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.
Please Login or Register for Free now to view all updates and articles
In addition to free-to-view updates and articles, you can also subscribe to the full Legal Centrix Vietnam Service including access to:
- Overview notes on the law
- Thousands of high quality translations of legislation covering all key business areas
- Legal and tax updates
- Articles on important legal and tax issues
- Weekly email alerts
- Sophisticated web platform and search
Legal Centrix is trusted by top law and accounting firms.
EY Vietnam
- Vietnam
- https://www.ey.com/vn/en/home
Ernst & Young Vietnam Limited
EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.
EY Vietnam, established in 1992 as the first 100% foreign invested accounting and advisory firm in Vietnam, is a member of EY. Since then, we have been recognized as a trusted business advisor - thanks to our people’s wealth of knowledge and understanding about Vietnam business environment, and to our distinguished credentials and experience in providing insightful advices and added values to our clients.
In Vietnam, with more than 1,700 local and expatriate professionals, we are dedicated to providing the same level of professional service that our clients worldwide have come to expect. We are also united by our shared values, which inspire our people worldwide and guide them to do the right thing, and our commitment to quality, which is embedded in who we are and everything we do.
Contact us or visit us today at ey.com/vn to see how we can help your business.
| Ho Chi Minh City | Hanoi |
| Bitexco Financial Tower, 20th Floor 2 Hai Trieu Street, District 1, Ho Chi Minh City Phone: +84 28 3824 5252 Fax: +84 28 3824 5250 eyhcmc@vn.ey.com |
CornerStone Building, 8th Floor 16 Phan Chu Trinh Street, Hoan Kiem District Hanoi Phone: +84 24 3831 5100 Fax: +84 24 3831 5090 eyhanoi@vn.ey.com |
|
Contact: Robert King, Partner |
Contact: Huong Vu, Partner |
EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.
Click here to view the author's profile
Author
-
EY Vietnam
Vietnam
Related Content
- No related content
Tags
Recent updates
- Decree 135/2024/NĐ-CP On Stipulating Mechanisms And Policies To Encourage The Development Of Rooftop Solar Power For Self-Production And Self-Consumption
- Decree 143/2024/NĐ-CP On Regulations On Voluntary Occupational Accident Insurance For Employees Working Without Labour Contracts
- Circular 49/2024/TT-NHNN On Amending And Supplementing A Number Of Articles Of Circular No. 11/2022/TT-NHNN Dated 30 September 2022 Of The Governor Of The State Bank Of Vietnam Regulating Bank Guarantees
- Thailand: New Draft Amendment of Anti-Money Laundering Act B.E. 2542 (1999)
- Key Highlights of Vietnam’s New Decree No. 135/2024 on On-Site Self-Consumption Rooftop Solar Power
- Thailand: Draft Climate Change Act
A leading provider of legal and tax know-how and information for Asia.
Copyright © 1997 - 2024 Legal Centrix. All Rights Reserved Privacy Policy | Terms of Use