Tax UpdatesTax Updates From Domicile Corporate Services



This January 2017 edition of Domicile’s Tax Updates looks at recently issued Circulars and Official Letters from Vietnam authorities, providing guidance in the often confusing realm of Vietnamese taxation. As always, please contact us if you would like further information on any of the items discussed in our publication.


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The Ministry of Finance released Circular 176/2016/TT-BTC (“Circular 176”) on 31 October 2016 amending sanctions and administrative penalties for invoices.


As a result of Circular 176, several provisions regarding invoices have been eliminated. However, additional requirements have been promulgated, with fines for non-compliance up to VND 4,000,000. This circular took effect from 15 December 2016.


Significant changes include:


Matters Circular No. 176 Former Regulations
Printing invoices without having signed a contract with an approved printing supplier VND 500,000 - VND 1,500,000 VND 2,000,000 - VND 4,000,000
Signing a contract for printing invoices, but which contains “insufficient” information. VND 500,000 VND 2,000,000
Issued VAT invoices (“Red invoices”) which are later lost by the issuer. VND 4,000,000 - VND 8,000,000 VND 10,000,000 - VND 20,000,000
Other missing invoices Application for extenuating circumstances is necessary Application only for natural disasters
Using invoices without waiting 5 days after receiving usage approval from the Tax Authorities VND 500,000 - VND 1,500,000 Not previously prescribed
Not lodging “Notification of invoice issuance.” VND 2,000,000 - VND 4,000,000 Not previously prescribed





Personal Income Tax (“PIT”) - Dependent Supporting Documents

On 12 December 2016, the General Department of Taxation (“GDT”) released Official Letter 5742/TCT-TNCN providing additional guidance on supporting documents for dependent relief for individual employees and an enterprise’s obligations.


In this letter, the Tax Authorities confirm that an enterprise is responsible for keeping and maintaining supporting documents for dependent registration for tax review.


Where employees authorise to an employer to carry out PIT finalization and these employees have left the company by the time of the tax visit, companies that have not maintained the required documents for dependent relief in terms of PIT calculation would be subject to extra tax payments and administrative penalties for late payment.


Personal Income Tax (“PIT”) - PIT rate for additional allowances

On 20 December 2016, GDT published OL 5918/TCT-TNCN relating to applicable tax rates/tax treatments for additional allowances paid by employers to employees upon employment termination, in particular:


- The payment of salary/wages are subject to the progressive PIT rate;

- The payment of severance allowances and employment termination allowances in accordance with the Labour Code and Social Insurance scheme are not included in taxable income for PIT calculations;

- The payment of extra-supportive allowances by an employer to an employee will be subject to 10% tax for any payment exceeding VND 2,000,000.


Essentially, payments following the laws, along with certain extra payments subject to caps, are deductible for CIT, provided that supporting document are available and maintained (see our Tax Updates - September 2016 for further information).


Commercial Invoices - Using invoices without lodging the initial notification of issuance to authorities

On 14 December 2016, GDT issued Official Letter 5791/TCT-CS concerning administrative penalties for using invoices without appropriate notification on the initial invoice issuance to the authorities.


Further to this guidance, when an enterprise uses VAT invoices received from a supplier for input credits, but the initial issuance of such invoices were not subject to notification with the Tax Authorities, then the enterprise would be subject to penalties due to underpayment of tax or inflated refunds. The penalty is calculated as 20% of the total underpaid tax amount.


The enterprise, however, would not be subject to additional sanctions for using these invoices for their tax declarations, provided that there is appropriate evidence which indicates the responsibility for the invoices laid with the supplier and such transaction was appropriately recorded in the accounting ledger.


As the VAT invoice is a key supporting document for accounting, and acts as primary evidence for VAT credits and CIT deductions, enterprises should maintain appropriate documents and seek guidance from Tax Authorities when suspecting the invoice compliance of suppliers.


Commercial Invoices - Using invoices

On 12 December 2016, the Ministry of Finance (“MOF”) issued Official Letter 17615/BTC-TCT providing guidance on usage of invoices.


According to this Official Letter, using invalid invoices which are seized by Tax Authorities will be considered as “illegal invoice utilisation”. The suppliers and the purchasers would be subject to penalties, ranging from VND 20,000,000 to VND 50,000,000. Such expenditure would not be VAT creditable and CIT deductible for tax declarations.


Furthermore, both parties are required to prepare “Minutes of Invoice Cancellation” and recover the issued invoice copies from the other party.


Social Insurance Scheme

On 22 December 2016, the Social Insurance Department (“SHUI Department”) released Official Letter 3076/BHXH-CĐ reinforcing the utilisation of new form “GCN 02” for sickness claims from 1 January 2017.


Pursuant to the new guidance, where an employee takes sick leave, they are required to lodge the sickness claim form “GCN 02” with the employer. This form, being either manually written or printed, signed and stamped by the hospital, can be used for sickness claims from the SHUI Department. Any document relating to these claims but issued under the former form “C65” would be rejected by the authority.


The new form “GCN 02” is promulgated in Appendix No.12 of Circular No.14/2016/TT-BYT.



For further information contact:


Matthew Lourey, Partner

email: This email address is being protected from spambots. You need JavaScript enabled to view it.


Phan Thi Thu Thuy, Manager

email: This email address is being protected from spambots. You need JavaScript enabled to view it.



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