EY Vietnam Tax Update - July 2020
EY Vietnam Bản Tin Cập Nhật Thuế- Tháng 7 Năm 2020
EY Vietnam
10th July 2020
July 2020 Tax Update highlights the following key points: 1) Tax treatment of COVID-19 related payments made for employees, 2) Ministry of Finance’s responses to certain petitions from enterprises at the Vietnam Business Forum, 3) Employer’s contribution to Social Insurance Fund for occupational diseases and accident, 4) Application of the new family relief from the tax reporting for July 2020 or Quarter 3/2020, 5) Personal income tax (PIT) treatment of visa and temporary resident card expenses for expatriate employees, working in Vietnam, and 6) PIT treatment of employee’s compulsory contribution to Disaster prevention fund.
Official Letter 44403/CT-THT dated 1 June 2020 (OL 44403) of the Hanoi Tax Department advising on the CIT and PIT treatment of COVID-19 related payments made for employees.
In OL 44403 the Hanoi Tax Department advises that COVID-19 related payments such as
payments made for the purchases of face masks, hand sanitizers, protective accessories,
and testing fees for infectious diseases shall be classified as staff welfare. The deduction of
staff welfare expenses will be limited to one month’s average salary in the tax year for the
corporate income tax (CIT) purposes.
These payments shall be taxable for the PIT purposes if they are made in the name of any
specific employee. If these payments are made for a collective group of employees, they
shall not be taxable for the PIT purposes.
Official Letter 5476/BTC-CST dated 7 May 2020 (OL 5476) of the Ministry of Finance
(MoF) responding to certain petitions from enterprises at the Vietnam Business Forum
(VBF).
In OL 5476, the MoF responded to the following key matters:
► Procedures to confirm enterprises satisfy the conditions of being an Export
Processing Enterprise (EPE)
According to Decree 82/2018/ND-CP, before issuing any Investment Registration
Certificate to a company which is applying for an EPE status, the licensing authorities
are required to seek the customs authorities’ confirmation on that company’s capability
of satisfying the required conditions of customs examination and supervision.
However, Decree 82/2018/ND-CP fails to provide any timeline for the customs
authorities to provide that confirmation. The lack of any clear timeline may cause a delay in the licensing process.
With respect to this matter, the MoF advises that the MoF and the General Department
of Customs are building a set of procedures for customs examination and supervision
and proposing methods for the relevant competent authorities to co-ordinate on this
matter. The MoF will then seek consultation on its proposal from the relevant
competent authorities before issuing specific guidance for implementation.
► Timing of sales recognition for CIT purposes with respect to export goods
The timing of sales recognition for tax purposes with respect to export goods is
regulated differently under different sets of tax regulations. Specifically, according to
the CIT regulations, the timing of sale recognitions with respect to the sale of goods is
determined as: “the date on which the title of goods or the right to use of goods is
transferred to buyer”. Whereas, from a VAT perspective, according to Circular
119/2014/TT-BTC which took effect from 1 September 2014: “the date on which sales
are recognized for export goods is the date that a seller completes its customs
declaration”. This inconsistent guidance on the timing of sales recognition for export
goods has caused lots of confusion and additional administration for companies having
export sales.
In OL 5476, the MoF advises that from 1 September 2014, with respect to export
goods, the timing of sales recognition for both CIT and VAT purposes is the date on
which the sellers complete their customs declaration.
In view of the above, companies having sales from export goods from 1 September
2014 should review their declared sales for CIT and VAT purposes and amend their tax
declarations, where necessary.
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