Our Vietnam Legal Update #185 would lead you on 03 legal issues:
I. Guidance on the tax declaration of branches located in a different province from the head office
The Tax Department of Hanoi City issued Official Letter No. 37635/CTHN-TTHT dated 1 October 2021 to guide on the tax declaration of a branch located in a different province (“Branch”) from the head office. The main content is as follows:
- Regarding the License Tax: The branch shall submit the branch’s license tax declaration dossier to the tax agency directly managing the Branch.
- Regarding Invoice: When providing goods, services, the seller shall issue invoices to the buyer. Thus, to comply with the law on issuing invoices, the head office and Branch must exactly identify the buyer and seller based on the real business situation.
- Regarding VAT: The Branch submits the VAT declaration dossier to the tax agency directly managing the Branch. In case the Branch does not directly sell goods, does not generate revenue, it shall make joint tax declarations with the head office as regulated by law.
- Regarding CIT: The Branch shall make joint CIT declarations at the tax agency directly managing the head office as regulated by law.
- Regarding PIT: If the Branch incurs income payments to individuals, the Branch shall submit PIT declaration dossiers and PIT finalization dossiers at the tax agency directly managing the Branch as regulated by law.
- Regarding foreign contractor tax: In case of the Branch purchases services or services associated with goods or pays income generated in Vietnam based on contractor contracts; purchase goods in the form of import and export on the spot or under the terms of international trade (Incoterms); distribute goods and provide services on behalf of foreign organizations and individuals in Vietnam, they are responsible for withholding contractor tax before paying foreign contractors and foreign sub-contractors as regulated by law.
II. Tax incentive policies
Tax Department of Ha Tinh Province issued the Official Letter No. 2415/CTHTI-TTHT dated 20 October 2021 on guiding tax incentive policies with the following contents:
- A business cooperation contract means a contract between investors for business cooperation and distribution of profits or products without the establishment of a business organization.
- For incomes from the implementation of new investment projects, enterprises will be exempt from tax for 2 years and reduce 50% of the payable tax for the next 4 years.
- Enterprises currently engaged in production and business activities may continue enjoying tax incentives for the remaining duration if they have a change in their enterprise registration certificates which does not affect the satisfaction of the prescribed conditions for tax incentives.
- The enterprises having investment projects to develop operating investment projects such as the expansion of production scale, increase of capacity, and renewal of production technology in the fields or geographical areas eligible for CIT incentives may be chosen to enjoy CIT incentives.
- The preferential tax rate of 10% is applicable throughout the operation duration to incomes of enterprises from: The forest planting, tending and protection; Agricultural cultivation, planting of forest trees and aquaculture in geographical areas with difficult socio-economic conditions; Production, propagation, and hybridization of plant varieties and animal breeds; Salt production, exploitation, and refinery, except salt production; Investment in the preservation of post-harvest farm products, aquatic products and foodstuffs.
III. The entrustment of importing goods for export production
The General Department of Customs issued the Official Letter No. 4948/TCHQ-TXNK dated 20 October 2021 on entrusting of importing goods for export production with the following contents:
- Commodity purchase and sale entrustment mean commercial activities whereby the mandatory conduct the purchase and sale of goods in his/her/its name under terms agreed upon with the mandator and is entitled to receive mandate commission.
- Organizations and individuals that are entrusted to import or awarded contracts for import of goods to provide for the entities specified in Article 16 of the Law on Export and Import Duties will be granted exemption of import duties on these goods, provided the prices of the goods under the entrustment or successful bids are not inclusive of import duties.
- In case an organization or individual is eligible for import tax exemption for goods imported for export production but entrusts an organization or individual to entrust the production of exported goods, these goods are exempt from import tax. export. However, this tax exemption comes with the condition that the supply price of goods under the trust contract does not include import tax.
Maybe you are interested in reading other Legal Update of BLawyers Vietnam: October 2021 (Part 4) | October 2021 (Part 3) | October 2021 (Part 2) | October 2021 (Part 1) September 2021 (Part 4) | September 2021 (Part 3) | September 2021 (Part 2) | September 2021 (Part 1) | August 2021 (Part 4) | August 2021 (Part 3) | August 2021 (Part 2)