The Department of Taxation (GDT) attended to the questions of taxpayers uploaded onto the GDT’s http://www.gdt.gov.vn GDT’s responses to some common tax concerns 

The GDT has clarified that for companies which have a negative EBITDA , the non-deductible interest expenses are determined as the total interest expenses minus the interest income on deposit / loans.

The Trade Union of Binh Duong called for support for employees who were not able to return home during TET due to COVID-19 pandemic. However, to date, it is not clear as to whether companies can claim a Corporate Income Tax (CIT) deduction for such support.  The Ministry of Finance has submitted a draft Decree which will also provide a guidance on this matter. 

Salary payments to expatriate employees before they obtain a work permit in Vietnam shall be treated as non-deductible for CIT purposes. 

Hence, payments to expatriate employees who, after completion of the quarantine period, are waiting for the work permit application to be processed, are not deductible for CIT purposes.

The GDT did not provide a clear response to a question as to whether income which is derived from an asset disposal should be included in the total revenue base for 2020 in determining whether a taxpayer is entitled to the 30% CIT reduction. The 30% CIT reduction only applies where a taxpayer’s revenue is of VND200 billion or less. Hence this remains unclear.

The application date of declaring Value Added Tax (VAT) centrally at head office in accordance with Article 11, Clause 2 in Decree 126/2020/ND-CP 

According to Decree 126/2020/ND-  CP, Article 11, Clause 2: companies which have multiple dependent accounting units in different provinces will declare tax centrally at the tax offices managing the head offices (instead of dependent accounting units, which conduct the selling activities and are located in different provinces, declaring VAT at their tax managing offices). 

Decree 126/2020/ND-CP only provides that the application date of Article 11, Clause 2 in Decree 126/2020/ND-CP is “from the first year of the next stable state budget period since the effective date of Law on Tax Administration No. 38/2019/QH14”. 

Based on Article 1, Clause 5 of Resolution 122/2020/QH14 which mentions that “extending the stable state budget period 2017-2020 to 2021” the Hanoi Tax Department has clarified the application date of Article 11, Clause 2 shall be from 2022.