1. Circular 119/2014/TT-BTC date 25th Aug 2014, effective on 1st Sep 2014
1.1. Amendments to:
- Circular 78/2013/TT-BTC on Company Income Tax
- Circular 111/2013/TT-BTC on Personal Income Tax
- Circular 215/2013/TT-BTC on Value Added Tax
- Circular 156/2013/TT-BTC on tax management
1.2. Key Features:
Goods and services used internally for continuity of business production process are excluded from taxable revenue.
- Goods/services circulated for internal use for continuity of business process is not subject to VAT.
- Import VAT will not be imposed when goods already exported is returned by overseas buyer.
- VAT invoice and VAT charge are no longer required in case of lending and return of machinery, equipment, inventory and materials.
- Condition of investment in fixed assets of VND01 billion for newly established enterprise for adopting VAT credit method is abolished.
(iii) Tax administration:
A number of new forms for filing VAT and PIT have been provided, replacing old forms.
2. Decree 91/2014/ND-CP date 1st Oct 2014, effective on 15th Nov 2014
2.1. Amendments to:
- Decree 218/2013/ND-CP on CIT
- Decree 65/2013/ND-CP on PIT
- Decree 209/2013/ND-CP on VAT
- Decree 83/2013/ND-CP on Tax management
2.2. Key Features:
- Tax exemption period for income from scientific research and technology development is extended to three years (from 1 year under previous Decrees).
- Income from sale of products manufactured by utilization of new technology is entitled to tax exemption for a maximum period of 5 years (rather than 1 year as provided under previous regulations).
- Staff welfare expenses (such as: holiday travel, health care treatment, etc.) are deductible if not in excess of one-month average salary in a tax year.
- Industrial parks including those located in cities urban district upgraded from suburban districts since 1st Jan 2009 are now resumed to CIT tax incentives.
- Projects that are currently enjoying tax incentives and have had business expansion during the period from 2009 to 2013, shall be entitled to tax incentives as granted for the main projects for remaining period of tax incentives for additional income from expanded projects.
- Taxpayers suffered from the removal of tax incentives that have been granted based on export ratio due to Vietnam’s commitments to WTO may reassess and apply its entitlements to tax incentives based on the regulations effective at the time of licensing and before effective day of Decree 24/2007/ND-CP for the remaining period of tax incentives (that are abolished).
If the term of payment is not due, input VAT of goods/service purchased on installment/deferred payment/credit that are valued from 20 million could still be claimable based on contracts/invoice despite the absence of the non-cash settlement evidence.
Housing benefits where the housing built by employer and provided for employees working in industrial zones or housing built in economic zones or other encouraged zones provided for employees are non-taxable.
(iv) Tax administration:
Quarterly CIT filling is no longer required but the provisional quarterly payment of CIT is still due.
Quarterly VAT filing is allowed for corporate taxpayers that have annual revenues (of previous year) of less than VND50 billion (rather than less than VND20 billion as provided under previous regulations).
3. Circular 151/2014/TT-BTC date 10 Oct 2014, effective on 15th Nov 2015
- Provides guidance for the implementation of Decree 91/2014/ND-CP
3.2. Key features:
- Taxpayers suffered from the removal of tax incentives that have been granted based on from export ratio due to Vietnam’s commitments to WTO are allowed to reassess and select separately the best preferential tax rate and the most favourable tax holiday and tax reduction period based on relevant regulations (i) from the licensing date to 21 March 2014; or (ii) from 2012 onward for the remaining period. This provision is retrospectively applicable, including the years that have been tax audited.
- Input VAT of goods purchased on credit/deferred payment that have been claimed must be adjusted if no evidence/voucher of non-cash payment available at the due date of payment.
(iii) Tax administration:
Newly established enterprises file VAT on a quarterly basis for the first tax year. From the second tax year, VAT filing period shall be determined based on revenues of previous years.
4. Law on Amendment of Some Tax Laws No. 71/2014/QH13 date 26 Nov 2014, effective on 1st Jan 2015
4.1. Amendment to:
- Corporate Income Tax Law
- Personal Income Tax Law
- Value Added Tax Law
- Law on Tax Administration
4.2. Key features:
- Removal of the cap on tax deduction for advertising and promotional cost.
- New investment projects engaged in manufacturing industrial supporting products will be entitled to preferential tax rate of 10% for 15 years from the year of operating income generation; 4 years of tax exemption and a 50% deduction for 9 subsequent years, following the tax exemption period.
- Business income is no longer subject to PIT at progressive rates similar to employment income. Business income, under the new Tax Law, is subject to PIT at flat rates of 0.5% to 5% depending on particular business activities, if the annual business income is in excess of VND100 million.
- Income from winnings at a casino is no longer subject to PIT.
- Employment income of Vietnamese crew members working for foreign shipping companies or Vietnamese shipping companies that provide international transport services is PIT exempt.
- Tax base for computation of income from transfer of securities and transfer of real property generated by residents will be the sale proceeds. This means that, similar to non-residents, income from transfer of securities and real property by residents shall be subject to PIT at deemed rate of 0.1% and 2% on the sale proceeds respectively.
(iii) Tax administration:
The interest rate of 0.07% per day on overdue tax payment of more than 90 days is abolished. Overdue tax payment is now subject to a single interest rate of 0.05% per day.
5. Law Amends Special Sale Tax Law No. 70/2014/QH13 date 26 Nov 2014
5.1. Amendments to:
- Special Sale Tax Law
5.2. Key feature:
From 1 January 2016, SST rates of certain goods and service such as cigarettes, wine, beer, casino will be increased.
For example SST rate for cigarettes increase from 65 to 70 in 2016 and 75 in 2019.