 March 2017, the General Department of Taxation released Official Letter number 1225/TCT-CS concerning declaration and deducting input VAT incurred in relation to the pre-establishment costs when establishing an enterprise.
According to the Official Letter, newly established enterprises are allowed to record and declare deductible VAT on pre-establishment costs paid by other individuals or organizations on its behalf, when these individuals or organizations issue VAT invoices for them and simultaneously declare and conduct output VAT tax payment.
Further guidance is specified in previous Official Letter number. 1459/TCT-CS dated 17 April 2015 and Official Letter number 137/TCT-CS dated 12 January 2016.
Value-Added Tax (“VAT”)
On 29 March 2017, the General Department of Taxation released Official Letter number 1158/TCT-CS concerning the application of registered VAT method.
According to the Official Letter, enterprises established in 2016 that lodged a “Notice of Application of VAT Method” (form 06/GTGT) for voluntary registration of utilizing the deductible method with the tax authority; where it is accepted be the tax authority to apply this method from 2016, the enterprise is also allowed to utilize the registration for 2017 without relodging form 06/GTGT to register for 2017.
Personal Income Tax ("PIT")
On 21 March 2017, the General Department of Taxation released Official Letter number 1166/TCT-TNCN guiding Personal Income Tax for travel expenses and telephone fees.
This Official Letter specifies payment for travel expenses (air tickets, accommodation expenses, taxi fees and meals) for individuals on business are accounted as deductible expenses for determination of Corporate Income Tax (“CIT”) taxable income, and are excluded from Personal Income Tax (“PIT”) taxable income.
Telephone charges for individuals are regarded as deductible expenses for CIT and excluded from PIT when it is explicitly specified in one of the following documents:
- Labour contract.
- Collective labour agreement
- Financial regime of company, corporation, or group, or
- Reward regulation issued by Chairman of BOD, General Director or other Directors.
In cases where an enterprise pays amounts in excess of the regulated package amount, the overpayment will be included as PIT taxable income.
For further information contact:
Matthew Lourey, Managing Partner
Phan Thi Thu Thuy, Manager