Tax UpdatesTax Updates From Domicile Corporate Services


This October 2018 publication on Tax and Accounting updates covers recent changes to compulsory e-invoicing in Vietnam, relaxation to requirements to register salary scales for small enterprises, along with our regular review of recent Official Letters released by the Tax Authorities.


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On 12 September 2018, the Vietnam Government released Decree 119/2018/ND-CP (“Decree 119”) on Regulations for Electronic invoices when Selling Goods and Providing Services, setting out instructions which compel enterprises in Vietnam to move to using E-invoices by 31 October 2020, and to cease using paper VAT invoices. The Decree is effective from 1 November 2018, and applicable to all enterprises in Vietnam.

The Decree requires enterprises established from 1 November 2018 to register and use E-invoices. Enterprises that are registered for paper invoices prior to 1 November 2018 can continue to use these up until 31 October 2020.

For further highlights regarding E-invoices on Decree 119, please refer to our Client Alert released on 16 September 2018.




Decree 121/2018/ND-CP was issued on 13 September 2018 by the Vietnam Government amending and supplementing Decree 49/2013/ND-CP on the implementation of salary regulations for labour.

A significant amendment is the exemption for enterprises which employ less than 10 staff from the registration of a salary scale and labour norms with the Labour Authorities in the district where the enterprise is located. The Decree is effective from 1 November 2018.



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


Foreign Contractor Tax for Intermediary Payment Service Provider

On 7 September 2018, the General Department of Taxation (“GDT”) issued Official Letter 3428/TCT-CS on foreign contractor tax (“FCT”) for intermediary payment service providers.

Where foreign organizations provide intermediary payment services for goods and services purchased from Vietnamese enterprises, the gains (transaction fees) that intermediary parties earned from these transactions will be subject to FCT. The seller is responsible for withholding and paying FCT on behalf of the foreign contractors before paying the service fee.

However, where foreign organizations act as intermediaries for payments of goods and service between foreign vendors and Vietnamese purchasers, the service fees earned by the foreign sellers are not subject to FCT.


PIT On Dividends From a Single-Member Limited Liability Company

On 4 September 2018, GDT issued Official Letter 3387/TCT-CS providing guidelines on Personal Income Tax (“PIT”) for dividends paid to an individual (personal) owner of a single-member Limited Liability Company (“LLC”).

According to Clause 4, Article 2 of Decree 12/2015/ND-CP, a dividend distributed after paying Corporate Income Tax to an individual owner of a single-member LLC is not subject to PIT.


Import Tax On Raw Materials For On-The-Spot Export Goods

On 5 October 2018, the General Department of Customs issued Official Letter 5826/TCHQ-TXNK on import taxes for raw materials included in on-the-spot exported goods.

According to Article 12 of Decree 134/2016/NĐ-CP, materials and components which are imported for producing exported products are exempt from import taxes.

However, if a Vietnamese enterprise sells products which are produced from imported materials to a foreign purchaser, and is nominated to deliver these products to another party in Vietnam for their on-the-spot export, import tax exemptions do not apply to the materials.

If the enterprise is exempted from import taxes for imported materials but later exports product by way of on-the-spot exports, the Customs Office will impose import taxes, and will charge administrative penalties and late payment charges.


Labour Contracts For Foreign Employees

On 2 October 2018, the Ministry of Labour, Invalids and Social Affairs issued Official Letter 1073/CVL-QLLD providing guidelines on labour contracts for foreign employees.

Clause 3, Article 12 and Clause 3, Article 15 of Decree 11/2016/ND-CP state that labour contracts with a foreign individual are to be signed after their work permit is available and before their proposed commencement date. In addition, within 5 working days from the signing date, the enterprise must send a copy of the signed labour contract to the authority which issued the work permit for the individual.


Capital Gains Tax

On 6 July 2018, the Hanoi Department of Taxation issued Official Letter 47360/CT-TTHT on Capital Gains Tax (”CGT”) policy.

According to Article 16 of Circular 151/2014/TT-BTC, where a transaction occurs in that a seller and purchaser of a Vietnamese enterprise are both foreign entities, the transaction is subject to CGT with the Vietnam enterprise in which interest is transferred being responsible for declaring and paying CGT on behalf of the seller.

The foundation for calculating CGT is based upon Article 14 of Circular 78/2014/TT-BTC.


Requirements For Electronic Signatures of Sellers On E-invoices

On 17 July 2018, GDT issued Official Letter 2796/TCT-DNL regarding the requirement for the electronic signatures of sellers on E-invoices.

Under article 16, 17 and 19 of the Accounting Law 88/2015/QH13, accounting documents must have signatures of the preparer, the approver and other related persons. This also applies for electronic documents.

Accordingly, if a Company has E-invoices issued by foreign vendors and managed by an electronic purchase system, but which have no electronic signatures of the seller, these are not acceptable for tax purposes.


Allocation of Management Expenses From Offshore Parent Companies To Their Permanent Establishments In Vietnam

On 15 August 2018, GDT issued Official Letter 57070/CT-TTHT providing guidelines on the allocation of management expenses from offshore parent companies to their Permanent Establishments (“PE”) in Vietnam.

According to Article 4, Circular 96/2015/TT-BTC, allocated business management expenses from an offshore parent company to their PE in Vietnam will only be deductible within the limits determined by the following formula:

Allocated Expenses = (Taxable revenue of the PE in the tax period / Total revenue of the parent company) x Total cost of business management of the parent company in the tax period.

Accordingly, where the parent company allocates business management expenses to its PE in Vietnam greater than the amount determined by the above formula, the excess will be forfeited as deductible.


For further information contact:


Matthew Lourey, Managing Partner

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Phan Thi Thu Thuy, Senior Manager - Accounting

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Do Thi Thao, Manager - Accounting

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